Question 1

The marginal rate of substitution assumes that:

A. prices remain unchanged.

B. total utility remains unchanged.

C. money income remains unchanged.

D. the quantities of both goods remain unchanged.

Question 2

If combinationAlies on a higher indifference curve than combinationBand combinationBlies on a higher indifference curve than combinationC,it must be that the total utility associated with combinationAis ________ the total utility associated with combinationC.

A. equal to

B. more than or equal to

C. more than

D. less than

Question 3

Assume that two combinations of two goods yield the same level of satisfaction. We can conclude that these combinations are on:

A. different indifference curves.

B. the same price line.

C. the same budget constraint.

D. the same indifference curve.

Question 4

Faced with two goods to buy, diamonds and silver, a utility-maximizing individual will buy according to which of the following statements?

A. Marginal utility of diamonds equals marginal utility of silver.

B. The price of diamonds equals the price of silver.

C. Marginal utility of diamonds divided by price of diamonds equals marginal utility of silver divided by price of silver.

D. The price of diamonds divided by marginal utility of silver equals the price of silver divided by marginal utility of diamonds.

Question 5

Assume that the marginal utilities for the first three units of a good consumed are 200, 150, and 125, respectively. The total utility for the first unit is:

A. 150.

B. 200.

C. 125.

D. 350.

Question 6

An indifference curve typically:

A. shows combinations of two goods that yield equal money income.

B. slopes downward.

C. slopes upward.

D. has a concave shape.

Question 7

A consumer has a budget of $16 and wishes to purchase both productsAandB. The price of productAis $1.30, while the price of productBis $0.94. The marginal utilities of the two products are provided in the table below.

Q MU_AMU_B

1 19 26

2 17 24

3 15 22

4 13 20

5 11 18

6 9 16

7 7 14

8 5 12

9 3 10

10 1 8

The optimal bundle is ____ of productAand ____ of productB.

A. 6 ; 10

B. 6 ; 11

C. 4 ; 11

D. 11 ; 9

E. 5 ; 10

Question 8

The consumer's budget constraint does not limit the amount of a product that a consumer can buy.

True

False

Question 9

If a budget rotates (does not shift) while the total amount of the budget stays the same, then the price of only one product changed.

True

False

Question 10

A consumer chooses to buy a product while thinking about the price of the product, as well as the utility they will receive from the product.

True

False

Question 11

If the prices of two products do not change and the amount of the budget stays the same, then the budget constraint shifts without a change in the slope.

True

False

Question 12

If total utility decreases from additional units of a product, then these units will have a negative marginal utility.

True

False

Question 13

The difference between the price of one product and the total budget is referred to as a "util."

True

False

Question 14

Rudolph has a budget of $44 to spend on rice (R) and chicken nuggets (N). The price of rice is $2.75 per pound, and the price of chicken nuggets is $13.75 per unit. The table below shows the marginal utilities that the consumer gets from the different quantities of both.

Q MU_RMU_N

1 17 13

2 14 10

3 11 7

4 8 4

5 5 1

6 2 0

7 0 0

8 0 0

9 0 0

10 0 0

What is the optimal bundle of rice and chicken nuggets (Q_R,Q_N) for Rudolph?(Q_R,Q_N) =

A. (7, 2)

B. (6, 2)

C. (7, 3)

D. (5, 3)

E. (3, 1)

Question 15

Question 15 1 points Save Answer Consider a situation in which you have $27 to spend on two products, carrots and cucumbers. Assume that the price of carrots is $7 and the price of cucumbers is $4. If the consumer purchases 1 units of carrots, then the consumer can (at most) purchase units of cucumbers. This bundle is indicated by point A in the figure below. Note: The answer may be rounded to three decimal places. cucumbers A 3 2 1 carrots N- A. 5.000 OB. 4.000 OC. 2.273 OD. 3.333 OE. 2.500