Question 1

Utility measurements are:

Accepted Answer

Utility measurements are a way to represent the satisfaction or happiness a person derives from consuming goods and services, often conceptualized in terms of a relative ranking of different combinations of goods rather than comparing preferences across different individuals.

Question 2

Revealed preference is:

Accepted Answer

Revealed preference theory, developed by economist Paul Samuelson, posits that an individual's preferences can be understood by observing their choices and behaviors in the marketplace, rather than through direct inquiry or introspection about utility or satisfaction levels. Choices B and C describe other methods or theories related to understanding or measuring utility, but they do not accurately describe revealed preference.

Question 3

Billy is deciding whether to stay home and watch TV or go out with friends. If Billy decides to stay home, we can conclude that he:

Accepted Answer

Billy's decision to stay home and watch TV over going out with friends reveals that, for this particular decision, he perceives more utility or satisfaction from staying home than from going out. This choice does not necessarily indicate his overall social preferences, future behavior, or personality traits.

Question 4

Utility is useful when:

Accepted Answer

Utility is a concept used to quantitatively describe a person's preferences for one good over another, allowing for comparison of satisfaction levels.

Question 5

What is a bundle in terms of utility?

Accepted Answer

A bundle, in the context of utility, refers to a specific combination of goods and services that an individual could consume. It represents a particular assortment or mix of items that a consumer might choose, allowing economists to analyze preferences and utility derived from different bundles.

Question 6

Mariana has an hour of free time during which she could either go for a run or swim at the local pool. She decides to swim. Economists would conclude that Mariana:

Accepted Answer

Mariana's choice to swim over going for a run indicates her preference for swimming during that hour, as per the concept of revealed preference in economics. This concept suggests that individuals reveal their preferences through their choices and actions.

Question 7

Corey has a blue sweater and a denim jacket. On some days he chooses to wear the sweater but on others he chooses to wear the jacket. Economists would most likely conclude that:

Accepted Answer

Economists would likely conclude that Corey's preferences have not changed, but other factors influencing his choice, such as the temperature outside, may have changed. This reflects the idea that external conditions can influence decision-making without altering underlying preferences.

Question 8

Utility is:

Accepted Answer

Utility is a concept in economics that represents the satisfaction or benefit a consumer derives from consuming a good or service. It is not limited to purchased goods and does not directly measure a consumer's income.

Question 9

A utility function is an equation for calculating:

Accepted Answer

A utility function represents the total utility an individual derives from consuming a particular combination of goods and services, reflecting their preferences and satisfaction.

Question 10

What is a baseline assumption that economists make about consumer behavior?

Accepted Answer

Economists typically assume that people are rational utility maximizers, meaning they make decisions that they believe will provide them with the greatest benefit or satisfaction given their resources and information.

Question 11

Utility is:

Accepted Answer

Utility encompasses all these aspects: it is maximized by rational individuals, revealed through their choices, and represents the satisfaction derived from various bundles of goods.

Question 12

Utility is:

Accepted Answer

Utility is a concept in economics that represents a measure of the satisfaction or happiness that consumers derive from the consumption of goods and services. It is considered a quantitative measure of consumers' preferences, although it is subjective and can vary greatly among individuals.

Question 13

Nikolaj makes a New Year's resolution to lose weight. On January 3 ^rd, he decides to go out for ice cream instead of going to the gym. Using the concept of revealed preference, economists would most likely conclude that Nikolaj:

Accepted Answer

Revealed preference theory suggests that individuals' choices reveal their preferences. By choosing ice cream over the gym, Nikolaj demonstrates he gains more utility from the ice cream, despite his resolution.

Question 14

Individuals will make choices to maximize their:

Accepted Answer

Individuals make choices to maximize their utility, which refers to the satisfaction or benefit they derive from consuming goods or services. This concept is central to microeconomic theory and consumer behavior.

Question 15

Economists assume that an individual chooses the option that:

Accepted Answer

Economists assume that individuals act rationally, choosing options that maximize their utility or satisfaction.

Question 16

After browsing his cabinets to see what meals he can make, Ken is deciding whether to make tacos or spaghetti for dinner. If Ken makes spaghetti, we can conclude:I. Ken would receive zero utility from eating tacos.II. Eating spaghetti for dinner will give Ken more utility than eating tacos.III. Eating spaghetti for dinner will give Ken positive utility.

Accepted Answer

Ken's decision to make spaghetti over tacos suggests that spaghetti offers him more utility (II) and that he derives positive utility from eating spaghetti (III). However, it does not imply that tacos offer zero utility (I), just less than spaghetti in this instance.

Question 17

According to revealed preference, a consumer that chooses to smoke cigarettes:

Accepted Answer

Revealed preference theory suggests that if a consumer chooses to purchase a particular good, they derive more utility from it than from other goods they could have purchased with the same resources.

Question 18

Pranav is deciding what to drink from a cooler that contains cans of soda pop and iced tea. When Pranav chooses iced tea, we assume that he will receive more utility from drinking iced tea than soda pop. Which economic concept is this conclusion based on?

Accepted Answer

Revealed preference theory suggests that the choices consumers make reveal their preferences regarding goods, assuming they are aware of their options and constraints. In this case, Pranav's choice of iced tea over soda pop indicates his higher utility or satisfaction from iced tea, as inferred from his action.

Question 19

Which of the following statements is true about individuals and utility?

Accepted Answer

Individuals seek to maximize utility as a fundamental assumption in economics, meaning they aim to achieve the highest level of satisfaction possible from their resources.

Question 20

After browsing the shoe store for a while, Bob buys a pair of Nike running shoes. Economists would say that Bob:

Accepted Answer

Bob's choice indicates he perceives more utility (satisfaction) per dollar from the Nike running shoes compared to other options available in the store, according to economic principles. This does not necessarily imply a distaste for other brands, a permanent preference for Nike, or that other shoes would cause disutility.

Quiz 7: Consumer Behavior

Utility measurements are:

Revealed preference is:

Billy is deciding whether to stay home and watch TV or go out with friends. If Billy decides to stay home, we can conclude that he:

Utility is useful when:

What is a bundle in terms of utility?

Mariana has an hour of free time during which she could either go for a run or swim at the local pool. She decides to swim. Economists would conclude that Mariana:

Corey has a blue sweater and a denim jacket. On some days he chooses to wear the sweater but on others he chooses to wear the jacket. Economists would most likely conclude that:

Utility is:

A utility function is an equation for calculating:

What is a baseline assumption that economists make about consumer behavior?

Utility is:

Utility is:

Nikolaj makes a New Year's resolution to lose weight. On January 3 rd, he decides to go out for ice cream instead of going to the gym. Using the concept of revealed preference, economists would most likely conclude that Nikolaj:

Individuals will make choices to maximize their:

Economists assume that an individual chooses the option that:

According to revealed preference, a consumer that chooses to smoke cigarettes:

Pranav is deciding what to drink from a cooler that contains cans of soda pop and iced tea. When Pranav chooses iced tea, we assume that he will receive more utility from drinking iced tea than soda pop. Which economic concept is this conclusion based on?

Which of the following statements is true about individuals and utility?

After browsing the shoe store for a while, Bob buys a pair of Nike running shoes. Economists would say that Bob:

Nikolaj makes a New Year's resolution to lose weight. On January 3 ^rd, he decides to go out for ice cream instead of going to the gym. Using the concept of revealed preference, economists would most likely conclude that Nikolaj: