Deck 1: Preferences and Utility

Question 1

If bundles of goods A and B lie on the same indifference curve,one can assume the individual:

A)prefers bundle A to bundle B
B)prefers bundle B to bundle A.
C)enjoys bundle A and B equally.
D)bundle A contains the same goods as bundle B.

Answer 1

enjoys bundle A and B equally.

Question 2

If utility is given by
,this person's indifference curves are:

A)parabolas.
B)hyperbolas.
C)concentric circles.
D)straight lines.

Answer 2

straight lines.

Question 3

If utility is given by
,then the person's MRS at the point x = 5,y = 2 is given by:

A)0.4.
B)1.0.
C)2.5.
D)5.0.

Answer 3

0.4.

Question 4

Indifference curves:

A)may sometimes intersect.
B)are contour lines only of a linear utility function.
C)are convex if the utility function is quasi-concave.
D)shift when prices change.

Question 5

concern the CES utility function:
For this utility function smaller values for
Imply:​

A)​increasingly concave indifference curves.
B)​increasingly convex indifference curves.
C)​indifference curves that are convex,linear,and then concave.
D)​indifference curves that are concave,linear,and then convex.

Question 6

If an individual's utility function is quasi-concave,his or her MRS will:

A)diminish as x is substituted for y.
B)increase as x is substituted for y.
C)be undefined except in special cases.
D)always depend only on the ratio of x to y.

Question 7

Which of the following utility functions best represents the idea that two goods,x and y,are perfect complements?

A)
B)
C)
D)

Question 8

Which of these utility functions represent the same preferences as
?

A)
B)
C)
D)All of the above represent the same preferences.

Question 9

concern the CES utility function:
For this utility function,marginal utilities are:​

A)​negative for
B)​diminishing only for
C)​increasing for
D)​always positive.

Question 10

For an individual who consumes only two goods,x and y,the opportunity cost of consuming one more unit of x in terms of how much y must be given up is reflected by:

A)the individual's marginal rate of substitution.
B)the market prices of x and y.
C)the slope of the individual's indifference curve.
D)none of the above.

Question 11

refer to an individual whose utility function is given by:


For this utility function,the MRS:

A)depends on the values of x and y.
B)is always 0.
C)is always 2.
D)is always 4.

Question 12

Which of the following utility functions would not be consistent with the notion that x and y are both "goods" with positive marginal utilities?

A)
B)
C)
D)

Question 13

refer to an individual whose utility function is given by:


With this utility function,the bundle (3,2)provides the same utility as the bundle:

A)(2,3).
B)(2,4).
C)(2,5).
D)(3,3).

Question 14

If utility is given by
Then the bundle (3,2)provides the same utility as the bundle:

A)(1,3).
B)(2,3).
C)(4,1).
D)(4,2).