Question 1

Which of the following best describes the assumption of transitivity in consumer preferences?

Accepted Answer

If a consumer prefers bundle A to bundle B and bundle B to bundle C, then the consumer must prefer bundle A to bundle C.

Question 2

Suppose a consumer's utility function is $$U(x, y) = x + 2y. $$What is the marginal utility of $$y$$?

Accepted Answer

$$2$$

Question 3

If a consumer's indifference curves for two goods are straight lines, what does this imply about the consumer's preferences?

Accepted Answer

The goods are perfect substitutes.

Question 4

Given the utility function $$U(x, y) = \min\{x, 2y\}$$, which of the following bundles provides a utility of $$6$$?

Accepted Answer

$$(6, 3)$$

Question 5

Which of the following statements about the Marginal Rate of Substitution (MRS) is correct?

Accepted Answer

The MRS is the negative of the ratio of the marginal utilities of the two goods: $$MRS = -\frac{MU_x}{MU_y}.$$

Question 6

A consumer's utility function is $$U(x, y) = 5x$$^{1/2}$$y^{1/2}. $$What is the marginal utility of $$x$?

Accepted Answer

$$\frac{5}{2}x$$^{-1/2}$$y^{1/2}$

Question 7

If a consumer considers $$x to be a $$neutral good, what can you say about the marginal utility of $$x$$?

Accepted Answer

The marginal utility of $$x is $$zero: $$MU_x = 0.$$

Question 8

Which of the following is NOT a property of indifference curves for standard (Cobb-Douglas) preferences?

Accepted Answer

They can cross each other.

Question 9

Suppose a consumer's utility function is $$U(x, y) = x + y. If $$the price of $$x is $$less than the price of $$y$$, and the consumer spends all income on one good, which bundle will maximize utility?

Accepted Answer

All income spent on $$x$$, none on $$y.$$

Question 10

If a consumer's utility function is $$U(x, y) = 2x + 3y^2$, what is the marginal utility of y$ when x = 1$ and y = 2$?

Accepted Answer

$$12$$

Question 11

Which of the following best explains why indifference curves cannot cross?

Accepted Answer

Crossing would violate the transitivity of preferences.

Question 12

A consumer's utility function is $$U(x, y) = x y. $$What is the Marginal Rate of Substitution (MRS) at the point $$(x, y)$$?

Accepted Answer

$$-\frac{y}{x}$$

Question 13

Which of the following statements about utility functions is correct?

Accepted Answer

Utility functions provide only an ordinal ranking of preferences, not a cardinal measure of satisfaction.

Question 14

If $$x is a$$ 'bad' (such as pollution), what can you infer about the marginal utility of $$x$$?

Accepted Answer

Marginal utility is negative: $$MU_x \u003c 0.$$

Question 15

Suppose a consumer's utility function is $$U(x, y) = x + y. $$What is the shape of the indifference curves for these preferences?

Accepted Answer

Straight lines with a slope of $$-1.$$

Question 16

If a consumer's utility function is $$U(x, y) = \min\{x, y\}$$, and she has 4 units of $$x$$ and 6 units of $$y$$, what is her utility?

Accepted Answer

$$4$$

Question 17

Which of the following best describes the economic meaning of a convex indifference curve?

Accepted Answer

The consumer is willing to give up less of one good to get more of another as she has more of it.

Question 18

Suppose a consumer's utility function is $$U(x, y) = x y$$, and she currently consumes $$x = 2$$ and $$y = 8. If $$she increases $$x by 1 $$unit, what is the increase in utility (marginal utility of $$x at $$this point)?

Accepted Answer

$$8$$

Question 19

Which of the following is a correct interpretation of the Marginal Rate of Substitution (MRS) at a point on an indifference curve?

Accepted Answer

The rate at which a consumer is willing to give up one good for another while maintaining the same utility.

Question 20

If a consumer's utility function is $$U(x, y) = x y$$, and the marginal utility of $$x is$$ $$MU_x = y$$, what happens to $$MU_x as $$the consumer increases $$y$$?

Accepted Answer

$$MU_x$$ increases as $$y$$ increases.

Preferences, Indifference Curves, and Utility in Microeconomics

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