West Los Angeles College » Economics » Econ 001 - Principles of Microeconomics » Summer 2019

Econ 001 - Principles of Microeconomics » Summer 2019 » Quiz 7

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Question #1

Which of these statements best fits how a behavioral economist might view a situation?

A. If you lost $20 today but then found $20 later on, you feel neutral because it's as if you never lost anything at all.

B. If you find $100 on the street, you will be more likely to spend if freely than you would be to take $100 out of your bank account.

C. Dollars are fungible, or have equal value to the individual, regardless of the situation.

Question #2

According to Daniel Kahneman and Amon Tversky, a $1 loss pains us ________ times more than a $1 gain helps us.

A. 1.5

B. 2.25

C. 2

Question #3

Select all the reasons why a decrease in the price of a product would lead to an increase in purchases of the product.,,

A. The income effect says that after the price decline, the consumer could purchase the same goods as before, and still have money left over to purchase more

B. The substitution effect says that because the product is cheaper relative to other things the consumer purchases, he or she will tend to buy more of the product.

C. The utility effect says that because the product is cheaper, a person can gain more utils of satisfaction through its purchase.

Question #4

A budget line for Shannon shows her consumption options for two of her favorite goods. An increase in a Shannon’s income would lead to:

A. a parallel shift in her budget line to the left, allowing her to buy less of both goods.

B. either a shift of the budget line to the right or the left depending on Shannon’s personal preferences.

C. a parallel shift in her budget line to the right, allowing her to buy more of both goods.

Question #5

Who determines how much utility an individual will receive from consuming a good?

A. Utility is determined by one's own preferences.

B. Producers determine utility by averaging the number of utils reported in customer feedback surveys.

C. Utility is determined by the supply and demand curves.

Question #6

What concept is defined as the value, or satisfaction, that people derive from the goods and services they consume and the activities they pursue?

A. opportunity cost

B. utility

C. contentment

Question #7

Economists believe that:

A. Utility can be measured like temperature.

B. Utility is impersonal and objective.

C. Utility is personal and subjective.

Question #8

Receiving less and less enjoyment from a second and then a third serving of ice cream is an example of ________.

A. the law of excessive returns

B. increasing marginal utility

C. the law of diminishing returns

Question #9

If you consume pasta every day of the week, its marginal utility is bound to ________ at the end of the week, ceteris paribus, and this demonstrates the law of ________.

A. Increase; Increasing Marginal Utility

B. Increase; Diminishing Marginal Utility

C. Decline; Diminishing Marginal Utility

D. Decrease; Total Utility

Question #10

The typical pattern revealed when consumers choose is that as the quantity consumed of some product rises,

A. total utility decreases, but marginal utility rises.

B. marginal utility increases.

C. total utility rises, but marginal utility falls.

D. total utility decreases.

Question #11

The difference between total utility and marginal utility is that,,

A. total utility is more accurate than marginal utility.

B. total utility is usually larger than marginal utility.

C. total utility is cumulate and marginal utility is not.

Question #12

Economists are able to determine total utility by:

A. summing up the marginal utilities of each unit consumed.

B. multiplying the marginal utility of the last unit consumed by the unit price.

C. multiplying the marginal utility of the first unit consumed by the number of units consumed.

D. multiplying the marginal utility of the last unit consumed by the number of units consumed.

Question #13

Marginal utility can:

A. be positive, negative, or zero

B. be positive or negative, but not zero

C. decrease, but not become negative

D. increase positively, but not negatively

Question #14

The step-by-step process of finding the choice with the highest total utility involves a comparison of the:

A. marginal utility gained and lost from different choices along the budget constraint.

B. budget constraint and low-income housing expenses.

C. various categories of economic proverbial wisdom

D. household consumption choice budget and the labor-leisure budget using an utilimometer.

Question #15

The government wants to make Medicare benefits available to more people, but to achieve this goal, it needs to make cuts in the existing Medicare budget. The two areas where they are considering cuts are nonessential elective surgery and 6-12 month mental health care programs. Applying the concept of diminishing marginal utility, the budget cuts should be made for spending on:

A. mental health therapy due to its higher marginal utility per dollar of expenditure.

B. both programs, which have the same marginal utility per dollar of expenditure.

C. neither can be compared by measuring marginal utility.

D. elective surgery due to its lower marginal utility per dollar of expenditure.

Question #16

Which of the following is considered to be a tell-tale signal that the choice with the highest total utility has been found?

A. the demand curves are flatter reducing quantity

B. the marginal utility per dollar is the same for both goods

C. the marginal utility per dollar is controlled by trade-offs

D. the quantities demanded change so total utility rises

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