Download Chapter 11 study questions

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Chapter 11 study questions
Multiple Choice
Identify the choice that best completes the statement or answers the question.
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1. The budget line shows
a. the person's lifetime earnings.
b. a person's budget and its limits.
c. a family's budget and what it plans to buy for the year.
d. the utility gained from successive amounts of a good.
e. only the affordable combinations of goods and services the person can buy.
2. A budget line shows the
a. unlimited combinations of goods and services that can be consumed.
b. limits to consumption possibilities.
c. limits to production possibilities.
d. unlimited combinations of goods and services that can be produced.
e. None of the above answers are correct.
3. A consumption point inside the budget line
a. is not possible to afford.
b. is possible to afford but has some unspent income.
c. shows that the consumer has chosen to spend all of his or her income on both products.
d. shows that the consumer spends income on only one of the goods.
e. is affordable and, because it is inside the budget line, means that all the person's budget
has been spent.
4. A budget line
a. keeps the budgets of all consumers in line with their needs.
b. shows the satisfaction people get from their budget.
c. describes the limits to consumption choices, given the income of the consumer and the
prices of goods and services.
d. has a positive slope.
e. has no slope.
5. A budget line shows
a. what consumption choices a person will make.
b. a person's consumption possibilities.
c. the total utility of possible consumption combinations.
d. Both answers A and C are correct.
e. Both answers A and B are correct.
6. Katie has $15. She likes M&M candies and Hershey's white chocolate bars. M&M candies are $1.50 a pack
and (the large) Hershey bars are $3.00 each. Katie can choose to buy
a. 4 Hershey bars and 2 packs of M&Ms.
b. 2 Hershey bars and 6 packs of M&Ms.
c. 5 Hershey bars and 10 packs of M&Ms.
d. Both answer A and answer B are correct.
e. Answer A, answer B, and answer C are correct.
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Name: ________________________
ID: A
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7. Timmy makes $100 per week as a taxidermist. He spends all this income to buy pizza and hair gel. The price
of a pizza is $10 and the price of a bottle of hair gel is $4. If Timmy buys 5 bottles of hair gel, then he buys
____ pizzas.
a. 10
b. 4
c. 8
d. 20
e. None of the above answers is correct.
____ 8. Timmy makes $100 per week as a taxidermist. He spends all this income to buy pizza and hair gel. The price
of a pizza is $10 and the price of a bottle of hair gel is $4. If Timmy buys 6 pizzas per week, how many
bottles of gel can he purchase?
a. 10
b. 60
c. 20
d. 40
e. None of the above answers is correct.
____ 9. Sarah earns $500 per week selling baskets made out of tree vines. With this money she buys sushi and rose
bushes. Each piece of sushi costs $1 and each rose bush costs $10. If Sarah spends $170 per week on sushi,
the maximum quantity of rose bushes can she buy each week is ____ bushes.
a. 33
b. 330
c. 3
d. 17
e. None of the above answers is correct.
____ 10.
Susan can watch movies or attend plays. The table above gives combinations of movies and plays that are on
her budget line. If the price of a movie is $5, then her budget for movies and plays is
a. $5 per month.
b. $25 per month.
c. $30 per month.
d. $60 per month.
e. unknown from the information.
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Name: ________________________
ID: A
____ 11. The figure above shows Sarah's budget line. Sarah earns $500 per week selling baskets made out of tree vines.
With this money she buys sushi and rose bushes. Each piece of sushi costs $1 and each rose bush costs $10.
Sarah will be at what point on her budget line if she spends $200 per week on sushi?
a. Point a
b. Point b
c. Point c
d. Point f
e. Point d
____ 12. The figure above shows Sarah's budget line. Sarah earns $500 per week selling baskets made out of tree vines.
With this money she buys sushi and rose bushes. Each piece of sushi costs $1 and each rose bush costs $10.
Sarah will be at what point on her budget line if she spends $500 per week on rose bushes?
a. Point a
b. Point c
c. Point e
d. Point f
e. Point b
____ 13. The figure above shows Sarah's budget line. Sarah earns $500 per week selling baskets made out of tree vines.
With this money she buys sushi and rose bushes. Each piece of sushi costs $1 and each rose bush costs $10.
Sarah will be at what point on her budget line if she spends $300 per week on rose bushes?
a. Point a
b. Point b
c. Point c
d. Point f
e. Point e
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Name: ________________________
ID: A
____ 14. The figure above shows Sarah's budget line. Sarah earns $500 per week selling baskets made out of tree vines.
With this money she buys sushi and rose bushes. Each piece of sushi costs $1 and each rose bush costs $10.
Sarah is NOT able to purchase the combination of
a. 50 roses bushes and 0 pieces of sushi.
b. 20 rose bushes and 200 pieces of sushi.
c. 0 roses bushes and 300 pieces of sushi.
d. 30 roses bushes and 300 pieces of sushi.
e. None of the above answers is correct because Sarah is able to purchase all the listed
combinations of roses and sushi.
____ 15. The figure above shows a consumer's budget line for sodas and DVD rentals. Point a represents an
a. affordable combination of sodas and DVDs that spends the entire budget.
b. affordable combination of sodas and DVDs that does not spend the entire budget.
c. unaffordable combination of sodas and DVDs.
d. affordable combination of sodas and DVDs but whether it spends the entire budget
cannot be determined from the figure.
e. None of the above answers is correct.
____ 16. The figure above shows a consumer's budget line between sodas and DVD rentals. Point c represents an
a. affordable combination of sodas and DVDs that spends the entire budget.
b. affordable combination of sodas and DVDs that does not spend the entire budget.
c. unaffordable combination of sodas and DVDs.
d. affordable combination of sodas and DVDs but whether it spends the entire budget
cannot be determined from the figure.
e. None of the above answers is correct.
____ 17. If the price of a good that a consumer purchases falls, the consumer's budget line will
a. rotate outward and its slope will change.
b. rotate inward and its slope will change.
c. shift outward and its slope will not change.
d. shift inward and its slope will not change.
e. either rotate or shift outward depending on whether the good has positive or negative
marginal utility.
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Name: ________________________
ID: A
____ 18. You consume hamburgers and hot dogs. If the price of a hamburger increases while the price of a hot dog and
your budget do not change, then your budget line will
a. not change because your budget hasn't changed.
b. shift outward and not change its slope.
c. rotate outward and change its slope.
d. rotate inward and change its slope.
e. shift inward and not change its slope
____ 19. Sarah buys milk and ground beef. When the price of milk changes, the
a. slope of Sarah's budget line changes.
b. slope of Sarah's budget line remains the same.
c. tradeoff between milk and ground beef changes.
d. Both answers A and C are correct.
e. Both answers B and C are correct.
____ 20. Suppose Alice spends her income on books and CDs. If her budget does not change and the price of a book
remains the same but the price of a CD falls, Alice
a. can now buy more books if she spends all her budget on books.
b. can now buy fewer CDs if she spends all her budget on CDs.
c. can now still buy the same number of books if she spends all her budget on books.
d. definitely must buy more CDs and more books.
e. can buy the same number of books and CDs because her budget has not changed.
____ 21. Samantha has a budget of $40 and buys beef jerky and fried pork rinds. Her budget does not change and the
price of both beef jerky and fried pork rinds increases. As a result,
a. Samantha's consumption possibilities have decreased.
b. Samantha's budget line shifts inward.
c. Samantha can still buy the combination of beef jerky and fried pork rinds she was
initially consuming because her budget did not change.
d. Answers A and B are correct.
e. Answers A and C are correct.
____ 22. Nadir and Nina consume the same goods. If Nadir has more income than Nina, then Nina's budget line will
a. lie to the left of Nadir's budget line.
b. be steeper than Nadir's budget line.
c. lie to the right of Nadir's budget line.
d. be flatter than Nadir's budget line.
e. More information is needed to determine how Nina's and Nadir's budget lines compare.
____ 23. An increase in a consumer's budget
a. shifts the budget line outward and does not change its slope.
b. shifts the budget line inward and does not change its slope.
c. rotates the budget line outward around the point where it intersects the x-axis.
d. rotates the budget line inward around the point where it intersects the x-axis.
e. rotates the budget line outward around the point where it intersects the y-axis.
____ 24. If you consume hot dogs and hamburgers and your budget increases, while the prices of hot dogs and
hamburgers do not change, then your budget line
a. does not change.
b. shifts outward and its slope does not change.
c. rotates outward and its slope changes.
d. shifts inward and its slope does not change.
e. rotates inward and its slope changes.
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Name: ________________________
ID: A
____ 25. In the above figures, which one reflects an increase in the price of chicken?
a. Figure A
b. Figure B
c. Figure C
d. Figure D
e. Both Figure B and Figure C
____ 26. In the above figures, which one reflects a decrease in the price of chicken?
a. Figure A
b. Figure B
c. Figure C
d. Figure D
e. Both Figure A and Figure D
____ 27. In the above figures, which one reflects an increase in the price of fish?
a. Figure A
b. Figure B
c. Figure C
d. Figure D
e. Both Figure B and Figure C
____ 28. In the above figures, which one reflects an increase in the consumer's income?
a. Figure A
b. Figure B
c. Figure C
d. Figure D
e. Both Figure A and Figure D
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Name: ________________________
ID: A
____ 29. When the price of one good changes while another good's price does not change, then there has been a change
in the
a. relative price.
b. marginal utility price.
c. absolute price.
d. marginal price.
e. utility price.
____ 30. Looking at prices for various goods in the United States between 1995 to 2005, we see that although the price
of different goods have changed at different rates,
a. all relative prices have risen.
b. all relative prices have decreased.
c. the relative price of gasoline and of college books and supplies have risen.
d. the relative price of long-distance phone calls and of coffee have risen.
e. relative prices have not changed.
____ 31. In the United States from 1995 to 2005, which of the following products had the largest relative price
decrease?
a. long-distance phone calls
b. gasoline
c. college books and supplies
d. apples
e. personal computers
____ 32. The benefit or satisfaction that a person gets from the consumption of a good or service is called
a. marginal opportunity benefit.
b. utility.
c. demand.
d. quantity demanded.
e. purchased utility.
____ 33. The benefit that John gets from eating an additional grape is called the
a. net gain.
b. demand.
c. quantity demanded.
d. total utility.
e. marginal utility.
____ 34. The benefit or satisfaction that a person gets from the consumption of a good or service is called
a. opportunity cost.
b. marginal return.
c. consumer cost.
d. utility.
e. demand.
____ 35. Marginal utility is the change in total utility that results from
a. an increase in the price of the good.
b. a change in the budget line.
c. a one-unit change in the quantity of a good consumed.
d. a decrease in the price of the good.
e. an increase in the consumer's income.
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Name: ________________________
ID: A
____ 36. If the total utility of 2 bags of chips is 25, the total utility of 3 bags is 33, and the total utility of 4 bags is 40
units, then the marginal utility of the 3rd and 4th bags are
a. 8 and 7, respectively.
b. 12.5 and 11, respectively.
c. 11 and 10, respectively.
d. 58 and 73, respectively.
e. 33 and 40, respectively.
____ 37. Diminishing marginal utility means that an increase in the consumption of a good leads to
a. a decrease in total utility.
b. a decrease in marginal utility.
c. an increase in marginal utility.
d. no change in marginal utility.
e. an increase in the consumer's budget.
____ 38. Kevin likes weasel leg stew. But every bite of the stew that he eats provides him with less and less total
utility. This fact means that Kevin's marginal utility is
a. decreasing.
b. increasing, but at a decreasing rate.
c. increasing at an increasing rate.
d. not changing.
e. changing but the rate of change is not certain without more information.
____ 39. The table above shows Buffy's utility from wooden stakes and cloves of garlic. If Buffy increases her
consumption of wooden stakes from 4 to 5 stakes, her marginal utility from the 5th stake is
a. 65.
b. 7.
c. 58.
d. 7÷ 5 = 1.29
e. None of the above answers is correct.
____ 40. The table above shows Buffy's utility from wooden stakes and cloves of garlic. As Buffy uses more stakes,
the marginal utility of a stake ____ and as she uses more cloves of garlic, the marginal utility of a clove of
garlic ____.
a. increases; increases
b. increases; decreases
c. decreases; increases
d. decreases; decreases
e. does not change; does not change
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Name: ________________________
ID: A
____ 41. The table above gives Matt's utility from consuming slices of pizza. As Matt consumes more slices of pizza,
he
a. obtains greater amounts of marginal utility.
b. obtains less total utility.
c. has diminishing marginal utility.
d. has diminishing total utility.
e. has unchanging marginal utility.
____ 42. For a consumer to maximize utility, in part the consumer must
a. allocate the entire available budget.
b. make the marginal utility per dollar spent as much different as possible for all goods.
c. make the marginal utility per dollar spent as small as possible for all goods.
d. spend as little of the budget as possible.
e. Answers A and B are both correct.
____ 43. In order to maximize her utility, a consumer must
a. not allocate her entire available budget.
b. allocate her entire available budget in order to buy the combination of goods that
equalizes the total utility per dollar spent for all goods.
c. allocate her entire available budget and do nothing else because when the entire budget is
allocated, utility is maximized.
d. allocate her entire available budget in order to buy the combination of goods that
equalizes the marginal utility per dollar spent for all goods.
e. allocate her entire available budget in order to buy the combination of goods that makes
the marginal utility per dollar spent for all goods as large as possible.
____ 44. Celine will maximize her utility if she allocates all of her available budget and then consumes so that the
a. marginal utility of good X is equal to marginal utility of good Y.
b. marginal utility per dollar spent on good X is equal to marginal utility per dollar spent on
good Y.
c. total utility of good X is equal to the total utility of good Y.
d. total utility per dollar spent on good Y is equal to total utility per dollar spent on good X.
e. total utility per dollar spent on good X is equal to the marginal utility per dollar spent on
good X and the total utility per dollar spent on good Y is equal to the marginal utility per
dollar spent on good Y.
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Name: ________________________
ID: A
____ 45. For David, the marginal utility of an additional car is 2,000 units and the marginal utility of an additional
vacation is 1,000 units. David is allocating all his budget. Hence to maximize his utility, David will
a. shift his consumption from the vacation to the car.
b. shift his consumption from the car to the vacation.
c. save his budget by not spending it until he can afford both the car and the vacation.
d. buy both the car and the vacation now.
e. possibly do something, but there is not enough information available to determine what
he would do.
____ 46. If Raul's marginal utility per dollar spent on bread is 25 and the marginal utility per dollar spent on butter is
30,
a. Raul should purchase more butter and less bread to increase his total utility.
b. Raul's marginal utility of butter will fall if he buys more butter.
c. Raul's marginal utility of bread will rise if he buys less bread.
d. Only answer B and answer C are correct.
e. Answer A, answer B, and answer C are correct.
____ 47. Brenda's marginal utility per dollar from the second hamburger is 20. Her marginal utility from the third
hamburger would be
a. less than 20.
b. more than 20.
c. equal to 20.
d. not comparable to the marginal utility per dollar from the second hamburger.
e. some amount, but we need more information to determine how it compares to 20.
____ 48. Liz consumes two goods, candy bars and potato chips. Her budget is $4 per day. The price of a candy bar is
$1.00 and the price of a bag of chips is 50 cents. Her utility is in the table above. How much marginal utility
per dollar spent does the 3rd bag of potato chips give Liz?
a. 18
b. 4
c. 8
d. 36
e. We need more information to be able to answer the question.
____ 49. Liz consumes two goods, candy bars and potato chips. Her budget is $4 per day. The price of a candy bar is
$1.00 and the price of a bag of chips is 50 cents. Her utility is in the table above. For Liz to maximize her
utility, what combination of candy bars and potato chips should she eat?
a. 4 candy bars and 0 bags of potato chips
b. 3 candy bars and 2 bags of potato chips
c. 2 candy bars and 4 bags of potato chips
d. 1 candy bar and 5 bags of potato chips
e. None of the above answers are correct.
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Name: ________________________
ID: A
____ 50. The demand curve for macadamia nuts is downward sloping. This slope is because consumers maximize their
utility and an increase in the price of macadamia nuts leads to
a. no change in quantity demanded.
b. an increase in the marginal utility per dollar spent on macadamia nuts.
c. a decrease in the marginal utility per dollar spent on macadamia nuts.
d. consumers' budget lines rotating outward with their slopes changing.
e. consumers' budget lines shifting outward with no change in their slope.
____ 51. Juan's marginal utility from strawberries is 200 and his marginal utility from cream is 100. Juan spends all his
budget. The price of strawberries is $5 per pound and the price of cream is $5 per pint. To maximize his
utility, Juan should
a. buy more cream and fewer strawberries.
b. buy less cream and more strawberries.
c. buy more cream and more strawberries.
d. buy less cream and fewer strawberries.
e. change nothing because Juan is maximizing his utility now.
____ 52. Paula is currently spending all of her budget and she finds that the marginal utility per dollar spent on dresses
exceeds the marginal utility per dollar spent on hats. To maximize her utility, Paula should therefore buy
a. more dresses and fewer hats.
b. more hats and fewer dresses.
c. more dresses and hats.
d. fewer dresses and hats.
e. probably change her purchases but more information is needed to determine if she should
buy more or fewer dresses and hats.
____ 53. When making a decision between purchasing soda or pizza, a consumer compares
a. only the marginal utility derived from the purchase of each unit of the items.
b. only the prices of each item.
c. marginal utility per-dollar-consumed for each item.
d. marginal utility per dollar spent for each item.
e. the price of each item to his or her total utility from the item.
____ 54. The maximum price a consumer is willing to pay for an extra unit of a good or service when total utility is
maximized is known as
a. demand.
b. marginal benefit.
c. quantity demanded.
d. total utility.
e. marginal utility.
____ 55. One reason why the price of diamonds is so high is because the
a. marginal utility of diamonds is zero.
b. marginal utility of diamonds is high.
c. marginal utility of diamonds is low.
d. total utility of diamonds is low.
e. total utility of diamonds is high.
____ 56. Related to the paradox of value, which of the following statements is correct?
a. The marginal utility of water is enormous but the total utility is small.
b. We consume so much water so its marginal utility is enormous.
c. The marginal utility of water is small but the total utility is enormous.
d. The consumer surplus from water is small.
e. The total utility of water is equal to the marginal utility of water.
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Name: ________________________
ID: A
____ 57. If we look at the changes in the consumption of beverages during the 1990s in the United States, we see that
the consumption of
a. bottled water has increased because its price has risen.
b. beer has increased because its price has fallen.
c. coffee has increased because its price has risen.
d. bottled water has increased because its price has fallen.
e. bottled water has increased because its price has risen
____ 58. An indifference curve is a line that shows
a. combinations of goods among which a consumer is indifferent.
b. different combinations of goods a consumer is able to buy.
c. the indifference of consumers for the budget constraint.
d. Both answers B and C are correct.
e. Both answers A and C are correct.
____ 59. An indifference curve shows
a. utility maximizing levels of consumption.
b. preferred combinations of goods.
c. a diminishing marginal rate of substitution as more of both goods are consumed.
d. combinations of goods among which a person is indifferent.
e. an increasing marginal rate of substitution for a good as more of it is consumed.
____ 60. A curve that shows combinations of goods among which a consumer does not prefer one combination to
another is
a. a budget line.
b. an indifference curve.
c. a production possibilities curve.
d. a demand curve.
e. a marginal rate of substitution curve.
____ 61. Along an indifference curve the
a. marginal rate of substitution is constant.
b. consumer does not prefer one consumption point to another.
c. marginal rate of substitution is equal to 0.
d. consumer prefers some of the consumption points to others.
e. marginal rate of substitution for a good increases as more of the good is consumed.
____ 62. Which of the following statements is FALSE?
a. A consumer has only one indifference curve.
b. A consumer possesses a preference map.
c. An indifference curve is a curve that shows the combination of goods among which a
consumer is indifferent.
d. The marginal rate of substitution is equal to the magnitude of the slope of the indifference
curve.
e. Diminishing marginal rate of substitution means that the marginal rate of substitution
decreases as more of the good is consumed.
____ 63. A preference map is a
a. series of indifference curves.
b. positively sloped series of curves, which reflect a consumer's preferences.
c. contour map of a consumer's budget.
d. map showing how much a consumer prefers one good for another.
e. None of the above answers is correct.
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Name: ________________________
ID: A
____ 64. The rate at which a person is willing to give up a gallon of gasoline to get one more pound of coffee, and
remain on the same indifference curve, is called his or her
a. relative cost of coffee in terms of gasoline.
b. indifference cost of coffee.
c. personal price of coffee.
d. marginal rate of substitution.
e. indifference price of coffee.
____ 65. As Sam moves rightward along his indifference curve, his marginal rate of substitution for the good on the
horizontal axis
a. is diminishing.
b. is increasing.
c. remains constant.
d. shows the change in his income.
e. first increases and then diminishes.
____ 66. Suppose the quantity of burgers is measured on the horizontal axis and the quantity of bags of French fries is
measured on the vertical axis. The marginal rate of substitution for burgers is
a. the ratio of burgers consumed to bags of fries consumed.
b. the ratio of bags of fries consumed to burgers consumed.
c. the rate at which a person is willing to give up burgers to get more bags of fries while
staying on the same indifference curve.
d. the rate at which a person is willing to give up bags of fries to get more burgers while
staying on the same indifference curve.
e. the number of burgers consumed minus the number of bags of fries consumed.
____ 67. A point where the budget line is just touching an indifference curve at one point is
a. the least affordable point.
b. the best affordable point.
c. on the lowest attainable indifference curve.
d. Both answers B and C are correct.
e. Both answers A and C are correct.
