20 multiple choice – Principles of Microeconomics

1. Jennifer’s two favorite flavors of soda are cola and lemon-lime. On a normal week, Jennifer bought 3 cola sodas and 3 lemon-lime sodas. After the price of cola soda increases, Jennifer buys only 2 cola sodas and 2 lemon-lime sodas in a week. This can be explained by

The fact that lemon-lime soda is an inferior good.

2. What happens in regards to moving along an indifference curve, if a consumer needs to make up for having one unit less of the good along the horizontal axis with only a small amount of good increased on the vertical axis?

In comparison with behavioral economist, traditional economists operate with the assumption that ________.

when people encounter a variety of situations, they fluctuate between rational and irrational decisions

Juan’s marginal utility from strawberries is 200 and his marginal utility from cream is 100. Juan spends all of 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

Which of the following statements is true based on what we know about the properties of utility?

Alexandra receives 20 utility from drinking one soda and 25 utility from eating a pizza. Therefore, Alexandra enjoys pizza more than sodas.

What is the typical pattern for consumers when they choose?

What will happen if a good that is normal has a decrease in price which causes a substitution effect?

The consumer will continue to purchase more of the lower priced good until his/her budget is exhausted.

8. If over the last twenty years consumer incomes declined by 20% and consumption of public transport increased by 10%, which of these statements must be true?

Read over the following scenarios. Which one best represents how a behavioral economist might view a situation?

Why do most demand curves have a negative slope?

Because consumers substitute higher quality goods for lower quality goods because of the substitution effect.

11. What is involved in the step-by-step process of finding the choice with the maximum utility?

Behavioral economist use something called a nudge to boost rational economic behavior. Which of these is an example of that type of nudge?

What economic concept is defined as the value, or satisfaction, that people derive from the goods and services they consume and the activities they pursue?

Greg eats pizza every day of the week. The marginal utility of pizza will most likely ________ by the end of the week, and all else being equal, this demonstrates the law of ________.

Jacob has a budget of $21 to spend on either soda or popcorn at the movie theater. A bag of popcorn costs $5 while a can of soda costs $2. Use the table below to identify the utility maximizing quantity of soda and popcorn given Jacob’s budget constraint.

Soda (Quantity) Total Utility Popcorn (Quantity) Total Utility
1 10 1 20
2 18 2 36
3 24 3 48
4 28 4 56
5 30 5 60
6 31 6 62
choose 1 answer

One difference between total utility and marginal utility is that

Which of the following best fits the typical pattern of total utility as consumption increases?

Jacob receives a total utility of 20 from consuming the first hamburger, 35 after consuming the second, and 45 after the third.

The utility an individual will receive from consuming a good is determined by

When considering consumer equilibrium on an indifference curve/budget line diagram, what is the slope of the budget line doing?

What must take place for a consumer to retain their original indifference curve trajectory in the presence of declining marginal rates of substitution, when time after time a unit of a good is sacrificed for another good?

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