Question 1

Apples Tacos  
-If Katie purchases two slices of pizza and six breadsticks to maximize her total utility, then

Accepted Answer

A)  a slice of pizza costs three times as much as a breadstick. 
B)  a breadstick costs three times as much as a slice of pizza. 
C)  her marginal utility from the second slice of pizza divided by the price of a slice of pizza is equal to her marginal utility from the sixth breadstick divided by the price of a breadstick. 
D)  Both answers A and C are correct. 
A)  a slice of pizza costs three times as much as a breadstick. 
B)  a breadstick costs three times as much as a slice of pizza. 
C)  her marginal utility from the second slice of pizza divided by the price of a slice of pizza is equal to her marginal utility from the sixth breadstick divided by the price of a breadstick. 
D)  Both answers A and C are correct.

Question 2

When Alex eats 1 slice of pizza, his total utility is 80; when Alex eats 2 slices of pizza, his total utility is 120. Alex's marginal utility from the second pizza is

Accepted Answer

A)  200. 
B)  80. 
C)  60. 
D)  40. 
A)  200. 
B)  80. 
C)  60. 
D)  40.

Question 3

-The table above gives the utility from pens and pencils. If the consumer has an income of $4, pens cost $1, and pencils cost $.20, what is the consumer's total utility when he or she maximizes utility?

Accepted Answer

A)  374 
B)  225 
C)  405 
D)  365 
A)  374 
B)  225 
C)  405 
D)  365

Question 4

At the utility maximizing equilibrium for two goods, X and Y, which of the following must be true?

Accepted Answer

A)  The marginal utility per dollar spent on X will exceed the marginal utility per dollar spent on Y. 
B)  The total expenditure will be the same for each good. 
C)  The marginal utility per dollar from X equals the marginal utility per dollar from Y. 
D)  The marginal utility will be the same for each good. 
A)  The marginal utility per dollar spent on X will exceed the marginal utility per dollar spent on Y. 
B)  The total expenditure will be the same for each good. 
C)  The marginal utility per dollar from X equals the marginal utility per dollar from Y. 
D)  The marginal utility will be the same for each good.

Question 5

Pizza Pepsi  
-The above table shows Priscilla's marginal utility from the two goods she consumes, pizza and Pepsi. The price of a slice of pizza is $2 and of a can of Pepsi is $1. Suppose Priscilla has $6 to spend. If Priscilla chooses to eat 3 slices of pizza,

Accepted Answer

A)  she is maximizing her total utility. 
B)  she is not equating marginal utility per dollar for pizza and Pepsi. 
C)  she is not at a consumer equilibrium. 
D)  Both answers B and C are correct. 
A)  she is maximizing her total utility. 
B)  she is not equating marginal utility per dollar for pizza and Pepsi. 
C)  she is not at a consumer equilibrium. 
D)  Both answers B and C are correct.

Question 6

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. Jean maximizes utility and buys only sodas and slices of pizza. If the price of a soda increases to $3 each, Jean's marginal utility per soda

Accepted Answer

A)  will increase and she'll buy more soda. 
B)  will decrease and she'll buy fewer sodas. 
C)  will decrease and she'll buy more pizza. 
D)  Both B and C are correct. 
A)  will increase and she'll buy more soda. 
B)  will decrease and she'll buy fewer sodas. 
C)  will decrease and she'll buy more pizza. 
D)  Both B and C are correct.

Question 7

-When Alex eats 1 slice of pizza, his total utility is 80; when Alex eats 2 slices of pizza, his total utility is 120. Alex's marginal utility from the second pizza is

Accepted Answer

A)  200. 
B)  80. 
C)  60. 
D)  40. 
A)  200. 
B)  80. 
C)  60. 
D)  40.

Question 8

Magazines Chocolate bars  
-Sonya's budget for magazines and chocolate bars is $50. Her marginal utility from these goods is shown in the table above. The price of a magazine is $5 and the price of a chocolate bar is $2.50. Sonya currently buys 2 magazines and 12 chocolate bars. To maximize her utility, she should

Accepted Answer

A)  buy more chocolate bars and fewer magazines. 
B)  buy more magazines and fewer chocolate bars. 
C)  buy more of both goods. 
D)  stay with the current combination of goods. 
A)  buy more chocolate bars and fewer magazines. 
B)  buy more magazines and fewer chocolate bars. 
C)  buy more of both goods. 
D)  stay with the current combination of goods.

Question 9

Bananas Apples  
-Marginal utility diminishes as consumption of a good decreases.

Accepted Answer

A) True 
 B)False

Question 10

-John either buys a steak or chicken when dining out. John's marginal utility for steak and chicken is given in the above table. If the price of a steak is $5 and the price of a chicken is $5 and John has $25 to spend on the two goods, what combination of steak and chicken will John consume to maximize his utility?

Accepted Answer

A)  1 steak and 4 chickens 
B)  3 steaks and 2 chickens 
C)  4 steaks and 3 chickens 
D)  5 steaks and 6 chickens 
A)  1 steak and 4 chickens 
B)  3 steaks and 2 chickens 
C)  4 steaks and 3 chickens 
D)  5 steaks and 6 chickens

Question 11

-With a given income and prices of goods, Marcus will be in a consumer equilibrium if ________.

