Even The Best Of Economists Can Not Beat This Quiz

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  • 1/30 Questions
    a consumer is maximizing her utility with a particular money income when:     - ProProfs

    a consumer is maximizing her utility with a particular money income when:    

    • The total utility derived from each product consumed is the same.
    • Mua/pa = mub/pb = muc/pc = ... = mun/pn.
    • Mua = mub = muc = ... = mun.
    • Pa = pb = pc = ... = pn.
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About This Quiz

An economy is an area of the production, distribution and trade, as well as consumption of goods and services by different agents. In general, it is defined 'as a social domain that emphasize the practices, discourses, and material expressions associated with the production, use, and management of resources'.
Do you study Economy and think you know it all, try this See morequiz; but be careful because "Even The Best Of Economists Can Not Beat This Quiz"

Even The Best Of Economists Can Not Beat This Quiz - Quiz

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  • 2. 

    assume that a consumer purchases products a, b, and c in quantities such that the last dollar spent on each yields the same marginal utility and the consumer's income is totally spent. we can conclude that:          

    • Total utility is being minimized.

    • Production costs are being minimized.

    • Marginal utility exceeds total utility.

    • Total utility is being maximized.

    Correct Answer
    A. Total utility is being maximized.
    Explanation
    When the consumer spends their income in a way that the last dollar spent on each product yields the same marginal utility, it indicates that the consumer is maximizing their total utility. This is because the consumer is allocating their spending in a way that maximizes the satisfaction or benefit they receive from consuming the products. Therefore, the correct answer is that total utility is being maximized.

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  • 3. 

    if a consumer is initially in equilibrium, an increase in money income will:  

    • Move him to a new equilibrium on a lower indifference curve.

    • Make his indifference curves steeper, but will not alter the equilibrium position.

    • Have no effect on the equilibrium position because product prices have not changed.

    • Move him to a new equilibrium on a higher indifference curve.

    Correct Answer
    A. Move him to a new equilibrium on a higher indifference curve.
    Explanation
    An increase in money income will allow the consumer to have more purchasing power, which means they can afford to consume more goods and services. This will result in a higher level of satisfaction, represented by a higher indifference curve. Therefore, the consumer will move to a new equilibrium on a higher indifference curve.

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  • 4. 

    Assume a diagram in which a budget line is imposed on an indifference map. a consumer will maximize her utility:

    • At any point where the budget line and an indifference curve intersect.

    • At either point where the budget line intersects the horizontal and vertical axes.

    • Where the budget line is tangent to an indifference curve.

    • Where the ratio of the two product prices equals the reciprocal of the consumer's income.

    Correct Answer
    A. Where the budget line is tangent to an indifference curve.
    Explanation
    A consumer will maximize her utility where the budget line is tangent to an indifference curve. This is because at this point, the consumer is allocating her income in such a way that the marginal rate of substitution (MRS) equals the ratio of the prices of the two products. This means that the consumer is getting the most utility possible given her budget constraint, as any other point on the budget line would result in a lower MRS and therefore lower utility. Therefore, the consumer will choose the point where the budget line is tangent to an indifference curve to maximize her utility.

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  • 5. 

    Utility:

    • Is synonymous with usefulness.

    • Is want-satisfying power.

    • Is easy to quantify.

    • Rarely varies from person to person.

    Correct Answer
    A. Is want-satisfying power.
    Explanation
    The term "utility" refers to the want-satisfying power of a product or service. It represents how much satisfaction or value an individual derives from consuming or using something. Utility is subjective and varies from person to person based on their preferences and needs. It is not easy to quantify as it is based on personal preferences and cannot be measured in a standardized manner. Therefore, the correct answer is "is want-satisfying power."

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  • 6. 

    Marginal utility can be:

    • Positive, but not negative.

    • Positive or negative, but not zero.

    • Positive, negative, or zero.

    • Decreasing, but not negative.

    Correct Answer
    A. Positive, negative, or zero.
    Explanation
    The correct answer is positive, negative, or zero. Marginal utility refers to the additional satisfaction or benefit derived from consuming one more unit of a good or service. It can be positive when consuming additional units increases satisfaction, negative when consuming additional units decreases satisfaction, or zero when consuming additional units does not change satisfaction. Therefore, marginal utility can take any of these three values.

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  • 7. 

    A product has utility if it:

    • Takes more and more resources to produce successive units of it.

    • Violates the law of demand.

    • Satisfies consumer wants.

    • Is useful

    Correct Answer
    A. Satisfies consumer wants.
    Explanation
    The correct answer is "satisfies consumer wants." This is because utility refers to the satisfaction or usefulness that a consumer derives from consuming a product or service. If a product satisfies consumer wants, it means that it is able to provide some level of satisfaction or fulfill a need or desire for the consumer. The other options provided in the question, such as taking more resources to produce or violating the law of demand, do not directly relate to the concept of utility.

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  • 8. 

    The law of diminishing marginal utility states that:

    • Total utility is maximized when consumers obtain the same amount of utility per unit of each product consumed.

    • Beyond some point additional units of a product will yield less and less extra satisfaction to a consumer.

    • Price must be lowered to induce firms to supply more of a product.

    • It will take larger and larger amounts of resources beyond some point to produce successive units of a product.

    Correct Answer
    A. Beyond some point additional units of a product will yield less and less extra satisfaction to a consumer.
    Explanation
    The correct answer is that beyond some point additional units of a product will yield less and less extra satisfaction to a consumer. This is known as the law of diminishing marginal utility. It states that as a consumer consumes more and more units of a product, the additional satisfaction or utility derived from each additional unit decreases. In other words, the more you have of something, the less satisfaction you gain from each additional unit. This concept is important in understanding consumer behavior and helps explain why consumers are willing to pay less for additional units of a product.

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  • 9. 

    The first pepsi yields craig 18 units of utility and the second yields him an additional 12 units of utility. his total utility from three pepsis is 38 units of utility. the marginal utility of the third pepsi is:

    • 26 units of utility.

    • 6 units of utility.

    • 8 units of utility.

    • 38 units of utility.

    Correct Answer
    A. 8 units of utility.
    Explanation
    The marginal utility of a good is the additional utility gained from consuming one more unit of that good. In this case, Craig gains 18 units of utility from the first Pepsi and an additional 12 units of utility from the second Pepsi. The total utility from three Pepsis is 38 units. To find the marginal utility of the third Pepsi, we subtract the total utility from the first two Pepsis (18 + 12 = 30) from the total utility of all three Pepsis (38). Therefore, the marginal utility of the third Pepsi is 8 units of utility.

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  • 10. 

    If the price of product x rises, then the resulting decline in the amount purchased will:

    • Necessarily increase the consumer's total utility from his total purchases.

    • Increase the marginal utility of this good.

    • Increase the total utility from purchases of this good.

    • Reduce the marginal utility of this good.

    Correct Answer
    A. Increase the marginal utility of this good.
    Explanation
    When the price of product x rises, the amount purchased will decline. This means that the consumer will have to make a decision to buy less of the product due to the higher price. As a result, the consumer will allocate their limited budget towards other goods that provide more value for their money. This implies that the marginal utility of product x will increase because the consumer is willing to pay a higher price for each unit of the product. Therefore, the correct answer is that the resulting decline in the amount purchased will increase the marginal utility of this good.

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  • 11. 

    Total utility may be determined by:

    • Multiplying the marginal utility of the last unit consumed by the number of units consumed.

    • Multiplying the marginal utility of the last unit consumed by the number of units consumed. summing the marginal utilities of each unit consumed.

    • Multiplying the marginal utility of the last unit consumed by product price.

    • Multiplying the marginal utility of the first unit consumed by the number of units consumed.

    Correct Answer
    A. Multiplying the marginal utility of the last unit consumed by the number of units consumed. summing the marginal utilities of each unit consumed.
    Explanation
    The correct answer is "multiplying the marginal utility of the last unit consumed by the number of units consumed." This is because total utility is determined by the cumulative satisfaction or usefulness derived from consuming multiple units of a good or service. The marginal utility of the last unit consumed represents the additional satisfaction gained from consuming one more unit, and multiplying it by the number of units consumed gives the total utility. On the other hand, summing the marginal utilities of each unit consumed would give the total marginal utility, not the total utility.

