Chapter 5: THEORY OF CONSUMER BEHAVIOR
5-41 Based on the above graph, if income is $800, how many units of Y will the consumer choose?
a. 6
b. 7
c. 8
d. 9
e. 10
5-42 According to the following graph, what is Y1?
Chapter 5: THEORY OF CONSUMER BEHAVIOR
The consumer’s income is $1,200.
a. 30
b. 80
c. 110
d. 120
e. none of the above
5-43 According to the following graph, at what price of Y are Y2 units demanded?
Chapter 5: THEORY OF CONSUMER BEHAVIOR
The consumer’s income is $1,200.
a. $ 8
b. $10
c. $15
d. $16
e. $12
Chapter 5: THEORY OF CONSUMER BEHAVIOR
5-44 According to the following graph, at point B,
The consumer’s income is $1,200.
a. the rate at which the consumer is willing to substitute X for Y is greater than it is at point
A.
b. the consumer is willing to give up more Y in order to gain an extra unit of X than at point
A.
c. the consumer will receive more Y for each unit of X exchanged in the market than at point
A.
d. both a and b
e. all of the above
Chapter 5: THEORY OF CONSUMER BEHAVIOR
5-45 Lord Greystroke uses his limited income to purchase fruits and nuts; he is currently buying 10
pounds of fruits at a price of $2 per pound and 5 pounds of nuts at a price of $6 per pound. The
last pound of fruits added 10 units to Lord Greystroke’s total utility, while the last pound of nuts
added 30 units. Lord Greystroke
a. is making the utility-maximizing choice.
b. should buy more fruits and less nuts because the last pound of fruits cost less than the last
pound of nuts.
c. should buy more fruits and less nuts because the last dollar spent on fruits added more to
total utility than the last dollar spent on nuts.
d. should buy more nuts and less fruits because the last pound of nuts added more to total
utility than the last pound of fruits.
e. should buy more nuts and less fruits because the last dollar spent on nuts added more to
total utility than the last dollar spent on fruits.
5-47 According to the following graph, if U2 is the maximum attainable utility, the price of X is
The price of Y is $50.
a. $10.
b. $15.
c. $20.
d. $25.
e. none of the above
Chapter 5: THEORY OF CONSUMER BEHAVIOR
5-48 According to the following graph, at point A,
The price of Y is $50.
a. the consumer can exchange two units of X for one unit of Y and keep utility unchanged.
b. the consumer can exchange two units of X for one unit of Y and keep income unchanged.
c. the consumer receives twice as much marginal utility from X as from Y.
d. both a and b
e. all of the above
5-49 According to the following graphs, the consumer’s demand curve for X is
The price of Y is $50.
a. D1.
Chapter 5: THEORY OF CONSUMER BEHAVIOR
b. D2.
c. D3.
d. D4.
5-50 Suppose that 25 units of X and 16 units of Y give a consumer the same satisfaction as 15 units of
X and 18 units of Y. Then
a. the consumer can exchange five units of X for one unit of Y and keep utility unchanged.
b. the consumer can exchange one unit of X for 1/5 unit of Y and keep utility unchanged.
c. the market rate of exchange of X for Y is 1/5.
d. both a and b
e. all of the above
5-51 Lulu consumes only candy and cookies; she is currently buying more cookies than candy with her
limited income. The last bag of candy gave Lulu the same additional utility as the last bag of
cookies, and the prices of candy and cookies are the same. Lulu
a. is maximizing utility given a limited income because the prices of candy and cookies are
the same.
b. is maximizing satisfaction given a limited income because the marginal utility per dollar
is the same for candy and cookies.
c. could get more satisfaction from the same income by buying more candy and less
cookies.
d. could get more satisfaction from the same income by buying more cookies and less
candy.
Chapter 5: THEORY OF CONSUMER BEHAVIOR
5-52 According to the following graphs, what is
1
Y
?
The price of Y is $15 per unit.
a. 12
b. 15
c. 20
d. 25
e. none of the above
5-53 According to the following graphs, what is
1
X
?
Chapter 5: THEORY OF CONSUMER BEHAVIOR
The price of Y is $15 per unit.
a. 10
b. 12
c. 18
d. 20
e. none of the above
5-54 According to the following graphs, at point B,
Chapter 5: THEORY OF CONSUMER BEHAVIOR
The price of Y is $15 per unit.
a. the consumer can exchange one unit of X for one unit of Y and keep income unchanged.
b. the marginal rate of substitution of X for Y is greater than it is at point A.
c. the consumer’s utility is greater than it is at point A.
d. both a and b
e. all of the above
5-55 According to the following graphs, what does the curve in the lower graph show?
Chapter 5: THEORY OF CONSUMER BEHAVIOR
The price of Y is $15 per unit.
a. how a consumer’s utility-maximizing choices of X and Y change when the budget
constraint changes
b. how a consumer’s preferences change when income changes
c. how a consumer’s utility-maximizing choices of X changes when the price of X changes
d. how a consumer’s utility-maximizing choices of Y changes when the price of Y changes
e. both c and d
5-56 Suppose that utility-maximizing consumers in San Francisco pay three times as much for apples
as for peaches. What is the ratio of the marginal utility of apples to the marginal utility of
peaches?
Chapter 5: THEORY OF CONSUMER BEHAVIOR
a. 1/3
b. 2/3
c. 3
d. none of the above
e. cannot determine without further information
5-57 Assume that an individual consumes two goods, X and Y. The total utility (assumed measurable)
of each good is independent of the rate of consumption of other goods. The prices of X and Y are,
respectively, $5 and $10.
Units of the Good
Total Utility of X
Total Utility of Y
1
2
3
4
5
6
7
8
50
95
135
170
200
225
245
260
400
750
950
1100
1220
1320
1400
1450
Given the above, if the consumer buys the third unit of Y,
a. the marginal utility of the third unit is 950 units of satisfaction.
b. the marginal utility per dollar spent on Y is 200.
c. the marginal utility per dollar spent on Y is 20.
d. both a and b.
5-58 Assume that an individual consumes two goods, X and Y. The total utility (assumed measurable)
of each good is independent of the rate of consumption of other goods. The prices of X and Y are,
respectively, $5 and $10.
Units of the Good
Total Utility of X
Total Utility of Y
1
2
3
4
5
6
7
8
50
95
135
170
200
225
245
260
400
750
950
1100
1220
1320
1400
1450
Given the above, if the consumer has $65 to spend on X and Y, the utility-maximizing bundle is
Chapter 5: THEORY OF CONSUMER BEHAVIOR
a. 3X and 5Y.
b. 4X and 4Y.
c. 5X and 2Y.
d. 1X and 6Y.
e. 2X and 7Y.
5-59 Assume that an individual consumes two goods, X and Y. The total utility (assumed measurable)
of each good is independent of the rate of consumption of other goods. The prices of X and Y are,
respectively, $5 and $10.
Units of the Good
Total Utility of X
Total Utility of Y
1
2
3
4
5
6
7
8
50
95
135
170
200
225
245
260
400
750
950
1100
1220
1320
1400
1450
Given the above, if the consumer has $110 to spend on X and Y, which combination will the
consumer choose?
a. 5X and 4Y
b. 6X and 8Y
c. 7X and 6Y
d. 8X and 7Y
e. 7X and 7Y
Chapter 5: THEORY OF CONSUMER BEHAVIOR
5-60 What is the equation for budget line LM, given the above graph?
a. Y = 10 + 1.5X
b. Y = 10 − (2/3)X
c. Y = 1.5 + 1.5X
d. Y = 1.5 − 10X
e. Y = 0.667 + 1.5X
Chapter 5: THEORY OF CONSUMER BEHAVIOR
5-61 What is the equation for budget line RS, given the above graph?
