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Exam 7: Consumer Behavior

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Question 1

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Sam has $200 a month to spend on either tanning sessions or rounds of golf. Tanning sessions are $20 each and a round of golf is $40. What can we say about Sam's utility?

A) Sam will receive more utility from each round of golf than each tanning session.
B) Sam will receive the same utility from one round of golf as he would from two tanning sessions.
C) Sam will maximize the utility he receives from 2 rounds of golf and 6 tanning sessions.
D) This question cannot be answered without more information.

E) None of the above
F) A) and C)

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Question 2

Multiple Choice

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Economists assume that an individual chooses the option that:

A) gives the individual the least utility.
B) gives the individual the most utility.
C) creates the most utility for society.
D) is the most efficient choice.

E) C) and D)
F) B) and D)

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Question 3

Multiple Choice

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

Assume the graph shown displays Nadia's total utility function for pairs of gloves. Which of the following statements is true?I. The marginal utility of the 10th of gloves is negative.II. The marginal utility of gloves increases first and then decreases.III. The marginal utility of the 6th pair of gloves is smaller than the marginal utility of the 1st pair of gloves.

Assume the graph shown represents Isaac's budget constraint. Isaac has $60 to spend on movie rentals and movie theater tickets. Which of the following can be said about Isaac's choices?

The table shown describes all the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items. The bundle of goods that will give Jack the highest total utility 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:

Riding her bike for one hour has given Aditi a utility of 7. If Aditi chooses to ride her bike for another hour, we can assume that:

The table shown describes the different combinations of goods that Jack can consume, given that his income to spend on these two items is $10. If Jack's income increases to $16, he could afford to buy:

Johnny spends his Saturday doing a variety of activities. In the morning he exercises and does yard work. He reads in the afternoon and hosts a dinner party in the evening. Economists would say his choice to do a variety of activities instead of spending all of his time on one activity illustrates the concept of:

Kimberly decides to decrease her hours at work to focus on school. Now that she has less income, she finds herself eating less steak and more pasta than ever before. What can we conclude about these goods?

The table shown describes the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items. Considering the information in the table, what is the price of an ice cream cone?

When someone is served pizza and soda for dinner, that individual would typically eat some pizza, then drink some soda, then eat more pizza, and so on, until consumption of both pizza and soda ceases. How can this behavior be explained using economic concepts?

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

If Xavier's budget constraint is represented in the graph shown, and the price of a bag of chips is $3, what is Xavier's income?

Assume Kara's budget constraint is represented by line A in the graph shown, and that her income to spend on these two items is $24. Her budget constraint will move to line B if the price of movie tickets:

Assume Jordan's budget constraint is represented in the graph shown. If Jordan's income is $18, what are the prices of these two goods?

Marginal utility:

Max is shopping for a new winter jacket. He is deciding between two coats that have identical features but are made by different brands: Columbia and Michael Kors. The Columbia jacket costs $120 and the Michael Kors jacket costs $300. Max decides to buy the Michael Kors jacket. This indicates that the Michael Kors jacket may be a(n) _____ good.

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: