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  Assume Alan's budget constraint is represented by line A in the graph shown. Which of the following would cause Alan's budget constraint to move to line B? A) The price of books decreases. B) The price of books increases. C) The price of movie tickets increases. D) The price of movie tickets decreases. Assume Alan's budget constraint is represented by line A in the graph shown. Which of the following would cause Alan's budget constraint to move to line B?


A) The price of books decreases.
B) The price of books increases.
C) The price of movie tickets increases.
D) The price of movie tickets decreases.

E) None of the above
F) C) and D)

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The table shown describes the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items. The table shown describes the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items.   What is the total utility Jack will receive if he consumes bundle D? A) 1,160 B) 1,300 C) 950 D) 2,220 What is the total utility Jack will receive if he consumes bundle D?


A) 1,160
B) 1,300
C) 950
D) 2,220

E) A) and B)
F) B) and D)

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The concept of utility maximization:


A) is solely used to measure an individual's satisfaction with consumption choices.
B) can be used broadly to think about choices that are motivated by satisfaction, envy, status, or kindness.
C) assumes that individuals seek to increase their own personal satisfaction regardless of others.
D) None of these are true.

E) A) and B)
F) B) and C)

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Sam has $200 a month to spend on two normal goods-tanning sessions and rounds of golf. Tanning sessions are $20 each, and a round of golf is $40. Sam currently consumes six tanning sessions and two rounds of golf each month. If the price of a round of golf drops to $20, the income effect predicts that Sam will:


A) increase his consumption of both rounds of golf and tanning sessions.
B) double his consumption of rounds of golf.
C) consume more rounds of golf and fewer tanning sessions.
D) consume fewer rounds of golf and more tanning sessions.

E) A) and C)
F) A) and D)

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  Assume the graph shown represents Laila's budget constraint. If a movie rental costs $4, what income must Laila have to spend on these two items? A) $18 B) $16 C) $56 D) Cannot be determined without more information. Assume the graph shown represents Laila's budget constraint. If a movie rental costs $4, what income must Laila have to spend on these two items?


A) $18
B) $16
C) $56
D) Cannot be determined without more information.

E) B) and D)
F) None of the above

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  If the graph shown represents Jordan's budget constraint, which of the following must be true? A) Jordan will spend twice as much on burritos as she does on salads. B) Jordan could consume either four salads or eight burritos. C) Jordan gets twice as much utility from salads as she does from burritos. D) All of these are correct. If the graph shown represents Jordan's budget constraint, which of the following must be true?


A) Jordan will spend twice as much on burritos as she does on salads.
B) Jordan could consume either four salads or eight burritos.
C) Jordan gets twice as much utility from salads as she does from burritos.
D) All of these are correct.

E) A) and B)
F) C) and D)

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  Assume Dawn's budget constraint is represented in the graph. If Dawn's income increases and she spends all her income on these two goods, then Dawn's total utility from consuming these two goods will likely: A) increase, because she can afford more of both goods now. B) decrease, because the marginal utility of consuming additional items decreases. C) decrease, because she would be buying more of these goods than desired. D) decrease, because the marginal utility of consuming additional items increases. Assume Dawn's budget constraint is represented in the graph. If Dawn's income increases and she spends all her income on these two goods, then Dawn's total utility from consuming these two goods will likely:


A) increase, because she can afford more of both goods now.
B) decrease, because the marginal utility of consuming additional items decreases.
C) decrease, because she would be buying more of these goods than desired.
D) decrease, because the marginal utility of consuming additional items increases.

E) C) and D)
F) A) and D)

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  Assume Doug's budget constraint is represented by line C in the graph shown. Which of the following would cause Doug's budget constraint to shift to line B? A) Doug loses his job. B) Doug finds soda at a warehouse outlet for a lower price. C) Doug's grocery store raises the price of milk by 10 percent. D) Doug's grocery store lowers all prices by 33 percent. Assume Doug's budget constraint is represented by line C in the graph shown. Which of the following would cause Doug's budget constraint to shift to line B?


A) Doug loses his job.
B) Doug finds soda at a warehouse outlet for a lower price.
C) Doug's grocery store raises the price of milk by 10 percent.
D) Doug's grocery store lowers all prices by 33 percent.

E) None of the above
F) A) and B)

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Elijah has just eaten his second popsicle. Using the concept of marginal utility, we can say that the utility he will receive from eating a third popsicle will:


A) reduce his total utility.
B) not reduce his total utility.
C) be less than the utility he received from the second popsicle, but will still increase his total utility.
D) be less than the utility he received from the second popsicle, and may increase or decrease his total utility.

