1			A typical indifference curve…
			A)	shows that as a consumer has more of a good he or she is less willing to exchange it for one unit of another good.
			B)	shows all combinations of goods that give a consumer the same level of utility.
			C)	shifts out if income increases.
			D)	both b and c
			E)	all of the above
2			The rate at which a consumer is ABLE to substitute one good for another is determined by the…
			A)	consumer's income.
			B)	indifference map.
			C)	ratio of the prices of the goods.
			D)	marginal rate of substitution.
3			A utility function shows the relation between…
			A)	the amount of goods consumed and a consumer's utility.
			B)	income and a consumer's utility.
			C)	prices and a consumer's utility.
			D)	maximum utility and the prices and income facing a consumer.
4			Along an indifference curve…
			A)	the ratio of the marginal utilities is constant.
			B)	the MRS is constant.
			C)	the price ratio is constant.
			D)	both b and c
			E)	none of the above
5			Which of the following assumptions is (are) NOT made in consumer behavior theory?
			A)	Consumers can rank all bundles of goods.
			B)	Consumers have complete information.
			C)	Consumers can measure the utility they get from all bundles of goods.
			D)	both b and c
			E)	None of the above are assumptions made in consumer behavior theory.
6			Marginal utility is the…
			A)	relative value of two goods when a utility-maximizing decision has been made.
			B)	change in total utility that results from increasing the amount of a good consumed by one unit.
			C)	change in the amount of a good consumed that increases total utility by one unit.
			D)	utility obtained from the consumption of all but the last unit of a good.
			E)	none of the above
7			If a consumer is choosing the bundle of goods that maximizes utility subject to a budget constraint, then the
			A)	rate at which the consumer is willing to substitute between goods is equal to the market rate of exchange between goods.
			B)	rate at which income affects the utility-maximizing choice is equal for all goods.
			C)	ratio of marginal utility to price is equal for all goods.
			D)	both a and c
			E)	all of the above
8			Dennis, who consumes only grilled chicken sandwiches and salads with low-fat dressing, has a weekly income of $100. He is currently consuming 20 grilled chicken sandwiches per week, at a price of $3 each, and 20 salads per week, at a price of $2 each. If the last sandwich and the last salad both added 40 units to Dennis's total utility, he
			A)	is making the utility-maximizing choice.
			B)	should buy more salads and fewer sandwiches.
			C)	should buy more sandwiches and fewer salads.
			D)	obtains more additional utility per dollar from sandwiches than from salads.
			E)	both b and d

The next 4 questions refer to the following figure:

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The consumer's income is $1,000.

9			What are the prices of goods X and Y?
			A)	PX = $8.25, PY = $10
			B)	PX = $10, PY = $8.25
			C)	PX = $200, PY = $160
			D)	PX = $6.25, PY = $5
			E)	PX = $5, PY = $6.25
10			What is the consumer's marginal rate of substitution in equilibrium?
			A)	unable to tell from information given
			B)	0.5
			C)	0.8
			D)	1.25
			E)	2.25
11			Why doesn't the consumer choose the combination of 60X and 112Y at point A?
			A)	MRS is greater than PX / PY.
			B)	MRS is less than PX / PY.
			C)	MUX is greater than MUY.
			D)	MUX / PX is less than MUY / PY.
			E)	both a and d
12			Why doesn't the consumer choose the combination at point B?
			A)	The marginal utility of Y exceeds the marginal utility of X.
			B)	The consumer is willing to give up more X for an additional unit of Y than must be given up given the relative prices of X and Y.
			C)	The marginal utility per dollar spent on Y exceeds the marginal utility per dollar spent on X.
			D)	both a and c
			E)	both b and c
13			If the price of a good decreases, the substitution effect…
			A)	is positive since the quantity of the good increases.
			B)	shows the increase in the quantity of the good demanded, holding income constant.
			C)	must be greater than the income effect.
			D)	shows the increase in the quantity of the good demanded, holding utility constant.
			E)	can increase or decrease the quantity of the good demanded.
14			If the price of a good increases, the income effect…
			A)	reinforces the substitution effect if the good is normal.
			B)	offsets the substitution effect if the good is inferior.
			C)	shows the change in the quantity demanded of the good, income held constant.
			D)	a and b
			E)	none of the above
15			The rate at which a consumer is WILLING to substitute one good for another is measured by the…
			A)	slope of the tangent to the indifference curve.
			B)	slope of the budget line.
			C)	indifference map.
			D)	consumer's real income.

The next 3 questions refer to the following graph:

The price of X is $30 and the price of Y is $60.

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16			If U1 is the highest level of utility the consumer can achieve, what is the consumer's income?
			A)	$ 480
			B)	$ 600
			C)	$ 800
			D)	$1,200
			E)	$2,400
17			How many units of Y will the consumer choose if point A is the utility-maximizing choice?
			A)	8
			B)	12
			C)	16
			D)	24
			E)	none of the above
18			How many units of X will the consumer choose if point B is the utility-maximizing choice?
			A)	14
			B)	24
			C)	30
			D)	32
			E)	none of the above
19			An individual's demand curve for X…
			A)	shows how the individual's preferences change as the price of X changes.
			B)	shows how the utility—maximizing choice of X changes as the price of X changes.
			C)	shows that the income effect is always negative.
			D)	both b and c
			E)	all of the above
20			Suppose that 4 units of X and 8 units of Y give a consumer the same satisfaction as 6 units of X and 4 units of Y. Then…
			A)	the consumer can exchange 1 unit of X for 2 units of Y and utility is unchanged.
			B)	the consumer can exchange 1 unit of X for ½ unit of Y and utility is unchanged.
			C)	the market rate of exchange of X for Y is ½.
			D)	both a and c
			E)	none of the above