Question 1

Given a particular market demand curve,consumer surplus is

Accepted Answer

A)  less the lower the price and the smaller the output.
B)  less the lower the price and the larger the output.
C)  greater the higher the price and the smaller the output.
D)  greater the lower the price and the smaller the output.
E)  greater the lower the price and the larger the output.F) All of the above
G) A) and E)

Question 2

When a consumer's marginal rate of substitution between X and Y is equal to the ratio of prices for X and Y,and when the consumer is spending all available income,then

Accepted Answer

A)  the budget line is tangent to an indifference curve.
B)  the consumer is not maximizing his utility.
C)  a higher indifference curve can be reached given the existing budget line.
D)  the budget line is tangent to the indifference curve at all quantities of X and Y.
E)  all budget lines are tangent to all indifference curves.F) B) and D)
G) A) and B)

Question 3

FIGURE 6-1
-Refer to Figure 6-1.The marginal utility of the second unit of the good consumed is

Accepted Answer

A)  10.
B)  20.
C)  30.
D)  40.
E)  50.F) B) and E)
G) B) and D)

Question 4

A demand curve for a normal good is downward sloping due to

Accepted Answer

A)  the income effect.
B)  the substitution effect.
C)  the combination of income and substitution effects.
D)  neither the substitution effect nor the income effect.
E)  the Giffen effect.F) C) and E)
G) A) and E)

Question 5

The figures below show Chris's consumption of specialty coffee per week.  FIGURE 6-10
-Refer to Figure 6-10.The two diagrams in Figure 6-10 are showing

Accepted Answer

A)  the change in Chris's preferences toward specialty coffee.
B)  that Chris is indifferent between bundles A,B and C.
C)  the derivation of Chris's demand curve for specialty coffee.
D)  that Chris is indifferent between points D,E and F.
E)  the derivation of Chris's indifference curve for specialty coffee.F) B) and E)
G) None of the above

Question 6

If all consumers in an economy have maximized their utility,and they face a given set of market prices,then each consumer will have identical

Accepted Answer

A)  total utilities for each good.
B)  marginal utilities for each good.
C)  marginal utilities per unit of each good.
D)  ratios of marginal utility to price for each good.
E)  consumption of each good.F) B) and E)
G) A) and B)

Question 7

FIGURE 6-6
-Refer to Figure 6-6.Suppose the market price is p*.In this case,the total value consumers place on consuming Q* units is outlined by the area

Accepted Answer

A)  BCD.
B)  ABD.
C)  ADE.
D)  ACDE.
E)  ABDF.F) B) and C)
G) A) and B)

Question 8

The table below shows the total value (in dollars) that Andrew gets from playing 9-hole rounds of golf.
  TABLE 6-3
-Refer to Table 6-3.If the price of a 9-hole round of golf is $9,then Andrew will play ________ rounds per month.

Accepted Answer

A)  2
B)  3
C)  4
D)  5
E)  6F) C) and D)
G) B) and C)

Question 9

6A-4 Deriving the Demand Curve
-Refer to Figure 6-9.In part (i) ,the line joining points A,B,and C is known as ________,which shows how ________.

Accepted Answer

A)  a price-consumption line; consumption changes as relative prices change,with money income constant
B)  an income-consumption line; consumption changes as income changes,with relative prices held constant
C)  a price-consumption line; consumption changes as money income and relative prices change
D)  an income-consumption line; consumption changes with changing relative prices and constant income
E)  an indifference map; the value of various combinations of two goods changesF) A) and E)
G) B) and D)

Question 10

FIGURE 6-1
-Refer to Figure 6-1.The consumer's total utility is

Accepted Answer

A)  increasing at an increasing rate.
B)  increasing at a decreasing rate.
C)  decreasing at an increasing rate.
D)  decreasing at a decreasing rate.
E)  constant.F) D) and E)
G) B) and D)

Question 11

Assume you are consuming two goods,X and Y.X and Y are both normal goods but they are not close complements.The price of good X increases but the price of Y remains unchanged.However,you are given enough additional income to ensure that your utility remains unchanged.What happens to your consumption of good X?

Accepted Answer

A)  it increases
B)  it stays the same
C)  it increases or decreases
D)  it decreases
E)  it increases over the long runF) A) and E)
G) D) and E)

Question 12

FIGURE 6-2
-Refer to Figure 6-2.Suppose that the price of Y is $1 and the consumer's income is $10.Initially,the price of X is $2 and the consumer is buying 4 units of good Y.If the price of X then falls to $1,which of the following pairs of quantities of X correctly completes the demand schedule below? Price of X: $1 $2
Quantity Demanded of X: ________ ________

Accepted Answer

A)  2; 4
B)  4; 4
C)  4; 3
D)  6; 3
E)  6; 4F) None of the above
G) A) and E)

