Question

Question 1

In the video, the marginal rate of substitution decreases as we move down along the indifference curve because:

Select one:

a. the marginal utility of coffee and the marginal utility of pizza both rise.

b. the marginal utility of coffee falls and the marginal utility of pizza rises.

c. the marginal utility of coffee rises and the marginal utility of pizza falls.

d. the marginal utility of coffee and the marginal utility of pizza both fall.

Question 2

What word do economists use for the value that we get from the goods that we consume?

Select one:

a. Consumption value

b. Utility

c. Surplus

d. Goodness

Question 3

Consumers would always prefer to have more of every good they consume, but what prevents them from reaching higher and higher indifference curves?

Select one:

a. The prices they face and their preferences

b. Their preferences and their income

c. The prices they face and their income

d. The prices they face, their income, and their preferences

Question 4

In a world with just two goods, pizza and coffee, which of the following would NOT be a variable that affects a consumer's budget constraint?

Select one:

a. The consumer's preferences

b. The price of coffee

c. The price of pizza

d. The consumer's income

Question 5

Suppose that the MRS is 4 cups of coffee per pizza and that the prices of coffee and pizza are $2.50 and $10 respectively. In this situation:

Select one:

a. You should purchase more pizzas because the price of a pizza is greater than the MRS.

b. You are not maximizing utility since the MRS is equal to 4 but the price ratio is equal to 1/4.

c. You should purchase more cups of coffee because the MRS is greater than the price of a cup of coffee.

d. You are maximizing utility since you and the market value pizza relative to coffee in the same way.

Question 6

Consumers decide to buy another unit of a good by:

Select one:

a. comparing the price of the good to the total utility of the good.

b. comparing the price of the good to the marginal utility of the good.

c. comparing the total spending on the good to the marginal utility of the good.

d. comparing the total spending on the good to the total utility of the good.

Question 7

Which of the following is true of combinations of coffee and pizza shown on the graph of indifference curves?

Select one:

a. Combinations below and to the right of other combinations are better.

b. Combinations below and to the left of other combinations are better.

c. Combinations above and to the left of other combinations are better.

d. Combinations above and to the right of other combinations are better.

Question 8

What is magical about the price of a cup of coffee?

Select one:

a. That the price of a cup of coffee can actually be lower than the marginal cost of producing the cup of coffee

b. That people are actually smart enough to compute what the price of a cup of coffee should be

c. That a cup of coffee can have one price despite there being tens of thousands of types of coffee

d. That one number can contain so much information about so many different variables in the world

Question 9

If the price of a pizza is $12 then when the price of a cup of coffee falls from $4 to $3:

Select one:

a. the opportunity cost of a pizza rises from 3 cups of coffee to 4 cups of coffee.

b. the opportunity cost of a cup of coffee falls from 4 pizzas to 3 pizzas.

c. the opportunity cost of a cup of coffee rises from 3 pizzas to 4 pizzas.

d. the opportunity cost of a pizza falls from 4 cups of coffee to 3 cups of coffee.

Question 10

The law of demand states that:

Select one:

a. if the price of a good falls, then it must be because the quantity of that good demanded has risen.

b. if the price of a good rises, then it must be because the quantity of that good demanded has risen.

c. if the price of a good falls then the quantity of that good demanded will rise.

d. if the price of a good rises then the quantity of that good demanded will rise.

Question 11

Why does Professor Girante mention that Starbucks offers over 80,000 combinations of drinks?

Select one:

a. To show how Starbucks uses bundling and tying to maximize profits.

b. To show the incredible number of choices that consumers face every day.

c. To show the supposed variety that consumers think they enjoy is just an illusion.

d. To show how producers contribute to the difficulty that consumers have making decisions.

Question 12

If, for a consumer choosing between two goods, the MRS equals the price ratio, then:

Select one:

a. we know nothing about whether the consumer is maximizing utility since prices are measured in dollars, not utility.

b. the marginal utility per dollar is equal for the two goods and the consumer is maximizing utility.

c. the marginal utility provided by each good is equal to that good's price, and the consumer is maximizing utility.

d. the marginal utility per dollar for both goods is equal to 1 and the consumer is maximizing utility.

Question 13

The law of demand arises from:

Select one:

a. every producer analyzing the different choices they have and deciding what to produce.

b. every consumer analyzing the different choices they have and deciding what to buy.

c. the law of supply.

d. the law of market equilibrium.

Question 14

Your income is:

Select one:

a. essentially a random variable from the perspective of economists.

b. determined both by factors under your control and factors not under your control.

c. determined entirely by factors not under your control.

d. determined entirely by factors under your control.

Question 15

Which of the following is NOT necessarily true about indifference curves?

Select one:

a. Indifference curves are always symmetrical.

b. Indifference curves further from the origin represent greater levels of utility.

c. Indifference curves slope downward.

d. Indifference curves cannot intersect each other.

Answer 1

Answering only first four MCQ are mandatory

Q1) option B)

As we move down along the IC , ( if coffee is on horizontal axis ) then more consumption of coffee , leads to fall in MU from coffee

& As less consumption of pizza , MU of pizza rises

So as MRS = MUc/MUp

So MRS Diminish

2) option B)

Consumption leads to Utility

3) option C)

Consumer maximizes the utility subject to the budget constraint

So budget constraint depends upon income & prices

Preferences leads to Utility function

4) option A)

consumer preferences is not variable

5) option B)

At eqm, MRS = price ratio

MRS_{​​​​C,P} =Pc/Pp

4 not equals to 2.5/10 = 1/4, so D is false

So MRS > Pc/Pp

So C is false , MRS is greater than price ratio & not price of Coffee alone

So MUc/Pc > MUp/Pp

So consume more Coffee & less pizza

Only B is right

6)option. B)

If MU > price , then additional unit of good is Consumed

7) option D)

combination above & to right, lie on higher IC & so provide more utility & Hence are preferred