Pre-Test Chapter 19 ed17

Pre-Test Chapter 19 ed17 - Pre-Test Chapter 19 ed17...

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Pre-Test Chapter 19 ed17 Multiple Choice Questions 1. (Consider This) Unlike newspaper dispensing devices, soft drink dispensing machines do not permit people to take more than one can or bottle with each payment. The reason is that the: A. opportunity cost of additional cans or bottles of soft drink increase very rapidly. B. marginal utility of extra soft drink cans or bottles declines slowly, particularly because they are storable and can be consumed later. C. marginal utility of extra soft drink cans or bottles declines quite rapidly. D. opportunity cost of additional cans or bottles of soft drink increase very slowly. 2. The indifference curve in the above diagram yields Juan 100 units of utility. If Juan's money income were to increase by 20 percent, the indifference curve would: A. shift leftward. B. shift rightward. C. become steeper. D. not be affected. 3. "Essential" water is cheaper than "nonessential" diamonds because: A. new industrial uses for diamonds have been discovered. B. the supply of water is great relative to demand and the supply of diamonds is small relative to demand. C. although the total utility of diamonds is greater, their marginal utility is small. D. the supply of diamonds is great relative to demand and the supply of water is small relative to demand. 4. Refer to the above diagram where xy is the relevant budget line and I 1 , I 2 , and I 3 are indifference curves. The equilibrium position for the consumer is at: A. any point on xy . B. point M . C. point K . D. point J . 5. Suppose you have a limited money income and you are purchasing products A and B whose prices happen to be the same. To maximize your utility you should purchase A and B in such amounts that: A. their marginal utilities are the same. B. their total utilities are the same. C. their marginal and total utilities are proportionate. D. the income and substitution effects associated with each are equal. 6. Where total utility is at a maximum, marginal utility is: A. negative. B. positive and increasing. C. zero. D. positive but decreasing. 7. In purchasing products A and B, a consumer is in equilibrium when: A. MU a / P a = MU b / P b B. MU a / P b = MU b / P a C. MU a - MU b = P a / P b
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D. MU a P a = MU b P b 8. Refer to the budget line shown in the diagram above. The absolute value of the slope of the budget line
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Pre-Test Chapter 19 ed17 - Pre-Test Chapter 19 ed17...

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