Question 1

Marginal utility is defined as the:

Accepted Answer

A) additional utility gained by consuming an extra unit of a good. 
B) total utility from all units consumed of a good. 
C) total utility from all units consumed divided by the number of units consumed. 
D) additional utility gained divided by the price of the good. 
A) additional utility gained by consuming an extra unit of a good. 
B) total utility from all units consumed of a good. 
C) total utility from all units consumed divided by the number of units consumed. 
D) additional utility gained divided by the price of the good.

Question 2

At George's current level of consumption,   /   = 7 and   /   = 9.George can increase his utility by decreasing his consumption of ski trips and increasing his consumption of restaurant meals.

Accepted Answer

A) True 
 B)False

Question 3

Table 7.1
-Refer to Table 7.1.Diminishing marginal utility sets in after the ________ cup of coffee per day.

Accepted Answer

A) first 
B) second 
C) third 
D) fourth 
A) first 
B) second 
C) third 
D) fourth

Question 4

Recall the application about store vs.online retailers,how do the sales strategies of conventional store and online retailers differ?

Accepted Answer

A) Conventional stores use the neural activity in the NAcc.and down-regulate the insula,and the online stores only use the neural activity for their sales strategies. 
B) Conventional stores use the neural activity in the NAcc.and down-regulate the insula,and the online stores only work with the insula for their sales strategies. 
C) There are no significant differences between the online and conventional retailers. 
D) Online stores focus on the NAcc activity,on the contrary conventional stores focus only on the insula. 
A) Conventional stores use the neural activity in the NAcc.and down-regulate the insula,and the online stores only use the neural activity for their sales strategies. 
B) Conventional stores use the neural activity in the NAcc.and down-regulate the insula,and the online stores only work with the insula for their sales strategies. 
C) There are no significant differences between the online and conventional retailers. 
D) Online stores focus on the NAcc activity,on the contrary conventional stores focus only on the insula.

Question 5

Total utility is the additional satisfaction received from consuming an additional unit of a product.

Accepted Answer

A) True 
 B)False

Question 6

Dan is consuming coffee and bagels so that   /   = 15 and   /   = 9.Using the equimarginal rule,Richard should:

Accepted Answer

A) continue to consume the same amount of coffee and bagels,as he is already maximizing utility. 
B) consume less of both coffee and bagels. 
C) consume more coffee and less bagels. 
D) consume less coffee and more bagels. 
A) continue to consume the same amount of coffee and bagels,as he is already maximizing utility. 
B) consume less of both coffee and bagels. 
C) consume more coffee and less bagels. 
D) consume less coffee and more bagels.

Question 7

Table 7.8
-Refer to Table 7.8.Jessy spends no more than $75 per month on movies and meals out.Movies cost $8 each and a meal out costs $15.If Jessy eats out three times per month,what is her marginal utility per dollar spent?

Accepted Answer

A) 120 
B) 8 
C) 15 
D) 9 
A) 120 
B) 8 
C) 15 
D) 9

Question 8

Table 7.1
-Refer to Table 7.1.The marginal utility of the third donut per day is:

Accepted Answer

A) 60. 
B) 15. 
C) 20. 
D) 75. 
A) 60. 
B) 15. 
C) 20. 
D) 75.

Question 9

-Refer to Figure 7.3.The marginal utility from the fourth slice of pie is:

Accepted Answer

A) 2. 
B) 3. 
C) 4. 
D) 8. 
A) 2. 
B) 3. 
C) 4. 
D) 8.

Question 10

The notion of anchoring helps explain the large effects of "sales" for retail goods.

Accepted Answer

A) True 
 B)False

Question 11

________ is a simple rule for dealing with a complex situation which provides a "fast and frugal" decision.

Accepted Answer

A) A present bias 
B) The Nacc 
C) Cognitive response 
D) Heuristic 
A) A present bias 
B) The Nacc 
C) Cognitive response 
D) Heuristic

Question 12

When the price of a good changes,the substitution effect and the income effect:

Accepted Answer

A) work in the same direction. 
B) work in opposite directions. 
C) cause the demand curve to slope upward. 
D) are irrelevant. 
A) work in the same direction. 
B) work in opposite directions. 
C) cause the demand curve to slope upward. 
D) are irrelevant.

