Question 1

An increase in the price of a product normally enables a consumer to reach a higher indifference curve.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following best expresses the law of diminishing marginal utility?

Accepted Answer

A)  The more of a product consumed, the smaller is the total utility from the product.
B)  The less of a product consumed, the greater is the marginal utility of the product.
C)  The more of a product consumed, the greater is the total utility from the product.
D)  The less of a product consumed, the smaller is marginal utility of the product.

Question 3

When the price of a product rises for an inferior good, the

Accepted Answer

A)  income and substitution effects will encourage consumers to purchase more of the product.
B)  income and substitution effects will encourage consumers to purchase less of the product.
C)  substitution effect will encourage consumers to purchase less of the product, but the income effect will encourage them to purchase more.
D)  substitution effect will encourage consumers to purchase more of the product, but the income effect will encourage them to purchase less.

Question 4

An increase in the productivity of labor over time will

Accepted Answer

A)  decrease the value of time.
B)  increase the value of time.
C)  decrease the demand for labor-saving devices.
D)  decrease the demand for consumer goods and services.

Question 5

With diminishing marginal utility, if a consumer reduces her consumption of a good, then her marginal utility from that good would increase.

Accepted Answer

A) True 
 B)False

Question 6

If a product has a diminishing, but positive, marginal utility, then

Accepted Answer

A)  total utility decreases at an increasing rate.
B)  total utility will become negative.
C)  total utility increases at a diminishing rate.
D)  total utility decreases at a diminishing rate.

Question 7

When total utility is at a maximum, marginal utility is zero.

Accepted Answer

A) True 
 B)False

Question 8

If total utility has reached a maximum level, and assuming that diminishing marginal utility already applies, then what will happen as the consumer consumes additional units of the product?

Accepted Answer

A)  Marginal utility of the additional units will be greater than zero.
B)  Total utility will turn negative.
C)  Marginal utility of the additional units will turn negative.
D)  Total utility will increase at a diminishing rate.

Question 9

This indicates that

Accepted Answer

A)  Ellie should make no change in consumption.
B)  given another dollar, Ellie should buy an additional unit of Beta.
C)  in order to maximize utility, Ellie should buy more of Beta and less of Alpha.
D)  in order to maximize utility, Ellie should buy more of Alpha and less of Beta.

Question 10

The increase in demand for iPad tablet computers can be explained by

Accepted Answer

A)  an increase in the technology used to produce iPads, making the supply of iPads increase.
B)  an increase in the price of laptop computers, making their MU/P decrease.
C)  the enhanced versatility and storage capacity of iPads, making their MU/P increase.
D)  an increase in the income of buyers, making the demand for iPads increase.

Question 11

Many people buy no more than one iPad because

Accepted Answer

A)  there's always a shortage of iPads.
B)  the MU/P of a second iPad is quite low for many people.
C)  the price of iPads has increased significantly.
D)  iPads have quickly become obsolete.

Question 12

A graph that shows the maximum combinations of two goods which a consumer can purchase with a given money income is

Accepted Answer

A)  the production possibilities curve.
B)  an indifference curve.
C)  a demand curve.
D)  a budget line.

Question 13

"Consumer equilibrium" refers to the situation when the consumer is getting

Accepted Answer

A)  the highest total utility out of spending a given budget on various goods.
B)  the highest marginal utility out of spending a given budget on various goods.
C)  equal marginal utility values from each product consumed.
D)  equal total utility values from each product consumed.

Question 14

Assume you are spending your full budget and purchasing such amounts of X and Y that the marginal utility from the last units consumed is 40 and 20 utils, respectively.Assume (a)  the prices of X and Y are $8 and $4 respectively; (b)  it takes 3 hours to consume a unit of X and 1 hour to consume a unit of Y; and (c)  your time is worth $2 per hour.You

Accepted Answer

A)  should substitute X for Y until the marginal utility per hour is the same for both products.
B)  are consuming X and Y in the optimal amounts.
C)  should consume less of Y and more of X.
D)  should consume less of X and more of Y.

Question 15

When a consumer shifts purchases from X to Y, the marginal utility of X falls and the marginal utility of Y rises.

Accepted Answer

A) True 
 B)False

Question 16

Marginal utility can be

Accepted Answer

A)  positive, but not negative.
B)  positive or negative, but not zero.
C)  positive, negative, or zero.
D)  decreasing, but not negative.

Question 17

The substitution effect of a price decrease for a good causes an increase in the consumption of the good, regardless of whether the good is normal or inferior.

Accepted Answer

A) True 
 B)False

Question 18

A consumer's demand curve for a product is downsloping because

Accepted Answer

A)  total utility falls below marginal utility as more of a product is consumed.
B)  marginal utility diminishes as more of a product is consumed.
C)  time becomes less valuable as more of a product is consumed.
D)  the income and substitution effects precisely offset each other.

Question 19

Which of the following has been a significant factor in the ability of iPads to compete effectively against laptop and desktop computers?

Accepted Answer

A)  iPads are often superior to laptop and desktop computers in their ability to create content.
B)  A scarcity of production capacity has curtailed the manufacture of laptop and desktop computers.
C)  Many consumers perceive that iPads are superior to laptops and desktop computers for the consumption of digital media.
D)  The prices of laptops and desktop computers have increased dramatically.

Question 20

(Last Word)  All of the following would reduce property crime by increasing its "price," except

Accepted Answer

A)  imposing greater penalties for those who are caught and convicted.
B)  using more sophisticated security systems.
C)  enhancing the legitimate earnings of potential criminals.
D)  cutting out the middlemen ("fences")  by selling stolen goods via Internet auction sites.

Exam 7: Utility Maximization

Correct Answer
verified

Marginal utility can be

Correct Answer
verified

Which of the following best expresses the law of diminishing marginal utility?

Correct Answer
verified

A consumer's demand curve for a product is downsloping because

Correct Answer
verified

If total utility has reached a maximum level, and assuming that diminishing marginal utility already applies, then what will happen as the consumer consumes additional units of the product?

Correct Answer
verified

The increase in demand for iPad tablet computers can be explained by

Correct Answer
verified

The substitution effect of a price decrease for a good causes an increase in the consumption of the good, regardless of whether the good is normal or inferior.

Correct Answer
verified

When total utility is at a maximum, marginal utility is zero.

Correct Answer
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Many people buy no more than one iPad because

Correct Answer
verified

(Last Word) All of the following would reduce property crime by increasing its "price," except

Correct Answer
verified

An increase in the price of a product normally enables a consumer to reach a higher indifference curve.

Correct Answer
verified

When a consumer shifts purchases from X to Y, the marginal utility of X falls and the marginal utility of Y rises.

Correct Answer
verified

If a product has a diminishing, but positive, marginal utility, then

Correct Answer
verified

An increase in the productivity of labor over time will

Correct Answer
verified

A graph that shows the maximum combinations of two goods which a consumer can purchase with a given money income is

Correct Answer
verified

This indicates that

Correct Answer
verified

When the price of a product rises for an inferior good, the

Correct Answer
verified

Which of the following has been a significant factor in the ability of iPads to compete effectively against laptop and desktop computers?

Correct Answer
verified

"Consumer equilibrium" refers to the situation when the consumer is getting

Correct Answer
verified

With diminishing marginal utility, if a consumer reduces her consumption of a good, then her marginal utility from that good would increase.

Correct Answer
verified

Exam 7: Utility Maximization

Correct AnswerverifiedShow Answer

Marginal utility can be

Correct AnswerverifiedShow Answer

Which of the following best expresses the law of diminishing marginal utility?

Correct AnswerverifiedShow Answer

A consumer's demand curve for a product is downsloping because

Correct AnswerverifiedShow Answer

If total utility has reached a maximum level, and assuming that diminishing marginal utility already applies, then what will happen as the consumer consumes additional units of the product?

Correct AnswerverifiedShow Answer

The increase in demand for iPad tablet computers can be explained by

Correct AnswerverifiedShow Answer

The substitution effect of a price decrease for a good causes an increase in the consumption of the good, regardless of whether the good is normal or inferior.

Correct AnswerverifiedShow Answer

When total utility is at a maximum, marginal utility is zero.

Correct AnswerverifiedShow Answer

Many people buy no more than one iPad because

Correct AnswerverifiedShow Answer

(Last Word) All of the following would reduce property crime by increasing its "price," except

Correct AnswerverifiedShow Answer

An increase in the price of a product normally enables a consumer to reach a higher indifference curve.

Correct AnswerverifiedShow Answer

When a consumer shifts purchases from X to Y, the marginal utility of X falls and the marginal utility of Y rises.

Correct AnswerverifiedShow Answer

If a product has a diminishing, but positive, marginal utility, then

Correct AnswerverifiedShow Answer

An increase in the productivity of labor over time will

Correct AnswerverifiedShow Answer

A graph that shows the maximum combinations of two goods which a consumer can purchase with a given money income is

Correct AnswerverifiedShow Answer

This indicates that

Correct AnswerverifiedShow Answer

When the price of a product rises for an inferior good, the

Correct AnswerverifiedShow Answer

Which of the following has been a significant factor in the ability of iPads to compete effectively against laptop and desktop computers?

Correct AnswerverifiedShow Answer

"Consumer equilibrium" refers to the situation when the consumer is getting

Correct AnswerverifiedShow Answer

With diminishing marginal utility, if a consumer reduces her consumption of a good, then her marginal utility from that good would increase.

Correct AnswerverifiedShow Answer

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