a. Y = 10 + 18X
b. Y = 10 − 1.8X
c. Y = 15 + (9/5)X
d. Y = 1.8 + (9/5)X
e. Y = 18 − (18/10)X
5-62 The market demand curve
a. shows how much all consumers demand at various prices.
b. is the vertical summation of the demand curves of all the consumers in the market.
c. is quite complex to construct, given the demand curves of the individual consumers.
d. all of the above
5-63 Market demand
a. is the horizontal summation of the individual demand curves.
b. slopes downward.
c. shows how market purchases vary with price.
d. both a and b
e. all of the above
Chapter 5: THEORY OF CONSUMER BEHAVIOR
5-64 Assume James purchases only two goods, steak and chicken, with his weekly income of $60. The
price of steak is $10 and the price of chicken is $5. The following table shows the marginal utility
James gets from each additional pound of steak and chicken:
Quantity
Marginal utility of
steak
Marginal utility of
chicken
1
70
50
2
60
40
3
50
30
4
40
20
5
32
10
6
16
5
Given the above information, what quantities of steak and chicken should James purchase to
maximize his utility?
a. 3 steak, 2 chicken
b. 5 steak, 2 chicken
c. 4 steak, 4 chicken
d. 2 steak, 5 chicken
e. none of the above
5-65 Assume James purchases only two goods, steak and chicken, with his weekly income of $60. The
price of steak is $10 and the price of chicken is $5. The following table shows the marginal utility
James gets from each additional pound of steak and chicken:
Quantity
Marginal utility of
steak
Marginal utility of
chicken
1
70
50
2
60
40
Chapter 5: THEORY OF CONSUMER BEHAVIOR
3
50
30
4
40
20
5
32
10
6
16
5
Given the above information, if the price of steak falls to $8, what quantities of steak and chicken
should James purchase to maximize his utility?
a. 6 steak, 2 chicken
b. 5 steak, 3 chicken
c. 4 steak, 4 chicken
d. 5 steak, 4 chicken
e. 3 steak, 6 chicken
5-66 Refer to the following indifference map for a consumer who has an income of $48 to spend on
goods X and Y and the market prices of X and Y are both $4:
Chapter 5: THEORY OF CONSUMER BEHAVIOR
In order to maximize utility subject to her budget constraint, this consumer should buy how many
units of good X?
a. 0
b. 4
c. 6
d. 8
e. 12
5-67 Refer to the following indifference map for a consumer who has an income of $48 to spend on
goods X and Y and the market prices of X and Y are both $4:
Now suppose the price of good X increases to $12 while the price of good Y remains $4. Utility
will be maximized on which indifference curve?
a. I
b. II
c. III
d. On an indifference curve below I
5-68 Refer to the following indifference map for a consumer who has an income of $48 to spend on
goods X and Y and the market prices of X and Y are both $4:
Chapter 5: THEORY OF CONSUMER BEHAVIOR
After the price of good X increases to $12 while the price of good Y remains $4, how many units
of good X would be purchased?
a. 0
b. 2
c. 4
d. 8
e. 12
5-69 The consumer faces a budget constraint because the market price of X is $3, the market price of Y
is $3, and the consumer’s budget is $90.How many units of X and Y would be purchased?
a. 0 units of X, 0 units of Y.
b. 10 units of X, 20 units of Y.
c. 20 units of X, 20 units of Y.
d. 30 units of X, 30 units of Y.
5-70 The consumer faces a budget constraint because the market price of X is $3, the market price of Y
is $3, and the consumer’s budget is $90. In order for this consumer to choose the corner solution
at point E, which of the following must occur?
Chapter 5: THEORY OF CONSUMER BEHAVIOR
a. price of X must rise to $6.
b. price of Y must rise to $6.
c. price of X must rise to $9.
d. price of Y must rise to $9.