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  • 12. 

    Where total utility is at a maximum, marginal utility is:

    • Negative.

    • Positive and increasing.

    • Zero

    • Positive but decreasing.

    Correct Answer
    A. Zero
    Explanation
    When total utility is at a maximum, it means that the consumer is experiencing the highest level of satisfaction or enjoyment from consuming a certain good or service. At this point, the marginal utility, which measures the additional satisfaction gained from consuming one more unit of the good, is zero. This means that consuming an additional unit does not increase the total utility because the consumer is already maximizing their satisfaction.

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  • 13. 

    Marginal utility:

    • Is equal to total utility divided by the number of units consumed.

    • Is equal to total utility if the demand curve is linear.

    • Increases as more of a product is consumed.

    • Diminishes as more of a product is consumed.

    Correct Answer
    A. Diminishes as more of a product is consumed.
    Explanation
    Marginal utility refers to the additional satisfaction or benefit that a consumer derives from consuming an additional unit of a product. As more of a product is consumed, the marginal utility tends to diminish. This is because the consumer's needs and desires are gradually satisfied, and each additional unit of the product provides less additional satisfaction compared to the previous units. Therefore, the correct answer is that marginal utility diminishes as more of a product is consumed.

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  • 14. 

    Which of the following is correct?

    • There is no firm mathematical relationship between marginal utility and total utility.

    • Total utility is equal to the change in marginal utility from consuming an additional unit of a product.

    • If marginal utility is diminishing and is a positive amount, total utility will increase.

    • If marginal utility is diminishing, total utility must also be diminishing.

    Correct Answer
    A. If marginal utility is diminishing and is a positive amount, total utility will increase.
    Explanation
    The correct answer is "if marginal utility is diminishing and is a positive amount, total utility will increase." This statement is correct because marginal utility measures the additional satisfaction or benefit gained from consuming one more unit of a product. If marginal utility is diminishing, it means that each additional unit provides less satisfaction than the previous one. However, as long as marginal utility remains positive, it still adds to the total utility or overall satisfaction. Therefore, the total utility will continue to increase, albeit at a decreasing rate, as more units of the product are consumed.

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  • 15. 

    The theory of consumer behavior assumes that:

    • Consumers behave rationally, maximizing their satisfactions.

    • Consumers have unlimited money incomes.

    • Consumers do not know how much marginal utility they obtain from successive units of various products.

    • Marginal utility is constant.

    Correct Answer
    A. Consumers behave rationally, maximizing their satisfactions.
    Explanation
    The theory of consumer behavior assumes that consumers behave rationally, maximizing their satisfactions. This means that consumers make decisions based on their preferences and try to maximize their utility or satisfaction from the goods and services they consume. This assumption is based on the idea that consumers are rational beings who carefully consider the costs and benefits of their choices in order to make the best decisions for themselves. It does not assume that consumers have unlimited money incomes, that they do not know the marginal utility they obtain from different products, or that marginal utility is constant.

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  • 16. 

    To maximize utility a consumer should allocate money income so that the:

    • Elasticity of demand on all products purchased is the same.

    • Marginal utility obtained from the last dollar spent on each product is the same.

    • Total utility derived from each product consumed is the same.

    • Marginal utility of the last unit of each product consumed is the same.

    Correct Answer
    A. Marginal utility obtained from the last dollar spent on each product is the same.
    Explanation
    To maximize utility, it is important for a consumer to allocate their money income in such a way that the marginal utility obtained from the last dollar spent on each product is the same. This means that the consumer should spend their money on different products in a way that the additional satisfaction gained from the last unit of each product is equal. By doing so, the consumer can achieve the maximum level of satisfaction and utility from their spending, ensuring that their money is allocated efficiently.

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  • 17. 

    Suppose that mux/px exceeds muy/py. to maximize utility the consumer who is spending all her money income should buy:

    • Less of x only if its price rises.

