LSUS MBA 701 Exam 2|Brand New
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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.
Refer to the following indifference map for a consumer who has an income of $48 to
spend on goods X and Y and the market prices of X and Y are both $4:
Now suppose the price of good X increases to $12 while the price of good Y remains
$4. Utility will be maximized on which indifference curve?
Exam Questions with Clear Correct
Verified Answers| All Graded
A+|100% Guaranteed
Success|Latest Premium Update.
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.
Refer to the following indifference map for a consumer who has an income of $48 to
spend on goods X and Y and the market prices of X and Y are both $4:
Now suppose the price of good X increases to $12 while the price of good Y remains
$4. Utility will be maximized on which indifference curve?