Question 13

Additional Application
A study done by a group from the Harvard School of Public Health in 1988 indirectly supported the relationship between the price a consumer pays and the marginal utility the consumer receives for medical services.The study claimed that the charges for surgery were "too high" while charges for doctor consultations and office visits were "too low." An hour of a doctor's time in surgery earned a great deal more than an hour of consultation in the office.If more prevention through consultation could result in less need for surgery,why should the fees for corrective medical surgery be so much greater than the fees for diagnosis and prevention of medical problems? Therefore the Harvard group recommended higher fees for consultation and lower fees for surgery.They determined that such changes would more accurately reflect the value of each service.
Yet consumers willingly pay more for surgery than consultation.Why? Because the marginal utility received from an hour of surgery is determined to be much greater than the marginal utility from an hour of consultation.Consumers allocate their expenditures with an awareness of the ratio of the marginal utility from a good or service to its price.
"Doctors' Fees Called Out of Balance," The Christian Science Monitor,September 29,1988,p.3.
-According to the group who conducted the study,the marginal value of a consultation is ________ the price being charged.

Accepted Answer

A) less than 
B) greater than 
C) equal to 
D) unrelated to 
A) less than 
B) greater than 
C) equal to 
D) unrelated to

Question 14

Consumers should allocate their scarce income so that:

Accepted Answer

A) the marginal utility for all goods consumed is zero. 
B) the marginal utility for all goods consumed is equal. 
C) the marginal utility divided by price is equal for all goods consumed. 
D) the marginal utility divided by price is maximized for all goods consumed. 
A) the marginal utility for all goods consumed is zero. 
B) the marginal utility for all goods consumed is equal. 
C) the marginal utility divided by price is equal for all goods consumed. 
D) the marginal utility divided by price is maximized for all goods consumed.

Question 15

What of the following is another mental shortcut to monitor consumption?

Accepted Answer

A) bundles 
B) utilities 
C) accounts 
D) none of the above 
A) bundles 
B) utilities 
C) accounts 
D) none of the above

Question 16

According to economics,why would a consumer download a song illegally?

Accepted Answer

A) Most people have a criminal mentality. 
B) The expected cost of the act is greater than the expected benefit. 
C) There are no other options for most consumers. 
D) The expected benefit of the act is greater than the expected cost. 
A) Most people have a criminal mentality. 
B) The expected cost of the act is greater than the expected benefit. 
C) There are no other options for most consumers. 
D) The expected benefit of the act is greater than the expected cost.

Question 17

Table 7.1
-Refer to Table 7.1.The total utility of five donuts per day is:

Accepted Answer

A) 60. 
B) 70. 
C) 65. 
D) 78. 
A) 60. 
B) 70. 
C) 65. 
D) 78.

Question 18

At Hillary's current level of consumption,   /   = 18 and   /   = 15.Hillary can increase her utility by increasing her consumption of good X and reducing her consumption of good Y.

Accepted Answer

A) True 
 B)False

Question 19

Table 7.8
-Refer to Table 7.8.Jessy spends no more than $75 per month on movies and meals out.Movies cost $8 each and a meal out costs $15.If Jessy wants to maximize her utility she should choose ________ movies and ________ meals out.

Accepted Answer

A) 0;5 
B) 1;4 
C) 4;2 
D) 3;3 
A) 0;5 
B) 1;4 
C) 4;2 
D) 3;3

Question 20

-Refer to Figure 7.1.The marginal utility of the third movie rental is:

Accepted Answer

A) 1. 
B) 3. 
C) 9.33. 
D) 28. 
A) 1. 
B) 3. 
C) 9.33. 
D) 28.