    • More of y only if its price rises.

    • More of y and less of x.

    • More of x and less of y.

    Correct Answer
    A. More of x and less of y.
    Explanation
    If mux/px exceeds muy/py, it means that the marginal utility per dollar spent on x is higher than the marginal utility per dollar spent on y. To maximize utility, the consumer should buy more of x and less of y. This is because buying more of x will increase the total utility gained from x, while buying less of y will decrease the total utility lost from y. By reallocating their spending in this way, the consumer can maximize their overall utility.

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  • 18. 
    Refer to the above data. if the consumer has a money income of $52 and the prices of j and k are $8 and $4 respectively, the consumer will maximize her utility by purchasing: - ProProfs

    Refer to the above data. if the consumer has a money income of $52 and the prices of j and k are $8 and $4 respectively, the consumer will maximize her utility by purchasing:

    • 2 units of j and 7 units of k.

    • 5 units of j and 5 units of k.

    • 4 units of j and 5 units of k

    • 6 units of j and 3 units of k.

    Correct Answer
    A. 4 units of j and 5 units of k
    Explanation
    Based on the given data, the consumer has a money income of $52 and the prices of j and k are $8 and $4 respectively. To maximize utility, the consumer needs to allocate their income in a way that maximizes the satisfaction they receive from consuming goods j and k. By purchasing 4 units of j at $8 each, the consumer spends $32. They can then purchase 5 units of k at $4 each, spending an additional $20. This totals to $52, which is the consumer's income. Therefore, purchasing 4 units of j and 5 units of k allows the consumer to maximize their utility within their budget constraint.

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  • 19. 
    Refer to the above data. what level of total utility is realized from the equilibrium combination of j and k, if the consumer has a money income of $52 and the prices of j and k are $8 and $4 respectively? - ProProfs

    Refer to the above data. what level of total utility is realized from the equilibrium combination of j and k, if the consumer has a money income of $52 and the prices of j and k are $8 and $4 respectively?

    • 156

    • 124

    • 276

    • 36

    Correct Answer
    A. 276
    Explanation
    The total utility realized from the equilibrium combination of goods j and k can be calculated by multiplying the quantity of each good consumed by its respective utility and adding them together. Since the prices of j and k are given as $8 and $4 respectively, and the consumer has a money income of $52, we can determine the quantity of each good that can be purchased. Assuming the consumer spends all their income, the quantity of j and k that can be purchased is 52/8 = 6.5 and 52/4 = 13 respectively. Multiplying the quantity of each good by its utility, we get 6.5 * 20 = 130 for j and 13 * 8 = 104 for k. Adding these values together, we get a total utility of 130 + 104 = 234. Therefore, the correct answer is 234, not 276.

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  • 20. 
    The marginal utility of the last unit of a consumed is 12 and the marginal utility of the last unit of b consumed is 8. what set of prices for a and b respectively would be consistent with consumer equilibrium? - ProProfs

    The marginal utility of the last unit of a consumed is 12 and the marginal utility of the last unit of b consumed is 8. what set of prices for a and b respectively would be consistent with consumer equilibrium?

    • $4 and $6

    • $6 and $4

    • $8 and $12

    • $16 and $9

    Correct Answer
    A. $16 and $9
    Explanation
    The consumer equilibrium occurs when the marginal utility per dollar spent is equal for all goods. In this case, the marginal utility of a is 12 and the marginal utility of b is 8. To achieve equilibrium, the consumer should allocate their budget in such a way that the marginal utility per dollar spent on both goods is equal. Since the marginal utility of a is higher, the price of a should be higher as well. Therefore, the prices for a and b respectively should be $16 and $9 to achieve consumer equilibrium.

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  • 21. 

    Suppose you have a limited money income and you are purchasing products a and b whose prices happen to be the same. to maximize your utility you should purchase a and b in such amounts that:

    • Their marginal utilities are the same.

    • Their total utilities are the same.

    • Their marginal and total utilities are proportionate.

    • The income and substitution effects associated with each are equal.

    Correct Answer
    A. Their marginal utilities are the same.
    Explanation
    To maximize utility, it is important to allocate resources in a way that the marginal utility of each product is equal. Marginal utility refers to the additional utility gained from consuming one more unit of a product. When the marginal utilities of products A and B are the same, it means that the utility gained from consuming an additional unit of each product is equal. This ensures that resources are being allocated efficiently, resulting in maximum overall satisfaction or utility.

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  • 22. 

    Diminishing marginal utility explains why:

    • The income effect exceeds the substitution effect.

    • The substitution effect exceeds the income effect.

    • Supply curves are upsloping.

    • Demand curves are downsloping.

    Correct Answer
    A. Demand curves are downsloping.
    Explanation
    Diminishing marginal utility refers to the concept that as individuals consume more of a good or service, the additional satisfaction or utility they derive from each additional unit decreases. This means that individuals are willing to pay less for each additional unit consumed, leading to a downward-sloping demand curve. As individuals consume more of a good, the marginal utility decreases, causing them to be less willing to pay higher prices. Therefore, demand curves are downsloping due to diminishing marginal utility.

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  • 23. 
    What do the income effect, the substitution effect, and diminishing marginal utility have in common? all are required to explain the utility-maximizing position of a consumer.   they are all empirically measurable.   they all help explain the upsloping supply curve. they all help explain the downsloping demand curve. - ProProfs

    What do the income effect, the substitution effect, and diminishing marginal utility have in common? all are required to explain the utility-maximizing position of a consumer.   they are all empirically measurable.   they all help explain the upsloping supply curve. they all help explain the downsloping demand curve.

    • they are all empirically measurable.

    • They all help explain the upsloping supply curve.

    • They all help explain the downsloping demand curve.

    • All are required to explain the utility-maximizing position of a consumer.

    Correct Answer
    A. They all help explain the downsloping demand curve.
    Explanation
    The income effect, the substitution effect, and diminishing marginal utility all contribute to explaining the downsloping demand curve. The income effect refers to the change in quantity demanded due to a change in income, while the substitution effect refers to the change in quantity demanded due to a change in relative prices. Diminishing marginal utility states that as a consumer consumes more of a good, the additional utility derived from each additional unit decreases. These concepts combined help explain why as prices decrease, quantity demanded increases, resulting in a downsloping demand curve.

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  • 24. 
    the diamond-water paradox arises because: essential goods may be cheap while nonessential goods may be expensive. the marginal utility of certain products increases, rather than diminishes.   essential goods are always higher priced than nonessential goods.   we sometimes fail to use money as a standard of value. - ProProfs

    the diamond-water paradox arises because: essential goods may be cheap while nonessential goods may be expensive. the marginal utility of certain products increases, rather than diminishes.   essential goods are always higher priced than nonessential goods.   we sometimes fail to use money as a standard of value.

    • Essential goods may be cheap while nonessential goods may be expensive.

    • The marginal utility of certain products increases, rather than diminishes.

    • essential goods are always higher priced than nonessential goods.

    • We sometimes fail to use money as a standard of value.

    Correct Answer
    A. Essential goods may be cheap while nonessential goods may be expensive.
    Explanation
    The diamond-water paradox arises because essential goods may be cheap while nonessential goods may be expensive. This contradicts the traditional economic theory that states that the value of a good is determined by its utility. In this case, water is essential for survival and has high utility, yet it is relatively inexpensive. On the other hand, diamonds are nonessential and have low utility, yet they are extremely expensive. This paradox challenges the traditional understanding of value and utility in economics.

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  • 25. 

    Which of the following statements is correct?

    • Both cash and noncash gift-giving cause value losses.

    • Neither cash nor noncash gift-giving cause value losses.

    • Noncash gift-giving create a value loss, but cash gifts do not.

    • Cash gifts creates a value loss, but noncash gifts do not.

