Q1. How is utilitydefined?

A.

the change in benefit from producing one additional unit of a good.

B.

the satisfaction experienced from consuming a good.

C.

ease of use.

D.

government provided goods like electricity.

Q2. Consumers' ability to purchase a good or service is limitedby:

A.

their income only.

B.

their preferences.

C.

the prices for the goods or services only.

D.

both the prices for the goods or services and their income.

Q4. Q3. Suppose Carolyn is on a fixed monthly income of$200 to spend on food while she is in medical school.Further, suppose the price of a singleserving macaroni and cheese is$4 and the price of a baguette is$2. Which one of the following consumption combinations is possible given these prices andincome?

A.

20 macaroni andcheeses, 100 baguettes

B.

20 macaroni andcheeses, 60 baguettes

C.

40 macaroni andcheeses, 50 baguettes

D.

15 macaroni andcheeses, 80 baguettes

Q5. A decrease in aconsumer's budget set can be causedby:

A.

an increase in income.

B.

a change in preferences.

C.

a decrease in prices.

D.

an increase in prices.

Q6. How is utilitydefined?

A.

the change in benefit from producing one additional unit of a good.

B.

the satisfaction experienced from consuming a good.

C.

ease of use.

D.

government provided goods like electricity.

Q7. Aconsumer's budgetset:

A.

is the set of all affordable combinations of two goods.

B.

includes only combinations of two goods that exhaust the budget.

C.

includes only combinations of two goods that leave the consumer with leftover money.

D.

Both A and C are correct answers.

Q8. In a budgetline, an increase in income is represented graphicallyby:

A.

a change in the slope of an indifference curve.

B.

a rightward parallel shift of the budget line.

C.

a change in the slope of the budget line.

D.

a leftward parallel shift of the budget line.

Q9. Which of the following statements about marginal utility is correct?

A.

It is the change in total utility resulting from getting one additional unit of a good.

B.

As consumption of a particular goodincreases, marginal utility decreases.

C.

It is the satisfaction experienced from consuming a good.

D.

Both A and B are correct.

Q10. If Joshua gets 200 utils from consuming three slices ofpizza, 220 utils from consuming four slices ofpizza, and 230 utils from consuming five slices ofpizza, thenJoshua's marginal utility from the fifth slice of pizzais:

A.

30 utils.

B.

230 utils.

C.

20 utils.

D.

10 utils.

Q11. Diminishing marginal utilityimplies:

A.

as the consumption of a good increases total utility decreases.

B.

as the consumption of a good increases marginal utility decreases.

C.

as the consumption of a good increases total utility increases.

D.

as the consumption of a good increases marginal utility increases.

Q12. Suppose that for George the marginal benefit per dollar spent on tuna is less than the marginal benefit per dollar spent on ham. The consumer can always increase his utility bybuying:

A.

more tuna and less ham.

B.

less tuna and more ham.

C.

more of both goods.

D.

The consumer is already maximizing utility.

Q13. A consumer should increase her consumption of good Y relative to good Xif:

A.

the marginal benefit per dollar spent on good X is the same as the marginal benefit per dollar spent on good Y.

B.

the marginal benefit per dollar spent on good X is smaller than the marginal benefit per dollar spent on good Y.

C.

the marginal benefit per dollar spent on good X is greater than the marginal benefit per dollar spent on good Y.

D.

none of the above

Q14. Recall the Application about how marginal utility changes with the quantity consumed to answer the following question. Neuroscientists offered subjects in an experiment varying monetaryrewards, and observed the neural activity in asubject's striatum region of the brain.

Recall the Application. The results of the study mentioned in the Application lend supportto:

A.

increasing marginal utility of rewards.

B.

the law of diminishing marginal utility of rewards.

C.

the law of supply.

D.

the law of averages.

Q15. Utility is the benefit a consumer gets from consuming a good.

True

False

Q16. The change in the quantity consumed that is caused by a change in realincome, with the relative prices heldconstant, refers to the

A.

income effect.

B.

substitution effect.

C.

equimarginal rule.

D.

law of diminishing marginal utility.