Marginal utility is defined as the:

At George's current level of consumption, / = 7 and / = 9.George can increase his utility by decreasing his consumption of ski trips and increasing his consumption of restaurant meals.

Table 7.1 -Refer to Table 7.1.Diminishing marginal utility sets in after the ________ cup of coffee per day.

Recall the application about store vs.online retailers,how do the sales strategies of conventional store and online retailers differ?

Total utility is the additional satisfaction received from consuming an additional unit of a product.

Dan is consuming coffee and bagels so that / = 15 and / = 9.Using the equimarginal rule,Richard should:

Table 7.8 -Refer to Table 7.8.Jessy spends no more than $75 per month on movies and meals out.Movies cost $8 each and a meal out costs $15.If Jessy eats out three times per month,what is her marginal utility per dollar spent?

Table 7.1 -Refer to Table 7.1.The marginal utility of the third donut per day is:

-Refer to Figure 7.3.The marginal utility from the fourth slice of pie is:

The notion of anchoring helps explain the large effects of "sales" for retail goods.

________ is a simple rule for dealing with a complex situation which provides a "fast and frugal" decision.

When the price of a good changes,the substitution effect and the income effect:

Consumers should allocate their scarce income so that:

What of the following is another mental shortcut to monitor consumption?

According to economics,why would a consumer download a song illegally?

Table 7.1 -Refer to Table 7.1.The total utility of five donuts per day is:

At Hillary's current level of consumption, / = 18 and / = 15.Hillary can increase her utility by increasing her consumption of good X and reducing her consumption of good Y.

Table 7.8 -Refer to Table 7.8.Jessy spends no more than $75 per month on movies and meals out.Movies cost $8 each and a meal out costs $15.If Jessy wants to maximize her utility she should choose movies and meals out.

-Refer to Figure 7.1.The marginal utility of the third movie rental is:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 7: Consumer Choice: Utility Theory and Insights From Neuroscience

Marginal utility is defined as the:

At George's current level of consumption, / = 7 and / = 9.George can increase his utility by decreasing his consumption of ski trips and increasing his consumption of restaurant meals.

Table 7.1 -Refer to Table 7.1.Diminishing marginal utility sets in after the ________ cup of coffee per day.

Recall the application about store vs.online retailers,how do the sales strategies of conventional store and online retailers differ?

Total utility is the additional satisfaction received from consuming an additional unit of a product.

Dan is consuming coffee and bagels so that / = 15 and / = 9.Using the equimarginal rule,Richard should:

Table 7.8 -Refer to Table 7.8.Jessy spends no more than $75 per month on movies and meals out.Movies cost $8 each and a meal out costs $15.If Jessy eats out three times per month,what is her marginal utility per dollar spent?

Table 7.1 -Refer to Table 7.1.The marginal utility of the third donut per day is:

-Refer to Figure 7.3.The marginal utility from the fourth slice of pie is:

The notion of anchoring helps explain the large effects of "sales" for retail goods.

________ is a simple rule for dealing with a complex situation which provides a "fast and frugal" decision.

When the price of a good changes,the substitution effect and the income effect:

Consumers should allocate their scarce income so that:

What of the following is another mental shortcut to monitor consumption?

According to economics,why would a consumer download a song illegally?

Table 7.1 -Refer to Table 7.1.The total utility of five donuts per day is:

At Hillary's current level of consumption, / = 18 and / = 15.Hillary can increase her utility by increasing her consumption of good X and reducing her consumption of good Y.

Table 7.8 -Refer to Table 7.8.Jessy spends no more than $75 per month on movies and meals out.Movies cost $8 each and a meal out costs $15.If Jessy wants to maximize her utility she should choose ________ movies and ________ meals out.

-Refer to Figure 7.1.The marginal utility of the third movie rental is:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Table 7.8 -Refer to Table 7.8.Jessy spends no more than $75 per month on movies and meals out.Movies cost $8 each and a meal out costs $15.If Jessy wants to maximize her utility she should choose movies and meals out.