____ 68. A consumer is in equilibrium when the
a. consumer is buying any combination of goods and services on his or her budget line.
b. consumer is buying the combination of goods and services on the budget line and on the
highest attainable indifference curve.
c. marginal rate of substitution is as small as possible.
d. marginal rate of substitution is as large as possible.
e. marginal rate of substitution exceeds the relative price of the two goods by as much as
possible.
____ 69. Luke enjoys eating tuna sashimi and drinking Pepsi. His consumer equilibrium occurs where his budget line
a. just touches the lowest indifference curve at one point.
b. just touches the highest indifference curve at one point.
c. touches every indifference curve.
d. is below every indifference curve.
e. More information about Luke's budget is needed to determine his consumer equilibrium.
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Name: ________________________
ID: A
____ 70. The point where an indifference curve just touches the budget line at one point
a. is the best affordable point.
b. is where the marginal rate of substitution exceeds the relative price by as much as
possible.
c. is a point on the consumer's supply of spending curve.
d. cannot be possible because indifference curves always cross the budget line at two points.
e. None of the above answers are correct
____ 71. In a budget line/indifference curve diagram, at the consumer's equilibrium at the best affordable point,
a. any movement upward or downward on the budget line will move the consumer to a less
preferred point.
b. any movement to the northeast to higher indifference curves moves the consumer to a
less preferred point.
c. the slope of the budget line exceeds the marginal rate of substitution by as much as
possible.
d. the budget line has a positive slope and the indifference curve has a negative slope.
e. the budget line has a negative slope and the indifference curve has a positive slope.
____ 72. Which of the following is NOT necessary for a consumer to be at his or her best affordable point of
consumption?
a. The consumer chooses a bundle of goods and services that lies on his or her budget line.
b. The consumer is on his or her highest attainable indifference curve.
c. When only two goods are consumed, the consumer chooses equal amounts of both.
d. The marginal rate of substitution between two goods is equal to the relative price of those
two goods.
e. The indifference curve is tangent to the budget line.
____ 73. Roger earns $60 per month, which he spends on frisbees and CDs. The price of a frisbee is $6, and the price
of a CD is $12. Which of the following combinations of frisbees and CDs is most likely to be his best
affordable point?
a. 8 frisbees and 1 CD
b. 5 frisbees and 2 CDs
c. 3 frisbees and 4 CDs
d. 2 frisbees and 5 CDs
e. 2 frisbees and 2 CDs
____ 74. In an indifference curve/budget line diagram, generally when the price of a good increases, the consumer
purchases
a. less of the good and moves to a lower indifference curve.
b. less of the good and moves to a higher indifference curve.
c. more of the good and moves to a higher indifference curve.
d. more of the good and moves to a lower indifference curve.
e. the same amount of the good and moves to a higher indifference curve.
____ 75. Moving down along an indifference curve,
a. the price of the good measured on the vertical axis decreases.
b. total utility decreases.
c. the marginal rate of substitution for the good on the horizontal axis decreases.
d. the slope of the budget line decreases.
e. the consumer increasingly prefers the new consumption points to the old consumption
points.
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Name: ________________________
ID: A
____ 76. In the above figure, I is an indifference curve. Moving from point a to point b,
a. the marginal rate of substitution for books decreases.
b. the budget line rotates inward.
c. the budget line rotates outward.
d. there is diminishing total utility.
e. the marginal rate of substitution for books increases.
____ 77. Consider an indifference curve for sodas and pizza, drawn in a figure with sodas measured along the
horizontal axis. Moving downward along the indifference curve, the
a. marginal utility per dollar for sodas must increase.
b. marginal utility per dollar for pizza must increase.
c. consumer remains indifferent among the different combinations of soda and pizza.
d. the level of total utility must change.
e. marginal rate of substitution is constant.
____ 78. ____ leads to a decrease in marginal utility per dollar for soda.
a. Increasing marginal utility
b. The diminishing marginal rate of substitution as fewer sodas are consumed
c. An outward shift in the indifference curves for soda
d. An increase in the price of soda
e. A fall in the price of soda
____ 79. Suppose Lizzie consumes soda and pizza. If the last bottle of soda she drinks provides 100 units of utility per
dollar while the last slice of pizza she eats provides 300 units of utility per dollar,
a. the demand curve for soda must have shifted outward.
b. the demand curve for pizza must have shifted inward.
c. Lizzie should buy more pizza and less soda to maximize her utility.
d. the indifference curve for soda and pizza must have rotated inward.
e. the marginal rate of substitution between soda and pizza equals 3.
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Name: ________________________
ID: A
____ 80. Billy has a $20 budget to spend on yogurt and cereal. Yogurt cost $2 each and cereal costs $4 each. Suppose
that the quantity of yogurt is on the vertical axis and the quantity of cereal is on the horizontal axis. If the
price of yogurt increases, which of the following is true?
i.
The budget line rotates outward.
ii. Yogurt's marginal utility per dollar decreases.
iii. The relative price of yogurt increases.
a.
b.
c.
d.
e.
i and ii
i and iii
ii and iii
i, ii, and iii
Only i
16
ID: A
Chapter 11 study questions
Answer Section
MULTIPLE CHOICE
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B
PTS:
Checkpoint 11.1
B
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Checkpoint 11.1
B
PTS:
Checkpoint 11.1
C
PTS:
Checkpoint 11.1
B
PTS:
Checkpoint 11.1
D
PTS:
Checkpoint 11.1
C
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Checkpoint 11.1
A
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Checkpoint 11.1
A
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Checkpoint 11.1
C
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Checkpoint 11.1
C
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Checkpoint 11.1
A
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Checkpoint 11.1
C
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Checkpoint 11.1
D
PTS:
Checkpoint 11.1
B
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Checkpoint 11.1
A
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Checkpoint 11.1
A
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Checkpoint 11.1
D
PTS:
Checkpoint 11.1
D
PTS:
Checkpoint 11.1
C
PTS:
Checkpoint 11.1
D
PTS:
Checkpoint 11.1
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1
Level 1: Definition
Budget line
Level 1: Definition
Budget line
Level 1: Definition
Budget line
Level 1: Definition
Budget line
Level 2: Using definitions
Budget line
Level 2: Using definitions
Budget line
Level 3: Using models
Budget line
Level 3: Using models
Budget line
Level 3: Using models
Budget line
Level 2: Using definitions
Budget line
Level 3: Using models
Budget line
Level 3: Using models
Budget line
Level 3: Using models
Budget line
Level 3: Using models
Budget line
Level 3: Using models
Budget line
Level 3: Using models
Budget line
Level 2: Using definitions
Budget line | Change in price
Level 2: Using definitions
Budget line | Change in price
Level 2: Using definitions
Budget line | Change in price
Level 2: Using definitions
Budget line | Change in price
Level 2: Using definitions
Budget line | Change in prices
ID: A
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44. ANS:
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A
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.1
TOP: Budget line | Change in income
A
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.1
TOP: Budget line | Change in income
B
PTS: 1
DIF: Level 3: Using models
Checkpoint 11.1
TOP: Budget line | Change in income
C
PTS: 1
DIF: Level 3: Using models
Checkpoint 11.1
TOP: Budget line | Change in price
A
PTS: 1
DIF: Level 3: Using models
Checkpoint 11.1
TOP: Budget line | Change in price
B
PTS: 1
DIF: Level 3: Using models
Checkpoint 11.1
TOP: Budget line | Change in price
D
PTS: 1
DIF: Level 3: Using models
Checkpoint 11.1
TOP: Budget line | Change in income
A
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.1
TOP: Relative price
C
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.1
Eye on the U.S. economy | Some changes in relative prices
E
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.1
Eye on the U.S. economy | Some changes in relative prices
B
PTS: 1
DIF: Level 1: Definition
Checkpoint 11.2
TOP: Utility
E
PTS: 1
DIF: Level 1: Definition
Checkpoint 11.2
TOP: Utility
D
PTS: 1
DIF: Level 1: Definition
Checkpoint 11.2
TOP: Utility
C
PTS: 1
DIF: Level 1: Definition
Checkpoint 11.2
TOP: Marginal utility
A
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.2
TOP: Marginal utility
B
PTS: 1
DIF: Level 1: Definition
Checkpoint 11.2
TOP: Diminishing marginal utility
A
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.2
TOP: Diminishing marginal utility
B