E) B) and C)
F) A) and B)

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Thinking about the total utility gained from the consumption of a typical good, we can say in general that:


A) total utility will rise, peak, and then decline as more and more units are consumed.
B) consuming more and more units of a good will eventually cause marginal utility to increase.
C) total utility will increase by decreasing amounts until it is maximized, after which it declines.
D) total utility is maximized at the point at which the marginal utility is greatest.

E) All of the above
F) A) and D)

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  Assume the graph shown displays Caleb's marginal utility for pairs of shoes. Which of the following statements is true? Remove rule below A. Caleb's A) Caleb's total utility decreases as the number of shoes increases. B) Caleb does not like shoes. C) Caleb's total utility is negative after eight pairs of shoes. D) Caleb's total utility starts decreasing after eight pairs of shoes. Assume the graph shown displays Caleb's marginal utility for pairs of shoes. Which of the following statements is true? Remove rule below A. Caleb's


A) Caleb's total utility decreases as the number of shoes increases.
B) Caleb does not like shoes.
C) Caleb's total utility is negative after eight pairs of shoes.
D) Caleb's total utility starts decreasing after eight pairs of shoes.

E) None of the above
F) A) and D)

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Individuals will make choices to maximize their:


A) constraints.
B) utility.
C) income.
D) values.

E) A) and B)
F) All of the above

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  Assume Hannah's budget constraint is represented in the graph shown. If the price of movie theater tickets decreases, the slope of Hannah's budget constraint would become _____, reflecting the fact that _____ are now relatively _____ expensive. A) steeper; movie theater tickets; less B) flatter; movie theater tickets; more C) steeper; movie rentals; less D) flatter; movie rentals; more Assume Hannah's budget constraint is represented in the graph shown. If the price of movie theater tickets decreases, the slope of Hannah's budget constraint would become _____, reflecting the fact that _____ are now relatively _____ expensive.


A) steeper; movie theater tickets; less
B) flatter; movie theater tickets; more
C) steeper; movie rentals; less
D) flatter; movie rentals; more

E) C) and D)
F) B) and C)

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Utility is useful when:


A) comparing the relative satisfaction different consumers receive from a particular good.
B) predicting whether a good or service will sell more if the price is lowered.
C) quantitatively describing a person's preferences for one good over another.
D) describing exactly how much an individual values one particular good.

E) A) and B)
F) A) and C)

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When an individual's income increases, the budget constraint:


A) shifts straight out, maintaining the same slope.
B) shifts straight in, maintaining the same slope.
C) rotates out and becomes flatter.
D) rotates in and becomes steeper.

E) C) and D)
F) B) and D)

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Cameron wears stylish and professional shoes to work every day. He would be more comfortable in sneakers, but he chooses to wear the uncomfortable dress shoes. How might an economist explain this choice?


A) Individuals sometimes ignore the utility of a choice.
B) Individuals' utility can be influenced by other people's perceptions of them.
C) Utility is not an appropriate measure for every model of behavior.
D) Individuals are sometimes irrational.

E) C) and D)
F) A) and D)

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The table shown describes the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items. The table shown describes the different combinations of goods that Jack can consume, given that he has $10 to spend on these two items.   If Jack consumes 3 popsicles and 1 ice cream cone, then: A) he still has $5 left to spend. B) the price of ice cream must have increased to $8. C) the price of popsicles must have decreased. D) None of these are true. If Jack consumes 3 popsicles and 1 ice cream cone, then:


A) he still has $5 left to spend.
B) the price of ice cream must have increased to $8.
C) the price of popsicles must have decreased.
D) None of these are true.

E) None of the above
F) All of the above

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  Assume Bryce's budget constraint is represented by line B in the graph shown. Which of the following would cause Bryce's budget constraint to shift to line A? A) The price of books increases. B) The price of books decreases. C) The price of movie tickets increases. D) The price of movie tickets decreases. Assume Bryce's budget constraint is represented by line B in the graph shown. Which of the following would cause Bryce's budget constraint to shift to line A?


A) The price of books increases.
B) The price of books decreases.
C) The price of movie tickets increases.
D) The price of movie tickets decreases.

E) A) and B)
F) None of the above

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After browsing the shoe store for a while, Bob buys a pair of Nike running shoes. Economists would say that Bob:


A) is revealing a strong distaste for New Balance running shoes.
B) will always choose Nike over any other shoe brand.
C) receives more utility per dollar from Nike running shoes than any other pair in the store.
D) would receive disutility from other pairs of running shoes.

E) B) and C)
F) A) and D)

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When a person's income increases:


A) more bundles of goods and services become affordable.
B) fewer bundles of goods and services become affordable.
C) there is no change in how many bundles of goods and services become affordable.
D) more expensive bundles of goods and services become affordable.

E) A) and C)
F) A) and D)

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