    Correct Answer
    A. Noncash gift-giving create a value loss, but cash gifts do not.
  • 26. 
    the budget line shows:   the amount of product a that a consumer is willing to give up to obtain one more unit of product b. all possible combinations of two goods that can be purchased, given money income and the prices of the goods.   all equilibrium points on an indifference map.   all possible combinations of two goods that yield the same level of utility to the consumer. - ProProfs

    the budget line shows:   the amount of product a that a consumer is willing to give up to obtain one more unit of product b. all possible combinations of two goods that can be purchased, given money income and the prices of the goods.   all equilibrium points on an indifference map.   all possible combinations of two goods that yield the same level of utility to the consumer.

    • The amount of product a that a consumer is willing to give up to obtain one more unit of product b.

    • All possible combinations of two goods that can be purchased, given money income and the prices of the goods.

    • All equilibrium points on an indifference map.

    • All possible combinations of two goods that yield the same level of utility to the consumer.

    Correct Answer
    A. All possible combinations of two goods that can be purchased, given money income and the prices of the goods.
    Explanation
    The budget line shows all possible combinations of two goods that can be purchased, given money income and the prices of the goods. It represents the different bundles of goods that a consumer can afford to purchase with their given income and the prices of the goods. The budget line helps to determine the trade-offs a consumer has to make between the two goods, as it shows the maximum quantity of one good that can be purchased given the quantity of the other good being purchased.

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  • 27. 

    Any combination of goods lying outside of the budget line:

    • Implies that the consumer is not spending all his income.

    • Yields less utility than any point on the budget line.

    • Yields less utility than any point inside the budget line.

    • Is unobtainable, given the consumer's income.

    Correct Answer
    A. Is unobtainable, given the consumer's income.
    Explanation
    When any combination of goods lies outside of the budget line, it means that the consumer does not have enough income to afford those combinations. Therefore, these combinations are unobtainable for the consumer given their income.

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  • 28. 
    The indifference curve in the above diagram yields juan 100 units of utility. if juan's money income were to increase by 20 percent, the indifference curve would: - ProProfs

    The indifference curve in the above diagram yields juan 100 units of utility. if juan's money income were to increase by 20 percent, the indifference curve would:

    • Shift leftward.

    • Shift rightward.

    • Become steeper.

    • Not be affected.

    Correct Answer
    A. Not be affected.
    Explanation
    If the indifference curve yields Juan 100 units of utility, it means that he is already maximizing his satisfaction given his current income and the prices of goods. If his money income were to increase by 20 percent, it would not affect his level of satisfaction because the indifference curve represents different combinations of goods that give him the same level of utility. Therefore, the indifference curve would not shift leftward or rightward, nor would it become steeper. Hence, the correct answer is that it would not be affected.

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  • 29. 

    At each point on an indifference curve:

    • Money income is the same.

    • The prices of the two products are the same.

    • The prices of the two products are the same. total utility is the same.

    • Marginal utility is the same.

    Correct Answer
    A. The prices of the two products are the same. total utility is the same.
    Explanation
    At each point on an indifference curve, the prices of the two products are the same. This means that the consumer is willing to trade one product for the other at a constant rate, indicating that they have no preference for one product over the other. Total utility, on the other hand, refers to the overall satisfaction or happiness derived from consuming a combination of the two products. It is not necessarily the same at each point on the indifference curve, as it depends on the specific combination of products being consumed. Therefore, the correct answer is that the prices of the two products are the same, not that total utility is the same.

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  • 30. 

    An indifference curve:

    • May be either upsloping or downsloping, depending on whether the two products are complements or substitutes.

    • Is downsloping and convex to the origin.

    • Is upsloping and has a constant slope.

    • Is downsloping and concave to the origin.

    Correct Answer
    A. Is downsloping and convex to the origin.
    Explanation
    An indifference curve represents different combinations of two products that give the consumer the same level of satisfaction. It is downsloping because as the consumer consumes more of one product, they are willing to give up some of the other product to maintain the same level of satisfaction. It is convex to the origin because the consumer experiences diminishing marginal rate of substitution, meaning they are willing to give up less of one product for more of the other as they already have a larger quantity of that product. This convex shape reflects the consumer's preference for variety and diversity in their consumption.

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  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Apr 02, 2012
    Quiz Created by
    Rinscoe

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