Question 1

Bikes and roller blades are substitutes.Marginal utility theory predicts that when the price of a bike rises,the quantity of bikes demanded

Accepted Answer

A) decreases and the demand curve for roller blades shifts rightward. 
B) decreases and the demand curve for roller blades shifts leftward. 
C) decreases and a movement occurs down along the demand curve for roller blades. 
D) increases and the demand curve for roller blades shifts rightward. 
E) increases and the demand curve for roller blades shifts leftward. 
A) decreases and the demand curve for roller blades shifts rightward. 
B) decreases and the demand curve for roller blades shifts leftward. 
C) decreases and a movement occurs down along the demand curve for roller blades. 
D) increases and the demand curve for roller blades shifts rightward. 
E) increases and the demand curve for roller blades shifts leftward.

Question 2

The total utility from owning three skirts is equal to

Accepted Answer

A) total income divided by the price of one skirt. 
B) total income divided by the amount spent to buy the three skirts. 
C) the sum of the marginal utility from the first skirt plus the marginal utility from the second skirt plus the marginal utility from the third skirt. 
D) three times the marginal utility from the first skirt. 
E) the total amount spent to buy the three skirts. 
A) total income divided by the price of one skirt. 
B) total income divided by the amount spent to buy the three skirts. 
C) the sum of the marginal utility from the first skirt plus the marginal utility from the second skirt plus the marginal utility from the third skirt. 
D) three times the marginal utility from the first skirt. 
E) the total amount spent to buy the three skirts.

Question 3

Bianca consumes pizza.Marginal utility theory predicts that when the price of pizza increases,

Accepted Answer

A) Bianca's total utility from pizza will increase. 
B) Bianca's marginal utility from pizza will not change. 
C) Bianca's demand curve for pizza will shift leftward. 
D) Bianca will buy less pizza. 
E) Bianca will buy more pizza. 
A) Bianca's total utility from pizza will increase. 
B) Bianca's marginal utility from pizza will not change. 
C) Bianca's demand curve for pizza will shift leftward. 
D) Bianca will buy less pizza. 
E) Bianca will buy more pizza.

Question 4

The paradox of value as it applies to diamonds and water can be explained by

Accepted Answer

A) distinguishing between utility and price. 
B) water having a high level of marginal utility relative to diamonds. 
C) water having a low price relative to diamonds. 
D) the fact that utility can't be measured. 
E) distinguishing between total utility and marginal utility. 
A) distinguishing between utility and price. 
B) water having a high level of marginal utility relative to diamonds. 
C) water having a low price relative to diamonds. 
D) the fact that utility can't be measured. 
E) distinguishing between total utility and marginal utility.

Question 5

Billy Jean loves to read and she has decided that she will buy all of her books at the bookstore at the outlet mall.One day she is in Chapters and sees a book from the Globe and Mail Best Sellers list that she wants to read and she decides to buy it. Buying the book means that she will not be able to take her Mom out for coffee this week.Billy Jean's decision is an example of

Accepted Answer

A) bounded economics. 
B) bounded self-interest. 
C) bounded willpower. 
D) bounded rationality. 
E) bounded anomalies. 
A) bounded economics. 
B) bounded self-interest. 
C) bounded willpower. 
D) bounded rationality. 
E) bounded anomalies.

Question 6

The relative price of beer to bacon is 2:1.If Bob's current consumption is at a level where MUbeer/MUbacon is 1:2,then to maximize total utility Bob must

Accepted Answer

A) consume more beer and less bacon. 
B) not change his current consumption of beer and bacon. 
C) consume less beer and more bacon. 
D) raise the price of beer. 
E) consume twice as much beer and half as much bacon. 
A) consume more beer and less bacon. 
B) not change his current consumption of beer and bacon. 
C) consume less beer and more bacon. 
D) raise the price of beer. 
E) consume twice as much beer and half as much bacon.

Question 7

If a consumer spends all his income and his marginal utility per dollar is equal for all goods,then

Accepted Answer

A) marginal utility is maximized. 
B) total utility is maximized. 
C) he cannot be better off even with more income. 
D) the proportion of income spent on each good must be equal. 
E) the number of units bought of each good must be equal. 
A) marginal utility is maximized. 
B) total utility is maximized. 
C) he cannot be better off even with more income. 
D) the proportion of income spent on each good must be equal. 
E) the number of units bought of each good must be equal.

Question 8

Which one of the following is not an assumption of marginal utility theory?

Accepted Answer

A) People derive utility from their consumption. 
B) More consumption yields more total utility. 
C) Utility can be measured. 
D) Marginal utility diminishes with more consumption. 
E) Consumers maximize total utility. 
A) People derive utility from their consumption. 
B) More consumption yields more total utility. 
C) Utility can be measured. 
D) Marginal utility diminishes with more consumption. 
E) Consumers maximize total utility.

Question 9

Harold can consume either pens or milkshakes.The price of a pen is $1,and the price of a milkshake is $1.Harold knows that when his income is spent,his marginal utility from pens will be 10 and his marginal utility from milkshakes will be 8.Harold is better off

Accepted Answer

A) by consuming more pens and fewer milkshakes. 
B) by consuming more pens and more milkshakes. 
C) by consuming fewer pens and fewer milkshakes. 
D) by consuming fewer pens and more milkshakes. 
E) only if he makes more income. 
A) by consuming more pens and fewer milkshakes. 
B) by consuming more pens and more milkshakes. 
C) by consuming fewer pens and fewer milkshakes. 
D) by consuming fewer pens and more milkshakes. 
E) only if he makes more income.

Question 10

The value of a good relates to

Accepted Answer

A) total utility,while price relates to consumer surplus. 
B) consumer surplus,while price relates to total utility. 
C) marginal utility,while price relates to consumer surplus. 
D) marginal utility,while price relates to total utility. 
E) total utility,while price relates to marginal utility. 
A) total utility,while price relates to consumer surplus. 
B) consumer surplus,while price relates to total utility. 
C) marginal utility,while price relates to consumer surplus. 
D) marginal utility,while price relates to total utility. 
E) total utility,while price relates to marginal utility.

Question 11

If Soula is maximizing her utility and consuming two goods that have the same marginal utility,she

Accepted Answer

A) buys only one. 
B) buys equal quantities of both. 
C) is paying the same price for each good. 
D) receives the same total utility from each good. 
E) is not spending all of her income. 
A) buys only one. 
B) buys equal quantities of both. 
C) is paying the same price for each good. 
D) receives the same total utility from each good. 
E) is not spending all of her income.

Question 12

Let MUA and MUB stand for the marginal utility of goods A and B,respectively.Let PA and PB stand for the price of goods A and B,respectively.Assume that for a given consumer MUA and MUB are equal to each other,and PA is greater than PB.In this case,the consumer is better off if he consumes

Accepted Answer

A) more of good A and less of good B. 
B) less of good A and more of good B. 
C) equal amount of goods A and B. 
D) good B only. 
E) neither good A nor good B. 
A) more of good A and less of good B. 
B) less of good A and more of good B. 
C) equal amount of goods A and B. 
D) good B only. 
E) neither good A nor good B.

Question 13

The paradox of value asks why

Accepted Answer

A) bad things happen to good people. 
B) the price of water is low and the price of a diamond is high,but water is essential to life while diamonds are not. 
C) the good die young. 
D) total utility is greater than marginal utility. 
E) the standard of living is higher in North America than in South America. 
A) bad things happen to good people. 
B) the price of water is low and the price of a diamond is high,but water is essential to life while diamonds are not. 
C) the good die young. 
D) total utility is greater than marginal utility. 
E) the standard of living is higher in North America than in South America.

Question 14

Other things remaining the same,marginal utility theory implies that a rise in the price of a good

Accepted Answer

A) increases the consumer surplus. 
B) decreases the consumer surplus. 
C) leaves consumer surplus unchanged. 
D) has an effect on consumer surplus that cannot be determined. 
E) decreases consumer surplus by the amount equal to the total utility of all goods consumed before the price rise but not after the price rise. 
A) increases the consumer surplus. 
B) decreases the consumer surplus. 
C) leaves consumer surplus unchanged. 
D) has an effect on consumer surplus that cannot be determined. 
E) decreases consumer surplus by the amount equal to the total utility of all goods consumed before the price rise but not after the price rise.

Question 15

Shelley is maximizing utility in her consumption of mansions and Porsches.If the marginal utility from her last purchased mansion is twice the marginal utility from her last purchased Porsche,then we know

Accepted Answer

A) Shelley buys twice as many mansions as Porsches. 
B) Shelley buys twice as many Porsches as mansions. 
C) Shelley buys more Porsches than mansions,but we do not know how many more. 
D) the price of a mansion is twice the price of a Porsche. 
E) the price of a Porsche is twice the price of a mansion. 
A) Shelley buys twice as many mansions as Porsches. 
B) Shelley buys twice as many Porsches as mansions. 
C) Shelley buys more Porsches than mansions,but we do not know how many more. 
D) the price of a mansion is twice the price of a Porsche. 
E) the price of a Porsche is twice the price of a mansion.

Question 16

Use the table below to answer the following questions.
Table 8.2.1  
-Refer to Table 8.2.1.Consider Sam's utility from sailing and skiing.If the price of sailing is $10 per hour and the price of skiing is $20 per hour,Sam will choose to spend

Accepted Answer

A) all his time sailing. 
B) all his time skiing. 
C) more time sailing than skiing. 
D) more time skiing than sailing. 
E) the same amount of time sailing and skiing. 
A) all his time sailing. 
B) all his time skiing. 
C) more time sailing than skiing. 
D) more time skiing than sailing. 
E) the same amount of time sailing and skiing.

Question 17

Use the table below to answer the following questions.
Windsurfing equipment rents for $10 per hour and snorkeling equipment rents for $5 per hour.
Table 8.3.1  
-Consider Devon's utility from snorkeling and windsurfing in Table 8.3.1.Devon has $55 to spend.What are Devon's choices for time spent on the two activities?

Accepted Answer

A) 1 hour of windsurfing and 9 hours of snorkeling 
B) 2 hours of windsurfing and 7 hours of snorkeling 
C) 3 hours of windsurfing and 5 hours of snorkeling 
D) 4 hours of windsurfing and 3 hours of snorkeling 
E) 5 hours of windsurfing and 1 hour of snorkeling 
A) 1 hour of windsurfing and 9 hours of snorkeling 
B) 2 hours of windsurfing and 7 hours of snorkeling 
C) 3 hours of windsurfing and 5 hours of snorkeling 
D) 4 hours of windsurfing and 3 hours of snorkeling 
E) 5 hours of windsurfing and 1 hour of snorkeling

Question 18

With respect to water and diamonds,water

Accepted Answer

A) has a higher marginal utility. 
B) has a lower marginal utility. 
C) has a lower total utility. 
D) is cheaper than diamonds because it has a lower total utility. 
E) has zero marginal utility. 
A) has a higher marginal utility. 
B) has a lower marginal utility. 
C) has a lower total utility. 
D) is cheaper than diamonds because it has a lower total utility. 
E) has zero marginal utility.

Question 19

Let MUA and MUB stand for the marginal utility of goods A and B,respectively.Let PA and PB stand for the price of goods A and B,respectively.Which statement must hold for consumer equilibrium?

Accepted Answer

A) MUA = MUB 
B) MUA = MUB and PA = PB 
C) MUA/MUB = PB/PA 
D) MUA/MUB = PA/PB 
E) MUAPA = MUBPB 
A) MUA = MUB 
B) MUA = MUB and PA = PB 
C) MUA/MUB = PB/PA 
D) MUA/MUB = PA/PB 
E) MUAPA = MUBPB

Question 20

According to the marginal utility theory,consumers

Accepted Answer

A) maximize utility and minimize marginal utility. 
B) maximize utility and equalize marginal utility per dollar across all goods. 
C) save part of their income for future consumption. 
D) maximize utility by spending the most on the least expensive good. 
E) maximize utility by spending the least on the least expensive good. 
A) maximize utility and minimize marginal utility. 
B) maximize utility and equalize marginal utility per dollar across all goods. 
C) save part of their income for future consumption. 
D) maximize utility by spending the most on the least expensive good. 
E) maximize utility by spending the least on the least expensive good.

Bikes and roller blades are substitutes.Marginal utility theory predicts that when the price of a bike rises,the quantity of bikes demanded

The total utility from owning three skirts is equal to

Bianca consumes pizza.Marginal utility theory predicts that when the price of pizza increases,

The paradox of value as it applies to diamonds and water can be explained by

The relative price of beer to bacon is 2:1.If Bob's current consumption is at a level where MU_beer/MU_bacon is 1:2,then to maximize total utility Bob must

If a consumer spends all his income and his marginal utility per dollar is equal for all goods,then

Which one of the following is not an assumption of marginal utility theory?

Harold can consume either pens or milkshakes.The price of a pen is $1,and the price of a milkshake is $1.Harold knows that when his income is spent,his marginal utility from pens will be 10 and his marginal utility from milkshakes will be 8.Harold is better off

The value of a good relates to

If Soula is maximizing her utility and consuming two goods that have the same marginal utility,she

Let MU_A and MU_B stand for the marginal utility of goods A and B,respectively.Let P_A and P_B stand for the price of goods A and B,respectively.Assume that for a given consumer MU_A and MU_B are equal to each other,and P_A is greater than P_B.In this case,the consumer is better off if he consumes

The paradox of value asks why

Other things remaining the same,marginal utility theory implies that a rise in the price of a good

Shelley is maximizing utility in her consumption of mansions and Porsches.If the marginal utility from her last purchased mansion is twice the marginal utility from her last purchased Porsche,then we know

Use the table below to answer the following questions. Table 8.2.1 -Refer to Table 8.2.1.Consider Sam's utility from sailing and skiing.If the price of sailing is $10 per hour and the price of skiing is $20 per hour,Sam will choose to spend

With respect to water and diamonds,water

Let MU_A and MU_B stand for the marginal utility of goods A and B,respectively.Let P_A and P_B stand for the price of goods A and B,respectively.Which statement must hold for consumer equilibrium?

According to the marginal utility theory,consumers

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

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Exam 8: Utility and Demand

Bikes and roller blades are substitutes.Marginal utility theory predicts that when the price of a bike rises,the quantity of bikes demanded

The total utility from owning three skirts is equal to

Bianca consumes pizza.Marginal utility theory predicts that when the price of pizza increases,

The paradox of value as it applies to diamonds and water can be explained by

The relative price of beer to bacon is 2:1.If Bob's current consumption is at a level where MUbeer/MUbacon is 1:2,then to maximize total utility Bob must

If a consumer spends all his income and his marginal utility per dollar is equal for all goods,then

Which one of the following is not an assumption of marginal utility theory?

Harold can consume either pens or milkshakes.The price of a pen is $1,and the price of a milkshake is $1.Harold knows that when his income is spent,his marginal utility from pens will be 10 and his marginal utility from milkshakes will be 8.Harold is better off

The value of a good relates to

If Soula is maximizing her utility and consuming two goods that have the same marginal utility,she

Let MUA and MUB stand for the marginal utility of goods A and B,respectively.Let PA and PB stand for the price of goods A and B,respectively.Assume that for a given consumer MUA and MUB are equal to each other,and PA is greater than PB.In this case,the consumer is better off if he consumes

The paradox of value asks why

Other things remaining the same,marginal utility theory implies that a rise in the price of a good

Shelley is maximizing utility in her consumption of mansions and Porsches.If the marginal utility from her last purchased mansion is twice the marginal utility from her last purchased Porsche,then we know

Use the table below to answer the following questions. Table 8.2.1 -Refer to Table 8.2.1.Consider Sam's utility from sailing and skiing.If the price of sailing is $10 per hour and the price of skiing is $20 per hour,Sam will choose to spend

With respect to water and diamonds,water

Let MUA and MUB stand for the marginal utility of goods A and B,respectively.Let PA and PB stand for the price of goods A and B,respectively.Which statement must hold for consumer equilibrium?

According to the marginal utility theory,consumers

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

The relative price of beer to bacon is 2:1.If Bob's current consumption is at a level where MU_beer/MU_bacon is 1:2,then to maximize total utility Bob must

Let MU_A and MU_B stand for the marginal utility of goods A and B,respectively.Let P_A and P_B stand for the price of goods A and B,respectively.Assume that for a given consumer MU_A and MU_B are equal to each other,and P_A is greater than P_B.In this case,the consumer is better off if he consumes

Let MU_A and MU_B stand for the marginal utility of goods A and B,respectively.Let P_A and P_B stand for the price of goods A and B,respectively.Which statement must hold for consumer equilibrium?