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Chap 03 13e - Nicholson
Indicate the answer choice that best completes the statement or answers the question.
1. If an individual's utility function is quasi-concave, their MRS will:
a. diminish as x is substituted for y.
b. increase as x is substituted for y.
c. be undefined except in special cases.
d. always depend only on the ratio of x to y.
ANSWER: a
2. Which of the following utility functions would not be consistent with the notion that x and y are both "goods" with
positive marginal utilities?
a.
b.
c.
d.
ANSWER: d
3. If bundles of goods A and B lie on the same indifference curve, one can assume:
a. the individual prefers bundle A to bundle B.
b. the individual prefers bundle B to bundle A.
c. the individual enjoys bundle A and B equally.
d. bundle A contains the same goods as bundle B.
ANSWER: c
Exhibit 3.1. Consider an individual whose utility function is given by:
.
4. Refer to Exhibit 3.1. For this utility function, the MRS:
a. depends on the values of x and y.
b. is always 0.
c. is always 2.
d. is always 4.
ANSWER: c
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,Name: Class: Date:
Chap 03 13e - Nicholson
5. If utility is given by , then the person's MRS at the point x = 5, y = 2 is given by:
a. 0.4.
b. 1.0.
c. 2.5.
d. 5.0.
ANSWER: a
6. For an individual who consumes only two goods, x and y, the opportunity cost of consuming one more unit of x in
terms of how much y must be given up is reflected by:
a. the individual's marginal rate of substitution.
b. the market prices of x and y.
c. the slope of the individual's indifference curve.
d. none of these.
ANSWER: b
7. If utility is given by , then the bundle (3, 2) provides the same utility as the bundle:
a. (1, 3).
b. (2, 3).
c. (4, 1).
d. (4, 2).
ANSWER: c
8. Indifference curves:
a. may sometimes intersect.
b. are contour lines only of a linear utility function.
c. are convex if the utility function is quasi-concave.
d. shift when prices change.
ANSWER: c
9. Which of the following utility functions best represents the idea that two goods, x and y, are perfect
complements?
a.
b.
c.
d.
ANSWER: d
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, Name: Class: Date:
Chap 03 13e - Nicholson
Exhibit 3.2. Consider the CES utility function given by:
10. Refer to Exhibit 3.2. For this utility function, marginal utilities are:
a. negative for < 0.
b. diminishing only for > 0.
c. increasing for > 0.
d. always positive.
ANSWER: d
11. Which of these utility functions represents the same preferences as ?
a.
b.
c.
d. All of the other choices represent the same preferences.
ANSWER: d
Exhibit 3.1. Consider an individual whose utility function is given by:
.
12. Refer to Exhibit 3.1. With this utility function, the bundle (3,2) provides the same utility as the bundle:
a. (2, 3).
b. (2, 4).
c. (2, 5).
d. (3, 3).
ANSWER: b
Page 3
Instant PDF Download
,All Chapters test bank are included. Please note there is no test bank for Ch 1 and Ch 2, Chapter 3 to 20 are included
Chap 03 13e - Nicholson
Indicate the answer choice that best completes the statement or answers the question.
1. If an individual's utility function is quasi-concave, their MRS will:
a. diminish as x is substituted for y.
b. increase as x is substituted for y.
c. be undefined except in special cases.
d. always depend only on the ratio of x to y.
ANSWER: a
2. Which of the following utility functions would not be consistent with the notion that x and y are both "goods" with
positive marginal utilities?
a.
b.
c.
d.
ANSWER: d
3. If bundles of goods A and B lie on the same indifference curve, one can assume:
a. the individual prefers bundle A to bundle B.
b. the individual prefers bundle B to bundle A.
c. the individual enjoys bundle A and B equally.
d. bundle A contains the same goods as bundle B.
ANSWER: c
Exhibit 3.1. Consider an individual whose utility function is given by:
.
4. Refer to Exhibit 3.1. For this utility function, the MRS:
a. depends on the values of x and y.
b. is always 0.
c. is always 2.
d. is always 4.
ANSWER: c
Page 1
,Name: Class: Date:
Chap 03 13e - Nicholson
5. If utility is given by , then the person's MRS at the point x = 5, y = 2 is given by:
a. 0.4.
b. 1.0.
c. 2.5.
d. 5.0.
ANSWER: a
6. For an individual who consumes only two goods, x and y, the opportunity cost of consuming one more unit of x in
terms of how much y must be given up is reflected by:
a. the individual's marginal rate of substitution.
b. the market prices of x and y.
c. the slope of the individual's indifference curve.
d. none of these.
ANSWER: b
7. If utility is given by , then the bundle (3, 2) provides the same utility as the bundle:
a. (1, 3).
b. (2, 3).
c. (4, 1).
d. (4, 2).
ANSWER: c
8. Indifference curves:
a. may sometimes intersect.
b. are contour lines only of a linear utility function.
c. are convex if the utility function is quasi-concave.
d. shift when prices change.
ANSWER: c
9. Which of the following utility functions best represents the idea that two goods, x and y, are perfect
complements?
a.
b.
c.
d.
ANSWER: d
Page 2
, Name: Class: Date:
Chap 03 13e - Nicholson
Exhibit 3.2. Consider the CES utility function given by:
10. Refer to Exhibit 3.2. For this utility function, marginal utilities are:
a. negative for < 0.
b. diminishing only for > 0.
c. increasing for > 0.
d. always positive.
ANSWER: d
11. Which of these utility functions represents the same preferences as ?
a.
b.
c.
d. All of the other choices represent the same preferences.
ANSWER: d
Exhibit 3.1. Consider an individual whose utility function is given by:
.
12. Refer to Exhibit 3.1. With this utility function, the bundle (3,2) provides the same utility as the bundle:
a. (2, 3).
b. (2, 4).
c. (2, 5).
d. (3, 3).
ANSWER: b
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