Ecoecon 3070 Intermediate Microeconomic Theory Practice Multiple-Choice Questions

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 0a of apples and 0b of butter b. at A is consuming either 0a of apples or 0b of butter. c. is indifferent between 0a of apples plus 0b of butter on the one hand and 0c of apples plus 0d of butter on the other. d. is correctly described by all of the above.

ECON 3070 Intermediate Microeconomic Theory: Practice Multiple-Choice Questions

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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. 0a of apples for 0d of butter. b. 0a of apples for 0b of butter. c. 0c of apples for 0d...