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Unformatted text preview: ECON 3070 Intermediate Microeconomic Theory: Practice Multiple-Choice Questions 1 ECON 3070 Intermediate Microeconomic Theory Practice Multiple-Choice Questions Utility and Choice 1. As long as the principle of diminishing marginal utility is operating, any increased consumption of a good a. lowers total utility. b. produces negative total utility. c. lowers marginal utility and, therefore, total utility. d. lowers marginal utility, but may raise total utility. 2. Among all the combinations of goods attainable by a consumer, the one that maximizes total utility is the one that a. maximizes the marginal utilities per dollar of each good. b. maximizes the marginal utilities per pound (or other physical unit) of each good. c. equates the marginal utilities per dollar of each good. d. equates the marginal utilities per pound (or other physical unit) of each good. 3. A utility contour (or indifference curve) shows all the alternative combinations of two consumption goods that a. can be produced with a given set of resources and technology. b. yield the same total of utility. c. can be purchased with a given budget at given prices. d. equate the marginal utilities of these goods and, therefore, make the consumer indifferent between them. When answering questions 4-6, consider the accompanying graph of a person’s consumption-indifference curves: 4. This graph indicates that the consumer a. at A is indifferent between 0 a of apples and 0 b of butter b. at A is consuming either 0 a of apples or 0 b of butter. c. is indifferent between 0 a of apples plus 0 b of butter on the one hand and 0 c of apples plus 0 d of butter on the other. d. is correctly described by all of the above. ECON 3070 Intermediate Microeconomic Theory: Practice Multiple-Choice Questions 2 5. This graph also indicates that the consumer prefers combination a. A to B . b. C to B . c. B to D . d. E to F . 6. This graph also shows the consumer’s marginal rate of substitution in the AB range to be a. a of apples for 0 d of butter. b. a of apples for 0 b of butter. c. c of apples for 0 d of butter. d. ac of apples for bd of butter. 7. At any given point on an indifference curve, the absolute value of the slope equals a. unity--otherwise there would be no indifference. b. the marginal rate of substitution. c. the consumer’s marginal utility. d. none of the above. 8. If a consumer’s marginal rate of substitution equals 2 eggs for 1 hamburger, a. the consumer’s indifference curve must be positively sloped. b. the consumer’s indifference curve must be convex with respect to the origin of the graph. c. the ratio of the consumer’s marginal utility of 1 egg to that of 1 hamburger must equal ½....
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This note was uploaded on 04/08/2008 for the course ECON 3070 taught by Professor Loh,joyce during the Spring '07 term at Colorado.
- Spring '07