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.2
TOP: Marginal utility
D
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.2
TOP: Diminishing marginal utility
C
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.2
TOP: Diminishing marginal utility
A
PTS: 1
DIF: Level 1: Definition
Checkpoint 11.2
TOP: Maximizing utility
D
PTS: 1
DIF: Level 1: Definition
Checkpoint 11.2
TOP: Maximizing utility
B
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.2
TOP: Maximizing utility
2
ID: A
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57. ANS:
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TOP:
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67. ANS:
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E
PTS: 1
DIF: Level 3: Using models
Checkpoint 11.2
TOP: Maximizing utility
E
PTS: 1
DIF: Level 3: Using models
Checkpoint 11.2
TOP: Maximizing utility
A
PTS: 1
DIF: Level 3: Using models
Checkpoint 11.2
TOP: Equalize marginal utility per dollar spent
C
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.2
TOP: Marginal utility per dollar spent
C
PTS: 1
DIF: Level 3: Using models
Checkpoint 11.2
TOP: Maximizing utility
C
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.2
TOP: Marginal utility and the demand curve
B
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.2
TOP: Marginal analysis
A
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.2
TOP: Marginal analysis
D
PTS: 1
DIF: Level 3: Using models
Checkpoint 11.2
TOP: Marginal analysis
B
PTS: 1
DIF: Level 1: Definition
Checkpoint 11.3
TOP: Consumer efficiency
B
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.3
TOP: Paradox of value
C
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.3
TOP: Paradox of value
D
PTS: 1
DIF: Level 2: Using definitions
Checkpoint 11.3
Eye on the U.S. economy | Rational choices in the beverage markets
A
PTS: 1
DIF: Level 1: Definition
Chapter 11 Appendix - Checkpoint 1
TOP: Indifference curve
D
PTS: 1
DIF: Level 1: Definition
Chapter 11 Appendix - Checkpoint 1
TOP: Indifference curve
B
PTS: 1
DIF: Level 1: Definition
Chapter 11 Appendix - Checkpoint 1
TOP: Indifference curve
B
PTS: 1
DIF: Level 1: Definition
Chapter 11 Appendix - Checkpoint 1
TOP: Indifference curve
A
PTS: 1
DIF: Level 1: Definition
Chapter 11 Appendix - Checkpoint 1
TOP: Preference map
A
PTS: 1
DIF: Level 1: Definition
Chapter 11 Appendix - Checkpoint 1
TOP: Preference map
D
PTS: 1
DIF: Level 1: Definition
Chapter 11 Appendix - Checkpoint 2
TOP: Marginal rate of substitution
A
PTS: 1
DIF: Level 2: Using definitions
Chapter 11 Appendix - Checkpoint 2
TOP: Marginal rate of substitution
D
PTS: 1
DIF: Level 3: Using models
Chapter 11 Appendix - Checkpoint 2
TOP: Marginal rate of substitution
B
PTS: 1
DIF: Level 1: Definition
Chapter 11 Appendix - Checkpoint 3
TOP: Consumer equilibrium
3
ID: A
68. ANS:
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TOP:
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79. ANS:
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80. ANS:
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B
PTS: 1
DIF:
Chapter 11 Appendix - Checkpoint 3
B
PTS: 1
DIF:
Chapter 11 Appendix - Checkpoint 3
A
PTS: 1
DIF:
Chapter 11 Appendix - Checkpoint 3
A
PTS: 1
DIF:
Chapter 11 Appendix - Checkpoint 3
C
PTS: 1
DIF:
Chapter 11 Appendix - Checkpoint 3
A
PTS: 1
DIF:
Chapter 11 Appendix - Checkpoint 3
Consumer equilibrium | Affordable point
A
PTS: 1
DIF:
Chapter 11 Appendix - Checkpoint 4
C
PTS: 1
DIF:
Integrative
TOP: Integrative
A
PTS: 1
DIF:
Integrative
TOP: Integrative
C
PTS: 1
DIF:
Integrative
TOP: Integrative
D
PTS: 1
DIF:
Integrative
TOP: Integrative
C
PTS: 1
DIF:
Integrative
TOP: Integrative
C
PTS: 1
DIF:
Integrative
TOP: Integrative
4
Level 2: Using definitions
TOP: Consumer equilibrium
Level 2: Using definitions
TOP: Consumer equilibrium
Level 1: Definition
TOP: Consumer equilibrium
Level 2: Using definitions
TOP: Consumer equilibrium
Level 2: Using definitions
TOP: Consumer equilibrium
Level 4: Applying models
Level 3: Using models
TOP: Deriving the demand curve
Level 2: Using definitions
Level 3: Using models
Level 3: Using models
Level 3: Using models
Level 3: Using models
Level 3: Using models