LSUS MBA701 EXAM 2 ( QUESTIONS AND
ANSWERS 2025) |100% VERIFIED|DISTINCTION
GUARANTEED| A+ RATED
If Mary prefers bananas to plums and plums to peaches, but is indifferent between bananas and
oranges, she
a. prefers oranges to peaches.
b. prefers plums to oranges.
c. is indifferent between oranges and plums.
d. is indifferent between oranges and peaches. - ANSWER prefers oranges to peaches.
A typical indifference curve
a. shows all combinations of goods that give a consumer the same level of utility.
b. shows that as a consumer has more of a good, he is less willing to exchange it for one unit of
another good.
c. shifts out if income increases.
d. both a and b
e. all of the above - ANSWER shows all combinations of goods that give a consumer the same
level of utility.
The rate at which a consumer is ABLE to substitute one good for another is determined by
a. the indifference map.
b. the marginal rate of substitution.
c. the consumer's income.
d. the budget line. - ANSWER Correct answer is marginal rate of substitution- marked wrong so
budget line
,A utility function
a. shows the relation between prices and a consumer's utility.
b. shows the relation between income and a consumer's utility.
c. shows the relation between the amount of goods consumed and a consumer's utility.
d. all of the above
e. none of the above - ANSWER shows the relation between the amount of goods consumed
and a consumer's utility.
Along an indifference curve
a. the MRS is constant.
b. the ratio of the marginal utilities is constant.
c. the price ratio is constant.
d. all of the above
e. none of the above - ANSWER e. none of the above
The slope of an indifference curve
a. shows the change in utility from an additional unit of the good.
b. shows the rate at which the consumer is able to substitute goods in the market.
c. is equal to the price ratio at all points.
d. is the rate at which the consumer is willing to exchange one good for another, utility held
constant.
e. all of the above - ANSWER is the rate at which the consumer is willing to exchange one good
for another, utility held constant.
Which of the following assumptions is(are) NOT made in consumer behavior theory?
a. Consumers can rank all bundles of goods.
b. Consumers can measure the utility they get from all bundles of goods.
,c. Consumers have complete information.
d. both a and b
None of the above are assumptions made in consumer behavior theory. - ANSWER Consumers
can measure the utility they get from all bundles of goods.
In the figure above, if price DECREASES from $60 to $40, an arrow representing the QUANTITY
effect
a. will point downward.
b. will be shorter than (and in opposite direction of) the arrow representing the price effect.
c. will be shorter than (and in same direction of) the arrow representing the price effect.
d. will point in the direction in which total revenue will move.
e. both a and d - ANSWER will be shorter than (and in opposite direction of) the arrow
representing the price effect.
The cross-price elasticity of demand between goods X and Y
a. measures the responsiveness of the quantity of X demanded to changes in the price of Y.
b. is the percentage change in the price of Y divided by the percentage change in the quantity of
X demanded.
c. is greater than zero if X and Y are substitutes.
d. both a and c
e. all of the above - ANSWER both a and c
Marginal revenue
a. is the change in total revenue when output increases by one unit.
b. is always greater than zero.
c. measures the slope of the total revenue curve.
, d. both a and c
e. all of the above - ANSWER d. both a and c
When marginal revenue is positive,
a. demand is elastic.
b. marginal revenue is greater than price.
c. decreasing price will decrease total revenue.
d. both b and c
e. all of the above - ANSWER a. demand is elastic.
If the demand for plastic surgery is price inelastic,
a.
then when more plastic surgery is performed, total expenditures on plastic surgery will
decrease.
b.
both "then when more plastic surgery is performed, total expenditures on plastic surgery will
decrease" and "the percentage change in price is less than the percentage change in quantity".
c.
the percentage change in price is less than the percentage change in quantity.
d.
both "changes in price do not affect the number of operations" and "then when more plastic
surgery is performed, total expenditures on plastic surgery will decrease".
e.
changes in price do not affect the number of operations. - ANSWER then when more plastic
surgery is performed, total expenditures on plastic surgery will decrease.
ANSWERS 2025) |100% VERIFIED|DISTINCTION
GUARANTEED| A+ RATED
If Mary prefers bananas to plums and plums to peaches, but is indifferent between bananas and
oranges, she
a. prefers oranges to peaches.
b. prefers plums to oranges.
c. is indifferent between oranges and plums.
d. is indifferent between oranges and peaches. - ANSWER prefers oranges to peaches.
A typical indifference curve
a. shows all combinations of goods that give a consumer the same level of utility.
b. shows that as a consumer has more of a good, he is less willing to exchange it for one unit of
another good.
c. shifts out if income increases.
d. both a and b
e. all of the above - ANSWER shows all combinations of goods that give a consumer the same
level of utility.
The rate at which a consumer is ABLE to substitute one good for another is determined by
a. the indifference map.
b. the marginal rate of substitution.
c. the consumer's income.
d. the budget line. - ANSWER Correct answer is marginal rate of substitution- marked wrong so
budget line
,A utility function
a. shows the relation between prices and a consumer's utility.
b. shows the relation between income and a consumer's utility.
c. shows the relation between the amount of goods consumed and a consumer's utility.
d. all of the above
e. none of the above - ANSWER shows the relation between the amount of goods consumed
and a consumer's utility.
Along an indifference curve
a. the MRS is constant.
b. the ratio of the marginal utilities is constant.
c. the price ratio is constant.
d. all of the above
e. none of the above - ANSWER e. none of the above
The slope of an indifference curve
a. shows the change in utility from an additional unit of the good.
b. shows the rate at which the consumer is able to substitute goods in the market.
c. is equal to the price ratio at all points.
d. is the rate at which the consumer is willing to exchange one good for another, utility held
constant.
e. all of the above - ANSWER is the rate at which the consumer is willing to exchange one good
for another, utility held constant.
Which of the following assumptions is(are) NOT made in consumer behavior theory?
a. Consumers can rank all bundles of goods.
b. Consumers can measure the utility they get from all bundles of goods.
,c. Consumers have complete information.
d. both a and b
None of the above are assumptions made in consumer behavior theory. - ANSWER Consumers
can measure the utility they get from all bundles of goods.
In the figure above, if price DECREASES from $60 to $40, an arrow representing the QUANTITY
effect
a. will point downward.
b. will be shorter than (and in opposite direction of) the arrow representing the price effect.
c. will be shorter than (and in same direction of) the arrow representing the price effect.
d. will point in the direction in which total revenue will move.
e. both a and d - ANSWER will be shorter than (and in opposite direction of) the arrow
representing the price effect.
The cross-price elasticity of demand between goods X and Y
a. measures the responsiveness of the quantity of X demanded to changes in the price of Y.
b. is the percentage change in the price of Y divided by the percentage change in the quantity of
X demanded.
c. is greater than zero if X and Y are substitutes.
d. both a and c
e. all of the above - ANSWER both a and c
Marginal revenue
a. is the change in total revenue when output increases by one unit.
b. is always greater than zero.
c. measures the slope of the total revenue curve.
, d. both a and c
e. all of the above - ANSWER d. both a and c
When marginal revenue is positive,
a. demand is elastic.
b. marginal revenue is greater than price.
c. decreasing price will decrease total revenue.
d. both b and c
e. all of the above - ANSWER a. demand is elastic.
If the demand for plastic surgery is price inelastic,
a.
then when more plastic surgery is performed, total expenditures on plastic surgery will
decrease.
b.
both "then when more plastic surgery is performed, total expenditures on plastic surgery will
decrease" and "the percentage change in price is less than the percentage change in quantity".
c.
the percentage change in price is less than the percentage change in quantity.
d.
both "changes in price do not affect the number of operations" and "then when more plastic
surgery is performed, total expenditures on plastic surgery will decrease".
e.
changes in price do not affect the number of operations. - ANSWER then when more plastic
surgery is performed, total expenditures on plastic surgery will decrease.
