31
96) When the price of a good decreases, the budget constraint shifts out parallel to the original budget
constraint.
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–10
97) Assuming a perfectly competitive market implies that households have perfect knowledge of qualities
and prices of everything available in the market.
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–13
98) Homogeneous products are distinguishable from each other.
Topic: Household Choices in Output Markets
Skill: Definition
Learning Outcome: Micro–13
99) Price increases cause a decrease in a household’s choice set.
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–11
100) Income increases cause no change in a household’s choice set.
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–11
101) When the price of a good decreases, the budget constraint does not change.
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–10
32
102) When the price of a good increases, the budget constraint shifts in parallel to the original budget
constraint.
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–10
103) Assuming a perfectly competitive market implies that households do not need knowledge of
qualities and prices of everything available in the market.
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–13
104) Homogeneous products are indistinguishable from each other.
Topic: Household Choices in Output Markets
Skill: Definition
Learning Outcome: Micro–13
105) Price decreases cause no change in a household’s choice set.
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–11
106) Income decreases cause a decrease in a household’s choice set.
Answer: TRUE
Diff: 2
Topic: Household Choices in Output Markets
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–11
33
Copyright © 2017 Pearson Education, Inc.
6.2 The Basis of Choice: Utility
1) Marginal utility is the ________ satisfaction gained by consuming ________ of a good.
A) total; all units
B) total; one more unit
C) additional; all units
D) additional; one more unit
Topic: The Basis of Choice: Utility
Skill: Definition
Learning Outcome: Micro–10
2) Kathy eats five slices of pizza on a Saturday night but admits each slice of pizza doesn’t taste as good
as the previous one. This suggests that for Kathy the
A) marginal utility of a slice of pizza is positive but decreasing.
B) marginal utility of a slice of pizza is negative.
C) total utility of slices of pizza is declining.
D) total utility of slices of pizza is increasing by larger and larger increments.
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–10
34
Refer to the information provided in Figure 6.8 below to answer the question(s) that follow.
Figure 6.8
3) Refer to Figure 6.8. The marginal utility of the first movie rental is
A) 0.
B) 15.
C) 25.
D) 40.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
4) Refer to Figure 6.8. The marginal utility of the fourth movie rental is
A) 0.
B) 3.
C) 25.
D) 28.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
35
5) Refer to Figure 6.8. The ________ movie rental has a marginal utility of zero.
A) first
B) second
C) third
D) fourth
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
6) Refer to Figure 6.8. The total utility of the three movies is ________ and the marginal utility of the third
movie is ________.
A) 15; 0
B) 25; 10
C) 28; 3
D) 0; 0
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
7) Refer to Figure 6.8. The marginal utility of the second movie rental is
A) 0.
B) 10.
C) 25.
D) 40.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
8) Refer to Figure 6.8. The marginal utility of the third movie rental is
A) 0.
B) 3.
C) 12.
D) 28.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
36
9) Refer to Figure 6.8. The ________ movie rental has a marginal utility of fifteen.
A) first
B) second
C) third
D) fourth
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
10) Refer to Figure 6.8. The total utility of four movies is ________ and the fourth movie’s marginal utility
is ________.
A) 15; 0
B) 25; 10
C) 28; 3
D) 28; 0
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
37
Refer to the information provided in Figure 6.9 below to answer the question(s) that follow.
Figure 6.9
11) Refer to Figure 6.9. The marginal utility of the second video game rental is
A) 8.
B) 10.
C) 25.
D) 40.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
12) Refer to Figure 6.9. The marginal utility of the fourth video game rental is
A) 0.
B) 4.
C) 8.
D) 22.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
38
13) Refer to Figure 6.9. The ________ video game rental has a marginal utility of zero.
A) first
B) second
C) third
D) fourth
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
14) Refer to Figure 6.9. The marginal utility of the first video game rental is
A) 8.
B) 10.
C) 25.
D) 40.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
15) Refer to Figure 6.9. The marginal utility of the third video game rental is
A) 0.
B) 4.
C) 8.
D) 22.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
16) Refer to Figure 6.9. The ________ video game rental has a marginal utility of eight.
A) first
B) second
C) third
D) fourth
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
39
Refer to the information provided in Table 6.1 below to answer the question(s) that follow.
Table 6.1
Number of
Hamburgers per Day
Total Utility Marginal Utility
1
30
2
52
3
67
4
76
5
4
Number of
Sodas per Day
Total Utility Marginal Utility
1
20
2
35
3
47
4
57
5
7
17) Refer to Table 6.1. The marginal utility of the second hamburger per day is
A) 10.
B) 15.
C) 22.
D) 52.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
18) Refer to Table 6.1. The marginal utility of the third hamburger per day is
A) 5.
B) 15.
C) 22.
D) 67.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
40
19) Refer to Table 6.1. Diminishing marginal utility sets in after the ________ soda per day.
A) first
B) second
C) third
D) fourth
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
20) Refer to Table 6.1. The total utility of five hamburgers per day is
A) 76.
B) 80.
C) 96.
D) indeterminate from this information.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
21) Refer to Table 6.1. The total utility of five sodas per day is
A) 35.
B) 64.
C) 92.
D) indeterminate from this information.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
22) Refer to Table 6.1. If the price of a soda is $2, the price of a hamburger is $6, and George has $14 of
income, George’s utility–maximizing combination of sodas and hamburgers per day is
A) 1 soda and 2 hamburgers.
B) 4 sodas and 1 hamburger.
C) 3 sodas and 1.5 hamburgers.
D) indeterminate from this information.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10