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Exam 7: Consumer Behavior

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Question 41

Multiple Choice

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A budget constraint:

A) shows different bundles of goods that all yield the same total utility.
B) shows different bundles of goods that all cost the same amount.
C) shows different bundles of goods that all maximize an individual's utility.
D) shows how much income is needed to maximize total utility.

E) A) and D)
F) C) and D)

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Question 42

Multiple Choice

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Quinn's income to spend each month on two normal goods,bowling or eating out,is $100.It costs $10 to bowl for the night,and it costs $20 for Quinn to eat at a restaurant.Quinn currently consumes four nights of bowling and three meals at a restaurant.If the price of bowling increased to $15,the income effect would predict:

A) Quinn would consume less of each good.
B) Quinn would consume more of each good.
C) Quinn would consume more bowling and less meals out.
D) Quinn would consume less bowling and more meals out.

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

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Question 43

Multiple Choice

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After browsing several pairs of shoes,Bob buys a pair of Nike running shoes.Economists would say that:

In general,an increase in the price of a good:

In general,changes in the price of a good:

Quinn's income to spend on either bowling or eating out each month is $100.It costs $10 to bowl for the night and it costs $20 for Quinn to eat at a restaurant.A point on Quinn's budget constraint would be:

This graph shows three different budget constraints: A,B,andC. If Gary has budget constraint A,and the price of milk is $3 a gallon,what is Gary's income?

A budget constraint is:

Sam has $400 a month to spend on either tanning sessions or rounds of golf.Tanning sessions are $20 each,and a round of golf is $50.A point on Sam's budget constraint would be:

Mary makes a New Year's resolution to lose weight.On January 3^rd,Mary decides to go to Ben & Jerry's for ice cream instead of going to the gym.Using the concept of revealed preference,we can conclude that Mary:

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. Considering the information in the table shown,if Jack consumes 2 popsicles and 2 ice cream cones:

The substitution effect can be defined as:

Grace has just eaten a slice of pizza and received a utility of 8.If she chooses to eat a second slice:

Utility is:

The Golden Rule "Do unto others as you would have done unto you" is an example of the economic concept of:

Katie just finished a bottle of Coke.Using the concept of marginal utility,we can say:

The concept of utility maximization:

Ethan enjoys buying books and going to the movies.He has income of $150 to spend on these two goods each month.The price of a book is $15 and the price of going to the movies is also $15.He currently consumes four books and six movies a month.If the price of a book drops to $10,the substitution effect would predict:

One baseline assumption that economists make is:

Johnny spends his day doing a variety of activities;he spends the morning exercising and doing yard work,reads in the afternoon,and hosts a dinner party in the evening.Economists would best explain his choice to do a variety of activities instead of a single activity using the concept of: