Deck 13: Consumer Choice and Demand

Question 1

Suppose a consumer has $100 to spend on two goods, shoes and shirts.If the price of a pair of shoes is $20 per pair and the price of a shirt is $15 each, which of the following combinations is unaffordable to the consumer?

A)5 pairs of shoes and 0 shirts
B)2 pairs of shoes and 4 shirts
C)0 pairs of shoes and 7 shirts
D)2 pairs of shoes and 3 shirts
E)0 pairs of shoes and 0 shirts

Answer 1

C

Question 2

A budget line shows the

A)quantities of goods a buyer can purchase with given income and prices.
B)relationship between price and quantity demanded.
C)total utility a consumer realizes from consuming different quantities of a good.
D)quantities of consumption that maximizes marginal utility.
E)the prices of the two goods a buyer can purchase.

Answer 2

A

Question 3

The figure above shows Sarah's budget line.Sarah earns $500 per week selling baskets made out of tree vines.With this money she buys sushi and rose bushes.Each piece of sushi costs $1 and each rose bush costs $10.Sarah will be at what point on her budget line if she spends $500 per week on rose bushes?

A)Point a
B)Point c
C)Point e
D)Point f
E)Point b

Answer 3

A

Question 4

Timmy makes $100 per week as a taxidermist.He spends all this income to buy pizza and hair gel.The price of a pizza is $10 and the price of a bottle of hair gel is $4.If Timmy buys 5 bottles of hair gel, then he buys ________ pizzas.

A)10
B)4
C)8
D)20
E)None of the above answers is correct.

Question 5

Which of the following statements is correct?

A)The slope of the budget line shows the opportunity cost of the good measured along the x-axis.
B)Along the budget line, consuming more of one good implies consuming more of the other.
C)The slope of the budget line shows there is no tradeoff between the two goods because the consumer can buy each of them.
D)If the consumer's budget increases, the budget line shifts leftward and its slope does not change.
E)None of the above answers is correct.

Question 6

The budget line is the boundary between

A)preferred and nonpreferred consumption combinations.
B)affordable and unaffordable consumption combinations.
C)goods and bads.
D)income and expenditure.
E)income and consumption.

Question 7

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each, steaks cost $10 each.If Reb purchases 124 lures per week, how many steaks can he buy?

A)620
B)38
C)123
D)380
E)100

Question 8

The point where the budget line intersects the y-axis represents a combination of goods that contains

A)some of both goods.
B)only the good measured on the y-axis.
C)only the good measured on the x-axis.
D)no goods.
E)the quantity of the good measured on the y-axis that has zero marginal utility.

Question 9

In order to draw Lucky's budget line, we need to know

A)only Lucky's budget.
B)only the prices of the goods Lucky consumes.
C)both Lucky's budget and the prices of the goods Lucky consumes.
D)Lucky's budget, the prices of the goods lucky consumes, and the utilities of the goods Lucky does not consume.
E)the utilities of the goods Lucky consumes.

Question 10

Reb earns $1,000 per week as a fishing guide in Texas.With this money he buys fishing lures and steaks.Lures cost $5 each, steaks cost $10 each.With this level of income, which consumption points are not possible?

A)200 lures, 0 steaks
B)100 lures, 60 steaks
C)80 lures, 20 steaks
D)0 lures, 50 steaks
E)50 lures, 50 steaks

Question 11

Timmy makes $100 per week as a taxidermist.He spends all this income to buy pizza and hair gel.The price of a pizza is $10 and the price of a bottle of hair gel is $4.If Timmy buys 6 pizzas per week, how many bottles of gel can he purchase?

A)10
B)60
C)20
D)40
E)None of the above answers is correct.

Question 12

Susan can watch movies or attend plays.The table above gives combinations of movies and plays that are on her budget line.If the price of a movie is $10, then her budget for movies and plays is

A)$10 per month.
B)$50 per month.
C)$60 per month.
D)$120 per month.
E)unknown from the information.

Question 13

The figure above shows Sarah's budget line.Sarah earns $500 per week selling baskets made out of tree vines.With this money she buys sushi and rose bushes.Each piece of sushi costs $1 and each rose bush costs $10.Sarah will be at what point on her budget line if she spends $200 per week on sushi?

A)Point a
B)Point b
C)Point c
D)Point f
E)Point d

Question 14

Which of the following is shown by a budget line?
I∙The combinations of goods a person can afford
Ii∙The production possibilities for a person
Iii∙The combinations of goods a person cannot afford

A)i only
B)i and ii
C)i and iii
D)ii and iii
E)ii only

Question 15

Katie has $15.She likes M&M candies and Hershey's white chocolate bars.M&M candies are $1.50 a pack and (the large)Hershey bars are $3.00 each.Katie can choose to buy

A)4 Hershey bars and 2 packs of M&Ms.
B)2 Hershey bars and 6 packs of M&Ms.
C)5 Hershey bars and 10 packs of M&Ms.
D)Both answer A and answer B are correct.
E)Answer A, answer B, and answer C are correct.

Question 16

Which of the following statements is correct?

A)Consumers have the ability to buy everything they desire.
B)A consumer's budget line shows the limits to what a consumer can buy.
C)A consumer's budget line shows the goods with the highest marginal utilities.
D)Rich consumers are unaffected by prices.
E)A budget line changes only if the person's budget changes.

Question 17

A consumption point inside the budget line

A)is unaffordable.
B)is possible to afford but has some unspent income.
C)shows that the consumer has chosen to spend all of his or her income on both products.
D)shows that the consumer spends income on only one of the goods.
E)is affordable and, because it is inside the budget line, means that all the person's budget has been spent.

Question 18

Sarah earns $500 per week selling baskets made out of tree vines.With this money she buys sushi and rose bushes.Each piece of sushi costs $1 and each rose bush costs $10.If Sarah spends $170 per week on sushi, the maximum quantity of rose bushes can she buy each week is ________ bushes.

A)33
B)330
C)3
D)17
E)None of the above answers is correct.

Question 19

If a consumer has $30 to spend on apples and bananas, where on the apple axis would the consumer's budget line intersect if the price of apples is $3 a pound?

A)30 pounds
B)10 pounds
C)3 pounds
D)0 pounds
E)It is impossible to determine with the given information.

Question 20

A budget line

A)shows the limits to what can be consumed.
B)has a slope equal to a relative price.
C)rotates or shifts only when the consumer's budget changes.
D)Answers B and C are both correct.
E)Answers A and B are both correct.

Question 21

Samantha has a budget of $40 and buys beef jerky and fried pork rinds.Her budget does not change and the price of both beef jerky and fried pork rinds increases.As a result,

A)Samantha's consumption possibilities have decreased.
B)Samantha's budget line shifts inward.
C)Samantha can still buy the combination of beef jerky and fried pork rinds she was initially consuming because her budget did not change.
D)Answers A and B are correct.
E)Answers A and C are correct.

Question 22

When a consumer's budget increases, the budget line

A)becomes steeper.
B)becomes flatter.
C)shifts outward.
D)shifts inward.
E)does not change.

Question 23

An increase in the price of a good

A)rotates the budget line inward and changes its slope.
B)rotates the budget line outward and changes its slope.
C)results in a movement downward along the budget line.
D)results in a movement upward along the budget line.
E)shifts the budget line inward and does not change its slope.

Question 24

If the price of the good measured on the x-axis becomes relatively cheaper, the budget line will

A)become vertical.
B)become steeper.
C)become flatter.
D)become horizontal.
E)shift rightward and not change its slope.

Question 25

If the slope of the budget line changes, there must have been

A)a change in the consumer's preferences.
B)an increase in the consumer's income.
C)a change in the price of at least one good.
D)a change in the price of both goods.
E)None of these could cause a change in the slope of the budget line.

Question 26

The figure above shows a consumer's budget line between sodas and DVD rentals.Point b represents an

A)affordable combination of sodas and DVDs that spends the entire budget.
B)affordable combination of sodas and DVDs that does not spend the entire budget.
C)unaffordable combination of sodas and DVDs.
D)affordable combination of sodas and DVDs but whether it spends the entire budget cannot be determined from the figure.
E)None of the above answers is correct.

Question 27

Suppose Alice spends her budget on books and downloaded movies.If her budget does not change and the price of a book stays the same but the price of a downloaded movie falls, her budget line

A)shifts outward and its slope does not change.
B)shifts inward and its slope does not change.
C)rotates inward and its slope changes.
D)rotates outward and its slope changes.
E)does not change because her budget has not changed.

Question 28

When the price of a good a consumer buys rises, the consumer's budget line

A)shifts inward and its slope does not change.
B)shifts outward and its slope does not change.
C)rotates inward and its slope changes.
D)rotates outward and its slope changes.
E)does not change.

Question 29

Assume that there are two goods, x and y.The quantity of good x is measured on the x-axis and the quantity of good y is measured on the y-axis.If the price of good y rises, then the

A)y-axis intercept of the budget line increases.
B)y-axis intercept of the budget line increases and the x-axis intercept of the budget line decreases.
C)y-axis intercept of the budget line decreases and the x-axis intercept does not change.
D)slope of the budget line changes.
E)Both answers C and D are correct.

Question 30

Nadir and Nina consume the same goods.If Nadir has more income than Nina, then Nina's budget line will

A)lie to the left of Nadir's budget line.
B)be steeper than Nadir's budget line.
C)lie to the right of Nadir's budget line.
D)be flatter than Nadir's budget line.
E)More information is needed to determine how Nina's and Nadir's budget lines compare.

Question 31

The figure above shows a consumer's budget line between sodas and DVD rentals.Point c represents an

A)affordable combination of sodas and DVDs that spends the entire budget.
B)affordable combination of sodas and DVDs that does not spend the entire budget.
C)unaffordable combination of sodas and DVDs.
D)affordable combination of sodas and DVDs but whether it spends the entire budget cannot be determined from the figure.
E)None of the above answers is correct.

Question 32

The figure above shows a consumer's budget line between sodas and DVD rentals.Point d represents an

A)affordable combination of sodas and DVDs that spends the entire budget.
B)affordable combination of sodas and DVDs that does not spend the entire budget.
C)unaffordable combination of sodas and DVDs.
D)affordable combination of sodas and DVDs but whether it spends the entire budget cannot be determined from the figure.
E)None of the above answers is correct.

Question 33

If one of the products a consumer buys rises in price, the consumer's budget line will

A)shift farther away from the origin of the graph and not change its slope.
B)rotate inward, closer to the origin.
C)vanish.
D)undergo no change.
E)shift farther away from the origin of the graph and become steeper.

Question 34

You consume hamburgers and hot dogs.If the price of a hamburger increases while the price of a hot dog and your budget do not change, then your budget line will

A)not change because your budget hasn't changed.
B)shift outward and not change its slope.
C)rotate outward and change its slope.
D)rotate inward and change its slope.
E)shift inward and not change its slope

Question 35

Reb buys fishing lures and steaks.If his budget does not change and the price of a fishing lure decreases, the maximum number of fishing lures he can purchase ________ and the maximum number of steaks he can purchase ________.

A)increases; increases
B)increases; decreases
C)increases; does not change
D)decreases; increases
E)does not change; does not change

Question 36

Bobby buys cat food for his cat, Pearl.If the price of cat food falls, then Bobby's budget line will

A)rotate outward and its slope will change.
B)rotate inward and its slope will change.
C)shift outward and its slope will not change.
D)shift inward and its slope will not change.
E)either rotate or shift outward depending on whether cat food has positive or negative marginal utility.

Question 37

The figure above shows a consumer's budget line for sodas and DVD rentals.Point a represents an

A)affordable combination of sodas and DVDs that spends the entire budget.
B)affordable combination of sodas and DVDs that does not spend the entire budget.
C)unaffordable combination of sodas and DVDs.
D)affordable combination of sodas and DVDs but whether it spends the entire budget cannot be determined from the figure.
E)None of the above answers is correct.

Question 38

The figure above shows Sarah's budget line.Sarah earns $500 per week selling baskets made out of tree vines.With this money she buys sushi and rose bushes.Each piece of sushi costs $1 and each rose bush costs $10.Sarah will be at what point on her budget line if she spends $300 per week on rose bushes?

A)Point a
B)Point b
C)Point c
D)Point f
E)Point e

Question 39

The figure above shows Sarah's budget line.Sarah earns $500 per week selling baskets made out of tree vines.With this money she buys sushi and rose bushes.Each piece of sushi costs $1 and each rose bush costs $10.Sarah is NOT able to purchase the combination of

A)50 roses bushes and 0 pieces of sushi.
B)20 rose bushes and 200 pieces of sushi.
C)0 roses bushes and 300 pieces of sushi.
D)30 roses bushes and 300 pieces of sushi.
E)None of the above answers is correct because Sarah is able to purchase all the listed combinations of roses and sushi.

Question 40

Which of the following describes what happens to a consumer's budget line if that consumer's budget increases? The budget line

A)becomes steeper.
B)becomes more horizontal.
C)shifts farther away from the origin of the graph.
D)shifts closer to the origin of the graph.
E)does not change.

Question 41

A budget line will shift outward and not change its slope if

A)there is an increase in the consumer's budget.
B)the consumer's preferences change.
C)the price of one good changes.
D)the price of both goods increase by the same percentage.
E)None of the above shift the budget line outward.

Question 42

Which of the above figures reflects a decrease in the price of chicken?

A)Figure A
B)Figure B
C)Figure C
D)Figure D
E)Both Figure A and Figure D

Question 43

Which of the above figures reflects an increase in the consumer's budget?

A)Figure A
B)Figure B
C)Figure C
D)Figure D
E)Both Figure A and Figure D

Question 44

When the price of one good changes while another good's price does not change, then there has been a change in the

A)relative price.
B)marginal utility price.
C)absolute price.
D)marginal price.
E)utility price.

Question 45

Linda has $10 a month to spend on ice cream cones and chocolate bars.If the price of an ice cream cone is $2 a cone and the price of a chocolate bar is $1 a bar, which of the following is a point on Linda's budget line?

A)4 cones and 0 chocolate bars
B)1 cone and 8 chocolate bars
C)3 cones and 1 chocolate bar
D)5 cones and 10 chocolate bars
E)0 cones and 0 chocolate bars

Question 46

An increase in a consumer's budget

A)shifts the budget line outward and does not change its slope.
B)shifts the budget line inward and does not change its slope.
C)rotates the budget line outward around the point where it intersects the x-axis.
D)rotates the budget line inward around the point where it intersects the x-axis.
E)rotates the budget line outward around the point where it intersects the y-axis.

Question 47

If you consume hot dogs and hamburgers and your budget increases, while the prices of hot dogs and hamburgers do not change, then your budget line

A)does not change.
B)shifts outward and its slope does not change.
C)rotates outward and its slope changes.
D)shifts inward and its slope does not change.
E)rotates inward and its slope changes.

Question 48

If the budget line rotates inward and becomes steeper, there is a

A)higher opportunity cost of the good measured on the x-axis.
B)lower opportunity cost of the good measured on the x-axis.
C)larger budget.
D)higher price for the good measured on the y-axis.
E)lower price for the good measured on the x-axis.

Question 49

The slope of the budget line represents an opportunity cost because, moving along the line,

A)income is increasing.
B)income is decreasing.
C)additional income must be earned in order to purchase more of one good.
D)a consumer must give up some of one good in order to get more of the other.
E)it is possible to consume more of both goods.

Question 50

The slope of the budget line can be interpreted as which of the following?

A)an opportunity cost
B)the consumer's budget divided by the price of the good measured on the y-axis
C)the consumer's budget divided by the price of the good measured on the x-axis
D)the number of units of the good measured on the y-axis plus the number of units of the good measured on the x-axis
E)the budget necessary to buy the combinations of goods on the budget line

Question 51

Reb buys fishing lures and steaks.If his budget increases, the maximum number of fishing lures he can purchase ________ and the maximum number of steaks he can purchase ________.

A)increases; increases
B)increases; decreases
C)decreases; increases
D)decreases; decreases
E)does not change; does not change

Question 52

Which of the above figures reflects an increase in the price of fish?

A)Figure A
B)Figure B
C)Figure C
D)Figure D
E)Both Figure B and Figure C

Question 53

If a budget line rotates inward and becomes steeper, then the

A)consumer's budget decreased.
B)consumer's budget increased.
C)price of one of the goods decreased.
D)price of one of the goods increased.
E)price of both of the goods must have decreased.

Question 54

An increase in a consumer's budget

A)changes the relative prices of the goods.
B)changes the slope of the budget line.
C)decreases consumption possibilities.
D)increases consumption possibilities.
E)has no effect on the consumer's budget line.

Question 55

A budget line shows the

A)limits to production possibilities.
B)limits to production opportunities.
C)slope of the demand curve.
D)limits to consumption possibilities.
E)way the demand curve shifts if the consumer's budget changes.

Question 56

A budget line

A)represents combinations of goods a consumer desires.
B)marks the boundary between what a consumer can afford and cannot afford.
C)has a positive slope.
D)is the same as the production possibilities frontier.
E)is the same as a demand curve.

Question 57

If a consumer's budget increases, the budget line

A)rotates outward and its slope changes.
B)rotates inward and its slope changes.
C)shifts outward and its slope does not change.
D)shifts inward and its slope does not change.
E)does not change.

Question 58

Sue consumes oysters and clams.Pounds of oysters are measured on the y-axis and pounds of clams on the x-axis.If the slope of Sue's budget line is 5 pounds of oysters per pound of clams, Sue must

A)give up 5 pounds of clams to obtain 1 pound of oysters.
B)give up 5 pounds of oysters to obtain 1 pound of clams.
C)pay $5 for a pound of clams only.
D)pay $5 for a pound of oysters only.
E)pay $5 for a pound of clams and pay $5 for a pound of oysters.

Question 59

Which of the above figures reflects an increase in the price of chicken?

A)Figure A
B)Figure B
C)Figure C
D)Figure D
E)Both Figure B and Figure C

Question 60

A relative price is the

A)price of a substitute.
B)price of a related good.
C)price of one good divided by the price of another.
D)absolute price of a good.
E)price of one good multiplied by the price of another.

Question 61

If a consumer obtains 20 units of utility for the first unit consumed, 10 for the second, and 5 for the third, what is the total utility of consuming three units?

A)20 units
B)30 units
C)35 units
D)5 units
E)None of the above answers is correct.

Question 62

Marginal utility is equal to which of the following?

A)total income divided by the price of the product
B)the change in total utility from consuming one more unit of a good
C)the satisfaction obtained from consuming any number of units of a good
D)total utility divided by the number of units of the good
E)None of the above answers is correct.

Question 63

Diminishing marginal utility means that as more of a good is consumed,

A)the price of the good rises.
B)the price of the good falls.
C)more income is spent.
D)the utility of an additional unit decreases.
E)the consumption of some other good must diminish.

Question 64

For Jack, the total utility from three shirts is 50 units and the marginal utility of one more shirt is 5.The total utility of four shirts is

A)45.
B)55.
C)55/4.
D)55/5.
E)None of the above answers is correct.

Question 65

Give the data in the above table, what is the marginal utility of the fourth quart of ice cream?

A)210
B)50
C)60
D)65
E)260

Question 66

As more of a good is consumed, total utility

A)increases.
B)decreases.
C)remains the same.
D)becomes negative and then turns positive.
E)might change but whether or not it changes depends on why more of the good is consumed.

Question 67

The above table shows Homer's utility from boxes of doughnuts.The marginal utility that Homer receives from the third box of doughnuts is equal to

A)75.
B)25.
C)20.
D)3.
E)50.

Question 68

If you get 40 units of utility from eating the first bag of pretzels, 30 from the second bag, and 20 from the third bag, the total utility of three bags of pretzels is ________ units of utility.

A)40
B)70
C)90
D)50
E)20

Question 69

Give the data in the above table, what is the marginal utility of the third quart of ice cream?

A)80
B)70
C)60
D)230
E)210

Question 70

The above table shows Homer's total utility from boxes of doughnuts.As Homer's consumption of doughnuts increases,

A)both his total utility and his marginal utility increase.
B)his total utility increases, but his marginal utility decreases.
C)his total utility decreases, but his marginal utility increases.
D)both his total utility and his marginal utility decrease.
E)None of the above answers are correct.

Question 71

The benefit that John gets from eating an additional grape is called the ________ the grape.

A)net gain from
B)demand for
C)quantity demanded of
D)total utility from
E)marginal utility from

Question 72

The above table shows Homer's utility from boxes of doughnuts.As Homer's consumption of doughnuts increases, his

A)marginal utility is positive and increasing.
B)marginal utility is positive but decreasing.
C)marginal utility is negative but increasing.
D)marginal utility is negative and decreasing.
E)total utility is not related to his marginal utility.

Question 73

If the total utility of 2 bags of chips is 25, the total utility of 3 bags is 33, and the total utility of 4 bags is 40 units, then the marginal utility of the 3rd and 4th bags are

A)8 and 7, respectively.
B)12.5 and 11, respectively.
C)11 and 10, respectively.
D)58 and 73, respectively.
E)33 and 40, respectively.

Question 74

Utility is the

A)benefit or satisfaction that a person gets from the consumption of a good or service.
B)measure of how useful a resource is in the production process.
C)measure of productivity associated with a good or service.
D)economic term for consumption possibilities.
E)economic term for how changes in price affect a consumer's purchases.

Question 75

Marginal utility is the change in total utility that results from

A)an increase in the price of the good.
B)a change in the budget line.
C)a one-unit change in the quantity of a good consumed.
D)a decrease in the price of the good.
E)an increase in the consumer's income.

Question 76

Give the data in the above table, what is the marginal utility of the second quart of ice cream?

A)80
B)70
C)60
D)75
E)150

Question 77

The above table shows Homer's utility from boxes of doughnuts.If Homer decreases his consumption of doughnuts from 4 boxes to 3 boxes, his

A)total utility and marginal utility will both decrease.
B)total utility will decrease, but his marginal utility will increase.
C)total utility will increase, but his marginal utility will decrease.
D)total utility and marginal utility will both increase.
E)None of the above answers are correct.

Question 78

If a consumer's total utility increases when another unit of a good is consumed, which of the following is true? Marginal utility must be

A)negative.
B)equal to one.
C)positive.
D)increasing.
E)some amount, but more information is needed to determine if marginal utility is positive, negative, or equal to zero.

Question 79

If Joan consumes 1 dinner roll, she has total utility of 15; if she consumes 2, she has total utility of 27; if she consumes 3, she has total utility of 37; and if she consumes 4, she has total utility of 45.What is the marginal utility of the fourth dinner roll consumed?

A)124 units of utility
B)45 units of utility
C)11.25 units of utility
D)8 units of utility
E)37 units of utility

Question 80

If Sarah gets 40 units of utility from her first piece of toast for breakfast and a total of 70 units from two pieces of toast, then the marginal utility of the first piece is ________ units and the marginal utility of the second piece is ________ units.

A)40; 70
B)40; 110
C)40; 30
D)40; 35
E)70; 40