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Chapter 6 Test Bank
Multiple Choice Questions
1. The term _________________ refers to the additional utility provided by one additional unit of
consumption.
A. utility
B. marginal utility
C. added utility
D. Giffen utility
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
2. The term ___________________ is used to describe the common pattern whereby each
marginal unit of a consumed good provides less of an addition to utility than the previous unit.
A. diminishing marginal utility
B. marginal utility pattern
C. marginal income utility
D. decreasing marginal utility
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
3. The ________________ arises when a price changes because consumers have an incentive
to consume less of the good with a relatively higher price and more of the good with a relatively
lower price.
A. income effect
B. substitution effect
C. backward-bending supply curve
D. preferences effect
Answer: B
Reference:
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Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
4. Which of the following occurs simultaneously with an income effect?
A. backward-bending supply curve
B. Giffen good effect
C. preferences effect
D. substitution effect
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
5. The term _____________ describes a situation where a ________________ causes a
reduction in the buying power of income, even though actual income has not changed.
A. substitution effect; lower price
B. intertemporal budget; higher price
C. income effect; higher price
D. intertemporal budget; lower price
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
6. In microeconomic terms, the ability of a good or a service to satisfy wants is called:
A. opportunity cost.
B. utility.
C. utility maximization.
D. profit potential.
Answer: B
Reference:
Explanation:
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Type: Multiple Choice Difficulty: Easy Category: Remember
7. Marginal utility can:
A. be positive or negative, but not zero
B. decrease, but not become negative
C. be positive, negative, or zero
D. increase positively, but not negatively
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
8. Economists are able to determine total utility by:
A. multiplying the marginal utility of the first unit consumed by the number of units consumed.
B. multiplying the marginal utility of the last unit consumed by the number of units consumed.
C. multiplying the marginal utility of the last unit consumed by the unit price.
D. summing up the marginal utilities of each unit consumed.
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
9. When economists attempt to predict the spending patterns of U.S. households, they will
typically view the _____________________ as a primary determining factor that influences the
individual consumption choices that each will make.
A. income level of each household
B. national average spending level
C. national average savings level
D. nation's perennial political debate
Answer: A
Reference:
Explanation:
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Type: Multiple Choice Difficulty: Medium Category: Understand
10. Economic theory offers ____________________ about the full range of possible events and
responses, which can prevent __________________ about how households will respond to
changes in prices or incomes.
A. one budget constraint theory; unrealistic possibilities
B. a systematic way of thinking; misguided conclusions
C. two budget constraint theories; misguided possibilities
D. systematic consumption choices; unrealistic conclusions
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
11. How does the U.S. Bureau of Labor Statistics gather information with regard to the typical
consumption choices of Americans?
A. Consumer Spending Survey
B. Consumer Income Budget Survey
C. Consumer Expenditure Survey
D. Consumer Income Survey
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
12. Approximately what portion of annual consumption is typically spent by American
households on shelter?
A. one-fourth
B. one-half
C. one-quarter
D. one-third
Answer: D
Reference:
Explanation:
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Chapter 6 Test Bank
Multiple Choice Questions
1. The term _________________ refers to the additional utility provided by one additional unit of
consumption.
A. utility
B. marginal utility
C. added utility
D. Giffen utility
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
2. The term ___________________ is used to describe the common pattern whereby each
marginal unit of a consumed good provides less of an addition to utility than the previous unit.
A. diminishing marginal utility
B. marginal utility pattern
C. marginal income utility
D. decreasing marginal utility
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
3. The ________________ arises when a price changes because consumers have an incentive
to consume less of the good with a relatively higher price and more of the good with a relatively
lower price.
A. income effect
B. substitution effect
C. backward-bending supply curve
D. preferences effect
Answer: B
Reference:
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Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
4. Which of the following occurs simultaneously with an income effect?
A. backward-bending supply curve
B. Giffen good effect
C. preferences effect
D. substitution effect
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
5. The term _____________ describes a situation where a ________________ causes a
reduction in the buying power of income, even though actual income has not changed.
A. substitution effect; lower price
B. intertemporal budget; higher price
C. income effect; higher price
D. intertemporal budget; lower price
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
6. In microeconomic terms, the ability of a good or a service to satisfy wants is called:
A. opportunity cost.
B. utility.
C. utility maximization.
D. profit potential.
Answer: B
Reference:
Explanation:
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Type: Multiple Choice Difficulty: Easy Category: Remember
7. Marginal utility can:
A. be positive or negative, but not zero
B. decrease, but not become negative
C. be positive, negative, or zero
D. increase positively, but not negatively
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
8. Economists are able to determine total utility by:
A. multiplying the marginal utility of the first unit consumed by the number of units consumed.
B. multiplying the marginal utility of the last unit consumed by the number of units consumed.
C. multiplying the marginal utility of the last unit consumed by the unit price.
D. summing up the marginal utilities of each unit consumed.
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
9. When economists attempt to predict the spending patterns of U.S. households, they will
typically view the _____________________ as a primary determining factor that influences the
individual consumption choices that each will make.
A. income level of each household
B. national average spending level
C. national average savings level
D. nation's perennial political debate
Answer: A
Reference:
Explanation:
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Type: Multiple Choice Difficulty: Medium Category: Understand
10. Economic theory offers ____________________ about the full range of possible events and
responses, which can prevent __________________ about how households will respond to
changes in prices or incomes.
A. one budget constraint theory; unrealistic possibilities
B. a systematic way of thinking; misguided conclusions
C. two budget constraint theories; misguided possibilities
D. systematic consumption choices; unrealistic conclusions
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Remember
11. How does the U.S. Bureau of Labor Statistics gather information with regard to the typical
consumption choices of Americans?
A. Consumer Spending Survey
B. Consumer Income Budget Survey
C. Consumer Expenditure Survey
D. Consumer Income Survey
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
12. Approximately what portion of annual consumption is typically spent by American
households on shelter?
A. one-fourth
B. one-half
C. one-quarter
D. one-third
Answer: D
Reference:
Explanation:
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