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. 2.25

B. 2

C. 1.5

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

B. 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

C. 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.

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

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

Question #5

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

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

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

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

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. contentment

B. opportunity cost

C. utility

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. increasing marginal utility

B. the law of diminishing returns

C. the law of excessive 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; Diminishing Marginal Utility

B. Decrease; Total Utility

C. Decline; Diminishing Marginal Utility

D. Increase; Increasing Marginal Utility

Question #10

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

A. marginal utility increases.

B. total utility rises, but marginal utility falls.

C. total utility decreases, but marginal utility rises.

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

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

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

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

Question #13

Marginal utility can:

A. decrease, but not become negative

B. be positive, negative, or zero

C. increase positively, but not negatively

D. be positive or negative, but not zero

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

C. budget constraint and low-income housing expenses.

D. various categories of economic proverbial wisdom

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. neither can be compared by measuring marginal utility.

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

D. both programs, which have the same 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 marginal utility per dollar is controlled by trade-offs

B. the demand curves are flatter reducing quantity

C. the quantities demanded change so total utility rises

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

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