Question 1

The diamond/water paradox is only true in theory, but no real-world examples have yet to be discovered.

Accepted Answer

A) True 
 B)False

Question 2

Refer to the information provided in Table 6.1 below to answer the question(s)  that follow.
Table 6.1
   Number of  Hamburgers per  Day  Total Utility  Marginal Utility 13025236747654 Number of  Sodas per Day  Total Utility  Marginal Utility 12023534745757\begin{array} { | c | c | c | } \hline \begin{array} { c } 	ext { Number of } \	ext { Hamburgers per } \	ext { Day }\end{array} & 	ext { Total Utility } & 	ext { Marginal Utility } \\hline 1 & 30 & \\hline 2 & 52 & \\hline 3 & 67 & \\hline 4 & 76 & \\hline 5 & & 4 \\hline \begin{array} { c } 	ext { Number of } \	ext { Sodas per Day }\end{array} & 	ext { Total Utility } & 	ext { Marginal Utility } \\hline 1 & 20 & \\hline 2 & 35 & \\hline 3 & 47 & \\hline 4 & 57 & \\hline 5 & & 7 \\hline\end{array} Number of  Hamburgers per  Day ​12345 Number of  Sodas per Day ​12345​ Total Utility 30526776 Total Utility 20354757​ Marginal Utility 4 Marginal Utility 7​​ 
-Refer to Table 6.1. Assume that a store is giving hamburgers and sodas away for free. Consumers can have as many sodas and hamburgers as they want, but the food has to be consumed one unit at a time. If George has already had one soda and two hamburgers, then George should

Accepted Answer

A)   next consume a soda to maximize his utility.
B)   next consume a hamburger to maximize his utility.
C)   be indifferent between consuming the second soda or the third hamburger.
D)   consume neither another soda nor another hamburger to maximize his utility. E) All of the above
F) A) and D)

Question 3

Refer to the information provided in Figure 6.2 below to answer the question(s)  that follow.  Figure 6.2
-Refer to Figure 6.2. Assume Mr. Lingle is on budget constraint AC. If the price of a beer is $5, Mr. Lingle's monthly income is

Accepted Answer

A)   $40.
B)   $80.
C)   $100.
D)   $200.E) A) and B)
F) C) and D)

Question 4

If MUx/Px exceeds MUy/Py, then a household can increase its utility by spending more on Y and less on X.

Accepted Answer

A) True 
 B)False

Question 5

Refer to the information provided in Figure 6.2 below to answer the question(s)  that follow.  Figure 6.2
-Refer to Figure 6.2. Assume Mr. Lingleʹs budget constraint is AC. He will have leftover income if he purchases the bundle represented by point

Accepted Answer

A)   A.
B)   B.
C)   E.
D)   D.E) A) and B)
F) A) and C)

Question 6

Refer to the information provided in Figure 6.2 below to answer the question(s)  that follow.  Figure 6.2
-Refer to Figure 6.2. Assume Mr. Lingleʹs budget is AC. At which point does Mr. Lingle spend exactly his income?

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   All of the above are correct.E) None of the above
F) All of the above

Question 7

Refer to the information provided in Figure 6.1 below to answer the question(s)  that follow.  Figure 6.1
-Refer to Figure 6.1. Along budget constraint AC, the opportunity cost of one hot dog

Accepted Answer

A)   is 1/4 of a hamburger.
B)   is 1/2 of a hamburger.
C)   is 2 hamburgers.
D)   changes as you move down along the budget constraint.E) None of the above
F) All of the above

Question 8

Refer to the information provided in Figure 6.5 below to answer the question(s)  that follow.  Figure 6.5
-Refer to Figure 6.5. Molly's budget constraint is EF. If her income decreases while the price of the goods are unchanged, her new budget constraint could be

Accepted Answer

A)   AD.
B)   BD.
C)   CD.
D)   Her new possible budget constraint is not shown on this graph.E) None of the above
F) A) and C)

Question 9

Refer to the information provided in Figure 6.1 below to answer the question(s)  that follow.  Figure 6.1
-Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hamburger is $8.00. Tom's monthly income is

Accepted Answer

A)   $2.50.
B)   $20.
C)   $80.
D)   $160.E) A) and C)
F) A) and D)

Question 10

Refer to the information provided in Figure 6.8 below to answer the question(s)  that follow.  Figure 6.8
-Refer to Figure 6.8. The marginal utility of the third movie rental is

Accepted Answer

A)   0.
B)   3.
C)   12.
D)   28.E) B) and C)
F) A) and B)

Question 11

Refer to the information provided in Figure 6.14 below to answer the question(s)  that follow.  Figure 6.14
-Refer to Figure 6.14. Jason cannot afford the bundle represented by point

Accepted Answer

A)   E.
B)   B.
C)   C.
D)   D.E) A) and C)
F) A) and B)

Question 12

The price of leisure is the wage rate.

Accepted Answer

A) True 
 B)False

Question 13

If the price of an inferior good rises, the income effect will result in households buying ________ of the good and the substitution effect will result in households buying ________ of the good.

Accepted Answer

A)   more; more
B)   more; less
C)   less; more
D)   less; lessE) B) and C)
F) C) and D)

Question 14

The law of diminishing marginal utility implies that as a household consumes more of a product, its total utility will increase by larger amounts -assuming marginal utility remains positive.

Accepted Answer

A) True 
 B)False

Question 15

Assuming a perfectly competitive market implies that households have perfect knowledge of qualities and prices of everything available in the market.

Accepted Answer

A) True 
 B)False

Question 16

Refer to the information provided in Table 6.1 below to answer the question(s)  that follow.
Table 6.1
   Number of  Hamburgers per  Day  Total Utility  Marginal Utility 13025236747654 Number of  Sodas per Day  Total Utility  Marginal Utility 12023534745757\begin{array} { | c | c | c | } \hline \begin{array} { c } 	ext { Number of } \	ext { Hamburgers per } \	ext { Day }\end{array} & 	ext { Total Utility } & 	ext { Marginal Utility } \\hline 1 & 30 & \\hline 2 & 52 & \\hline 3 & 67 & \\hline 4 & 76 & \\hline 5 & & 4 \\hline \begin{array} { c } 	ext { Number of } \	ext { Sodas per Day }\end{array} & 	ext { Total Utility } & 	ext { Marginal Utility } \\hline 1 & 20 & \\hline 2 & 35 & \\hline 3 & 47 & \\hline 4 & 57 & \\hline 5 & & 7 \\hline\end{array} Number of  Hamburgers per  Day ​12345 Number of  Sodas per Day ​12345​ Total Utility 30526776 Total Utility 20354757​ Marginal Utility 4 Marginal Utility 7​​ 
-Refer to Table 6.1. Diminishing marginal utility sets in after the ________ soda per day.

Accepted Answer

A)   first
B)   second
C)   third
D)   fourth E) None of the above
F) A) and C)

Question 17

Refer to the information provided in Figure 6.5 below to answer the question(s)  that follow.  Figure 6.5
-Refer to Figure 6.5. Molly's budget constraint is EF. If her income decreases while the price of the goods are unchanged, her new budget constraint is

Accepted Answer

A)   AD.
B)   BD.
C)   CD.
D)   It is not shown on this graph.E) A) and C)
F) B) and C)

Question 18

Assume leisure is an inferior good instead of a normal good. The income effect of a wage increase will lead to a ________ demand for leisure and a ________ labor supply.

Accepted Answer

A)   higher; higher
B)   higher; lower
C)   lower; higher
D)   lower; lowerE) All of the above
F) B) and D)

Question 19

For Matthew, the marginal utility of the 9th soda in a day is positive and the marginal utility of the 10th soda in a day is zero. This

Accepted Answer

A)   implies that Matthew's demand curve for sodas per day will become upward sloping at 10 sodas per day.
B)   is impossible because each additional unit of consumption of any good must provide positive marginal utility.
C)   implies that at a zero price Matthew's demand curve will intersect the quantity axis at 10.
D)   implies that Matthew maximizes utility by consuming 9 sodas per day.E) C) and D)
F) A) and B)

Question 20

Refer to the information provided in Table 6.2 below to answer the question(s)  that follow.
Table 6.2
   Number of  Candy Bars per Day  Total Utility  Marginal Utility 1402753100411555 Number of  Hot Dogs per Day  Total Utility  Marginal Utility 13025437248456\begin{array} { | c | c | c | } \hline \begin{array} { c } 	ext { Number of } \	ext { Candy Bars per Day }\end{array} & 	ext { Total Utility } & 	ext { Marginal Utility } \\hline 1 & 40 & \\hline 2 & 75 & \\hline 3 & 100 & \\hline 4 & 115 & \\hline 5 & & 5 \\hline \begin{array} { c } 	ext { Number of } \	ext { Hot Dogs per Day }\end{array} & 	ext { Total Utility } & 	ext { Marginal Utility } \\hline 1 & 30 & \\hline 2 & 54 & \\hline 3 & 72 & \\hline 4 & 84 & \\hline 5 & & 6 \\hline\end{array} Number of  Candy Bars per Day ​12345 Number of  Hot Dogs per Day ​12345​ Total Utility 4075100115 Total Utility 30547284​ Marginal Utility 5 Marginal Utility 6​​ 
-Refer to Table 6.2. If the price of a candy bar is $1, the price of a hot dog is $2, and Aaron has $6 of income, Aaron's utility-maximizing combination of candy bars and hot dogs per day is

Accepted Answer

A)   1 candy bar and 2 hot dogs.
B)   4 candy bars and 1 hot dog.
C)   2 candy bars and 1.5 hot dogs.
D)   indeterminate from this information. E) B) and C)
F) None of the above

Exam 6: Household Behavior and Consumer Choice

The diamond/water paradox is only true in theory, but no real-world examples have yet to be discovered.

Correct Answer
verified

The law of diminishing marginal utility implies that as a household consumes more of a product, its total utility will increase by larger amounts -assuming marginal utility remains positive.

Correct Answer
verified

Refer to the information provided in Figure 6.5 below to answer the question(s) that follow. Figure 6.5 -Refer to Figure 6.5. Molly's budget constraint is EF. If her income decreases while the price of the goods are unchanged, her new budget constraint could be

Correct Answer
verified

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 -Refer to Figure 6.2. Assume Mr. Lingle is on budget constraint AC. If the price of a beer is $5, Mr. Lingle's monthly income is

Correct Answer
verified

Correct Answer
verified

Assuming a perfectly competitive market implies that households have perfect knowledge of qualities and prices of everything available in the market.

Correct Answer
verified

Refer to the information provided in Figure 6.14 below to answer the question(s) that follow. Figure 6.14 -Refer to Figure 6.14. Jason cannot afford the bundle represented by point

Correct Answer
verified

If MU_x/P_x exceeds MU_y/P_y, then a household can increase its utility by spending more on Y and less on X.

Correct Answer
verified

Assume leisure is an inferior good instead of a normal good. The income effect of a wage increase will lead to a demand for leisure and a labor supply.

Correct Answer
verified

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 -Refer to Figure 6.2. Assume Mr. Lingleʹs budget is AC. At which point does Mr. Lingle spend exactly his income?

Correct Answer
verified

For Matthew, the marginal utility of the 9th soda in a day is positive and the marginal utility of the 10th soda in a day is zero. This

Correct Answer
verified

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 -Refer to Figure 6.2. Assume Mr. Lingleʹs budget constraint is AC. He will have leftover income if he purchases the bundle represented by point

Correct Answer
verified

Refer to the information provided in Figure 6.1 below to answer the question(s) that follow. Figure 6.1 -Refer to Figure 6.1. Along budget constraint AC, the opportunity cost of one hot dog

Correct Answer
verified

Refer to the information provided in Figure 6.8 below to answer the question(s) that follow. Figure 6.8 -Refer to Figure 6.8. The marginal utility of the third movie rental is

Correct Answer
verified

Refer to the information provided in Figure 6.1 below to answer the question(s) that follow. Figure 6.1 -Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hamburger is $8.00. Tom's monthly income is

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the information provided in Figure 6.5 below to answer the question(s) that follow. Figure 6.5 -Refer to Figure 6.5. Molly's budget constraint is EF. If her income decreases while the price of the goods are unchanged, her new budget constraint is

Correct Answer
verified

The price of leisure is the wage rate.

Correct Answer
verified

If the price of an inferior good rises, the income effect will result in households buying of the good and the substitution effect will result in households buying of the good.

Correct Answer
verified

Exam 6: Household Behavior and Consumer Choice

The diamond/water paradox is only true in theory, but no real-world examples have yet to be discovered.

Correct AnswerverifiedShow Answer

The law of diminishing marginal utility implies that as a household consumes more of a product, its total utility will increase by larger amounts -assuming marginal utility remains positive.

Correct AnswerverifiedShow Answer

Refer to the information provided in Figure 6.5 below to answer the question(s) that follow. Figure 6.5 -Refer to Figure 6.5. Molly's budget constraint is EF. If her income decreases while the price of the goods are unchanged, her new budget constraint could be

Correct AnswerverifiedShow Answer

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 -Refer to Figure 6.2. Assume Mr. Lingle is on budget constraint AC. If the price of a beer is $5, Mr. Lingle's monthly income is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assuming a perfectly competitive market implies that households have perfect knowledge of qualities and prices of everything available in the market.

Correct AnswerverifiedShow Answer

Refer to the information provided in Figure 6.14 below to answer the question(s) that follow. Figure 6.14 -Refer to Figure 6.14. Jason cannot afford the bundle represented by point

Correct AnswerverifiedShow Answer

If MUx/Px exceeds MUy/Py, then a household can increase its utility by spending more on Y and less on X.

Correct AnswerverifiedShow Answer

Assume leisure is an inferior good instead of a normal good. The income effect of a wage increase will lead to a ________ demand for leisure and a ________ labor supply.

Correct AnswerverifiedShow Answer

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 -Refer to Figure 6.2. Assume Mr. Lingleʹs budget is AC. At which point does Mr. Lingle spend exactly his income?

Correct AnswerverifiedShow Answer

For Matthew, the marginal utility of the 9th soda in a day is positive and the marginal utility of the 10th soda in a day is zero. This

Correct AnswerverifiedShow Answer

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 -Refer to Figure 6.2. Assume Mr. Lingleʹs budget constraint is AC. He will have leftover income if he purchases the bundle represented by point

Correct AnswerverifiedShow Answer

Refer to the information provided in Figure 6.1 below to answer the question(s) that follow. Figure 6.1 -Refer to Figure 6.1. Along budget constraint AC, the opportunity cost of one hot dog

Correct AnswerverifiedShow Answer

Refer to the information provided in Figure 6.8 below to answer the question(s) that follow. Figure 6.8 -Refer to Figure 6.8. The marginal utility of the third movie rental is

Correct AnswerverifiedShow Answer

Refer to the information provided in Figure 6.1 below to answer the question(s) that follow. Figure 6.1 -Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hamburger is $8.00. Tom's monthly income is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Refer to the information provided in Figure 6.5 below to answer the question(s) that follow. Figure 6.5 -Refer to Figure 6.5. Molly's budget constraint is EF. If her income decreases while the price of the goods are unchanged, her new budget constraint is

Correct AnswerverifiedShow Answer

The price of leisure is the wage rate.

Correct AnswerverifiedShow Answer

If the price of an inferior good rises, the income effect will result in households buying ________ of the good and the substitution effect will result in households buying ________ of the good.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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If MU_x/P_x exceeds MU_y/P_y, then a household can increase its utility by spending more on Y and less on X.

Correct Answer
verified

Assume leisure is an inferior good instead of a normal good. The income effect of a wage increase will lead to a demand for leisure and a labor supply.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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If the price of an inferior good rises, the income effect will result in households buying of the good and the substitution effect will result in households buying of the good.

Correct Answer
verified