Page 1

1.	Refer to Figure 6.2. Assume Mr. Lingle is on budget constraint AC. If the price of a Gardenburger is $5, Mr. Lingle's monthly income is
	a.	$20.
	b.	$60.
	c.	$100.
	d.	$200.

2.	You would be willing to pay a maximum of $100 to attend a football game, and you can buy a ticket for $30. Your consumer surplus is
	a.	$30.
	b.	$50.
	c.	$70.
	d.	$100.

     Page 2

3.	Refer to Figure 6.8. The marginal utility of the third movie rental is
	a.	1.
	b.	3.
	c.	9.33.
	d.	28.

4.	For Tom, the marginal utility of the first cup of coffee he drinks in the morning is worth $2.00. The marginal utility of the tenth cup of coffee he drinks in the morning is worth $0. This implies that at a price of $0 Tom
	a.	would drink an infinite number of cups of coffee each morning.
	b.	would drink at least ten cups of coffee per morning.
	c.	would drink more than ten cups of coffee per morning, but the actual number is indeterminate from this information.
	d.	would drink zero cups of coffee per morning.

     Page 3

5.	Kathleen likes avocado and crab dip. She goes to a party where the delectable dip is on the food table. After eating four crackers with avocado and crab dip, she switches to cheese and crackers. We can conclude that
	a.	the avocado and crab dip cannot have been that good.
	b.	the avocado and crab dip now has a marginal utility of zero.
	c.	at this point cheese and crackers have a higher marginal utility than avocado and crab dip.
	d.	Kathleen is no longer maximizing her utility.

6.	Refer to Figure 6.2. Along budget constraint AC, the opportunity cost of one Gardenburger
	a.	is 1/4 of a beer.
	b.	is a beer.
	c.	is 2 beers.
	d.	changes as you move down the budget constraint.

     Page 4

7.	The demand curve for X is derived from indifference curves and a budget constraint by
	a.	changing the level of income.
	b.	changing the price of X.
	c.	changing the price of Y.
	d.	changing consumers' preferences.

ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
Number of hamburgers        Total          Marginal
    per day                utility         utility
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
        1                    30                 
        2                    52
        3                    67
        4                    76
        5                                       4
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ

ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
Number of sodas             Total          Marginal
    per day                utility         utility
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
        1                    20                 
        2                    35
        3                    47
        4                    57
        5                                      7
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
Figure 6.10

8.	Refer to Figure 6.10. The marginal utility of the second soda per day is
	a.	10.
	b.	15.
	c.	35.
	d.	55.

9.	Assume your demand for ginger ale remains constant, but the price of ginger ale increases. Your consumer surplus
	a.	decreases.
	b.	increases.
	c.	remains constant.
	d.	may increase or decrease depending on the amount of the price decrease.

     Page 5

10.	Refer to Figure 6.5. Molly's budget constraint was originally CD. Molly's new budget constraint is EF. This would occur if
	a.	Molly's income decreased.
	b.	Molly's income increased.
	c.	Molly's income increased and the price of cassette tapes decreased.
	d.	both b and c.

     Page 6

11.	Refer to Figure 6.15. If the price of a movie is $6.00, consumer surplus is
	a.	$8.00.
	b.	$10.00.
	c.	$16.00.
	d.	$24.00.

     Page 7

12.	Refer to Figure 6.22. If the price of an ice cream cone is $2, the price of ice cream sundaes is
	a.	$2.
	b.	$3.
	c.	$50.
	d.	$100.

     Page 8

13.	Refer to Figure 6.9. The __________ movie rental has a marginal utility of zero.
	a.	fourth
	b.	third
	c.	second
	d.	first

     Page 9

14.	Refer to Figure 6.6. Bill's budget constraint was originally CD. Bill's new budget constraint is EF. This would occur if
	a.	Bill's income increased.
	b.	Bill's income decreased.
	c.	Bill's income increased and the price of black beans decreased.
	d.	both b and c.

15.	Which of the following is an INCORRECT statement about a household's budget constraint?
	a.	Points on a budget constraint represent combinations of the goods that exactly use up the household's income.
	b.	Points within the budget constraint represent combinations of the goods that do not use up all the household's income.
	c.	If points A and B lie on the budget constraint, we can deduce that a household is indifferent between the two.
	d.	If the price of one good decreased, ceteris paribus, the budget constraint will swivel or rotate outward.

     Page 10