Question 13

The marginal rate of substitution

Accepted Answer

A)  always has a positive algebraic value.
B)  is constant as one moves along a particular indifference curve.
C)  is the amount of one good the consumer is willing to give up in exchange for another so as to keep total satisfaction unchanged.
D)  is the amount of one good the consumer is willing to give up in exchange for another so as to keep total expenditure unchanged.
E)  is equal to the price ratio on the budget line.F) A) and B)
G) C) and E)

Question 14

6A-5 Income and Substitution Effects 1.The income and substitution effects of the reduction in the price of X are represented as follows: A) the distance Q1d shows the substitution effect and the distance Q2e shows the income effect. B) the distance de shows the income effect and the distance cd shows the substitution effect. C) the distance Q1Q2 shows the income effect and the distance Q2Q3 shows the substitution effect. D) the distance Q1Q2 shows the substitution effect and the distance Q2Q3 shows the income effect. E) the distance Q1Q3 shows the substitution effect and the distance Q2Q3 shows the income effect." class="answers-bank-image d-inline" rel="preload" > FIGURE 6-11
-Refer to Figure 6-11.Suppose the consumer begins at E1.The income and substitution effects of the reduction in the price of X are represented as follows:

Accepted Answer

A)  the distance Q1d shows the substitution effect and the distance Q2e shows the income effect.
B)  the distance de shows the income effect and the distance cd shows the substitution effect.
C)  the distance Q1Q2 shows the income effect and the distance Q2Q3 shows the substitution effect.
D)  the distance Q1Q2 shows the substitution effect and the distance Q2Q3 shows the income effect.
E)  the distance Q1Q3 shows the substitution effect and the distance Q2Q3 shows the income effect.F) D) and E)
G) B) and C)

Question 15

In which of the following situations will an individual's purchasing power be unaffected?

Accepted Answer

A)  all absolute prices fall by 15% and money income falls by 15%
B)  all relative prices fall by 15% and money income falls by 15%
C)  all relative prices rise by 15% and money income falls by 15%
D)  all absolute prices remain constant and money income falls by 15%
E)  all relative prices remain constant and money income rises by 15%F) None of the above
G) B) and E)

Question 16

Bjorn is a student with a monthly budget of $500,which he allocates between transportation services and "all other goods." Suppose the price of transportation is $5 per unit,and the price of "all other goods" is $20 per unit.The marginal utility he currently receives from his consumption of transportation services is 60.What is his marginal utility from the consumption of "all other goods" if he is maximizing his utility?

Accepted Answer

A)  5
B)  20
C)  25
D)  200
E)  240F) D) and E)
G) B) and E)

Question 17

FIGURE 6-2
-Refer to Figure 6-2.Suppose the price of X is $2,the price of Y is $1,and the consumer's income is $10.The consumer is currently buying 4 units of good X and 2 units of good Y.In order to maximize his utility,he should

Accepted Answer

A)  make no changes - he is already maximizing his total utility.
B)  buy the same amount of X but less Y.
C)  buy more of X but the same amount Y.
D)  buy more of X and less Y.
E)  buy more Y and less X.F) B) and E)
G) C) and D)

Question 18

The table below shows the total value (in dollars) that Andrew gets from playing 9-hole rounds of golf.
  TABLE 6-3
-Refer to Table 6-3.If the price of a 9-hole round of golf is $19,then Andrew will play ________ rounds per month.

Accepted Answer

A)  2
B)  3
C)  4
D)  5
E)  6 or moreF) All of the above
G) C) and E)

Question 19

If money income is reduced by half,and the prices of all goods consumed by the household are reduced by half,the household's budget line will

Accepted Answer

A)  not change.
B)  shift inward.
C)  shift outward.
D)  become steeper.
E)  become flatter.F) B) and D)
G) B) and E)

Question 20

The table below shows the total value (in dollars) that Andrew gets from playing 9-hole rounds of golf.
  TABLE 6-3
-Refer to Table 6-3.Andrew values the 4th round of golf at a marginal value of

Accepted Answer

A)  $16.
B)  $92.
C)  $108.
D)  $310.
E)  $430.F) B) and E)
G) B) and D)

Exam 6: Consumer Behaviour

6A-4 Deriving the Demand Curve -Refer to Figure 6-9.In part (i) ,the line joining points A,B,and C is known as ,which shows how .

Correct Answer
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A demand curve for a normal good is downward sloping due to

Correct Answer
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FIGURE 6-6 -Refer to Figure 6-6.Suppose the market price is p.In this case,the total value consumers place on consuming Q units is outlined by the area

Correct Answer
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If money income is reduced by half,and the prices of all goods consumed by the household are reduced by half,the household's budget line will

Correct Answer
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If all consumers in an economy have maximized their utility,and they face a given set of market prices,then each consumer will have identical

Correct Answer
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Given a particular market demand curve,consumer surplus is

Correct Answer
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FIGURE 6-1 -Refer to Figure 6-1.The marginal utility of the second unit of the good consumed is

Correct Answer
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The figures below show Chris's consumption of specialty coffee per week. FIGURE 6-10 -Refer to Figure 6-10.The two diagrams in Figure 6-10 are showing

Correct Answer
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FIGURE 6-2 -Refer to Figure 6-2.Suppose the price of X is $2,the price of Y is $1,and the consumer's income is $10.The consumer is currently buying 4 units of good X and 2 units of good Y.In order to maximize his utility,he should

Correct Answer
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6A-5 Income and Substitution Effects FIGURE 6-11 -Refer to Figure 6-11.Suppose the consumer begins at E₁.The income and substitution effects of the reduction in the price of X are represented as follows:

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In which of the following situations will an individual's purchasing power be unaffected?

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The marginal rate of substitution

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FIGURE 6-1 -Refer to Figure 6-1.The consumer's total utility is

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The table below shows the total value (in dollars) that Andrew gets from playing 9-hole rounds of golf. TABLE 6-3 -Refer to Table 6-3.If the price of a 9-hole round of golf is $9,then Andrew will play ________ rounds per month.

Correct Answer
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The table below shows the total value (in dollars) that Andrew gets from playing 9-hole rounds of golf. TABLE 6-3 -Refer to Table 6-3.If the price of a 9-hole round of golf is $19,then Andrew will play ________ rounds per month.

Correct Answer
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When a consumer's marginal rate of substitution between X and Y is equal to the ratio of prices for X and Y,and when the consumer is spending all available income,then

Correct Answer
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The table below shows the total value (in dollars) that Andrew gets from playing 9-hole rounds of golf. TABLE 6-3 -Refer to Table 6-3.Andrew values the 4th round of golf at a marginal value of

Correct Answer
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Exam 6: Consumer Behaviour

6A-4 Deriving the Demand Curve -Refer to Figure 6-9.In part (i) ,the line joining points A,B,and C is known as ________,which shows how ________.

Correct AnswerverifiedShow Answer

A demand curve for a normal good is downward sloping due to

Correct AnswerverifiedShow Answer

FIGURE 6-6 -Refer to Figure 6-6.Suppose the market price is p*.In this case,the total value consumers place on consuming Q* units is outlined by the area

Correct AnswerverifiedShow Answer

If money income is reduced by half,and the prices of all goods consumed by the household are reduced by half,the household's budget line will

Correct AnswerverifiedShow Answer

If all consumers in an economy have maximized their utility,and they face a given set of market prices,then each consumer will have identical

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Given a particular market demand curve,consumer surplus is

Correct AnswerverifiedShow Answer

FIGURE 6-1 -Refer to Figure 6-1.The marginal utility of the second unit of the good consumed is

Correct AnswerverifiedShow Answer

The figures below show Chris's consumption of specialty coffee per week. FIGURE 6-10 -Refer to Figure 6-10.The two diagrams in Figure 6-10 are showing

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

FIGURE 6-2 -Refer to Figure 6-2.Suppose the price of X is $2,the price of Y is $1,and the consumer's income is $10.The consumer is currently buying 4 units of good X and 2 units of good Y.In order to maximize his utility,he should

Correct AnswerverifiedShow Answer

6A-5 Income and Substitution Effects FIGURE 6-11 -Refer to Figure 6-11.Suppose the consumer begins at E1.The income and substitution effects of the reduction in the price of X are represented as follows:

Correct AnswerverifiedShow Answer

In which of the following situations will an individual's purchasing power be unaffected?

Correct AnswerverifiedShow Answer

The marginal rate of substitution

Correct AnswerverifiedShow Answer

FIGURE 6-1 -Refer to Figure 6-1.The consumer's total utility is

Correct AnswerverifiedShow Answer

The table below shows the total value (in dollars) that Andrew gets from playing 9-hole rounds of golf. TABLE 6-3 -Refer to Table 6-3.If the price of a 9-hole round of golf is $9,then Andrew will play ________ rounds per month.

Correct AnswerverifiedShow Answer

The table below shows the total value (in dollars) that Andrew gets from playing 9-hole rounds of golf. TABLE 6-3 -Refer to Table 6-3.If the price of a 9-hole round of golf is $19,then Andrew will play ________ rounds per month.

Correct AnswerverifiedShow Answer

When a consumer's marginal rate of substitution between X and Y is equal to the ratio of prices for X and Y,and when the consumer is spending all available income,then

Correct AnswerverifiedShow Answer

The table below shows the total value (in dollars) that Andrew gets from playing 9-hole rounds of golf. TABLE 6-3 -Refer to Table 6-3.Andrew values the 4th round of golf at a marginal value of

Correct AnswerverifiedShow Answer

6A-4 Deriving the Demand Curve -Refer to Figure 6-9.In part (i) ,the line joining points A,B,and C is known as ,which shows how .

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FIGURE 6-6 -Refer to Figure 6-6.Suppose the market price is p.In this case,the total value consumers place on consuming Q units is outlined by the area

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6A-5 Income and Substitution Effects FIGURE 6-11 -Refer to Figure 6-11.Suppose the consumer begins at E₁.The income and substitution effects of the reduction in the price of X are represented as follows:

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