Accepted Answer

A)  his marginal utility from all goods is the same 
B)  he purchases the same amounts of all goods 
C)  he maximizes his total utility 
D)  his marginal utility from all goods is at its maximum 
A)  his marginal utility from all goods is the same 
B)  he purchases the same amounts of all goods 
C)  he maximizes his total utility 
D)  his marginal utility from all goods is at its maximum

Question 12

-The table above gives the utility from pens and pencils. If the consumer has an income of $4, pens cost $1, and pencils cost $.20, which of the following combinations maximizes the consumer's utility?

Accepted Answer

A)  4 pens and 0 pencils 
B)  3 pens and 5 pencils 
C)  3 pens and 6 pencils 
D)  no combination shown 
A)  4 pens and 0 pencils 
B)  3 pens and 5 pencils 
C)  3 pens and 6 pencils 
D)  no combination shown

Question 13

-Steve has two goods he can spend his income on, skiing and skating, and his marginal utilities from each are in the table above. The price of each unit of skiing is $10 and the price of each unit of skating is $5. Steve has $40 to spend. If Steve consumes the quantities of skiing and skating to maximize his utility, what is his total utility?

Accepted Answer

A)  40 
B)  60 
C)  250 
D)  300 
A)  40 
B)  60 
C)  250 
D)  300

Question 14

According to the principle of diminishing marginal utility, as the quantity of a good or service consumed increases, total utility

Accepted Answer

A)  increases. 
B)  decreases. 
C)  is unchanging. 
D)  is zero. 
A)  increases. 
B)  decreases. 
C)  is unchanging. 
D)  is zero.

Question 15

-The above table shows Homer's total utility from boxes of doughnuts. As Homer's consumption of doughnuts increases,

Accepted Answer

A)  both his total utility and his marginal utility increase. 
B)  his total utility increases, but his marginal utility decreases. 
C)  his total utility decreases, but his marginal utility increases. 
D)  both his total utility and his marginal utility decrease. 
A)  both his total utility and his marginal utility increase. 
B)  his total utility increases, but his marginal utility decreases. 
C)  his total utility decreases, but his marginal utility increases. 
D)  both his total utility and his marginal utility decrease.

Question 16

Pizza Pepsi  
-The above table shows Priscilla's marginal utility from the two goods she consumes, pizza and Pepsi. The price of a slice of pizza is $2 and of a can of Pepsi is $1. Suppose Priscilla has $6 to spend. If Priscilla is consuming 1 slice of pizza and 2 cans of Pepsi, which of the following is correct?

Accepted Answer

A)  Priscilla is maximizing her utility. 
B)  Priscilla should increase her consumption of Pepsi to maximize her utility. 
C)  Priscilla should increase her consumption of pizza to maximize her utility. 
D)  None of the above answers is correct. 
A)  Priscilla is maximizing her utility. 
B)  Priscilla should increase her consumption of Pepsi to maximize her utility. 
C)  Priscilla should increase her consumption of pizza to maximize her utility. 
D)  None of the above answers is correct.

Question 17

At Revolution Doughnuts in Fort Collins, Colorado, a cup of coffee or a doughnut is $1. Suppose Hannah loves going to Revolution Doughnuts. Currently, her marginal utility per dollar from doughnuts is 14 and her marginal utility per dollar from coffee is 10. Is Hannah maximizing her total utility?

Accepted Answer

A)  No, she needs to buy more doughnuts and less coffee. 
B)  No, she needs to buy more coffee and fewer doughnuts. 
C)  Yes, she is maximizing utility. 
D)  No, she needs to buy fewer doughnuts and less coffee. 
A)  No, she needs to buy more doughnuts and less coffee. 
B)  No, she needs to buy more coffee and fewer doughnuts. 
C)  Yes, she is maximizing utility. 
D)  No, she needs to buy fewer doughnuts and less coffee.

Question 18

Because we cannot observe or measure utility

Accepted Answer

A)  the predictions of marginal utility theory cannot be verified. 
B)  marginal utility theory is incomplete and so its predictions might not be valid. 
C)  marginal utility theory must be derived from assumptions about demand curves because demand curves can be measured. 
D)  None of the above answers are correct. 
A)  the predictions of marginal utility theory cannot be verified. 
B)  marginal utility theory is incomplete and so its predictions might not be valid. 
C)  marginal utility theory must be derived from assumptions about demand curves because demand curves can be measured. 
D)  None of the above answers are correct.

Question 19

-Given the data in the above table, income of $13, a price of $1 for a bottle of water and $2.00 for a hamburger, what is the marginal utility per dollar spent on the fifth hamburger?

Accepted Answer

A)  10 units of utility 
B)  8 units of utility 
C)  6 units of utility 
D)  4 units of utility 
A)  10 units of utility 
B)  8 units of utility 
C)  6 units of utility 
D)  4 units of utility

Question 20

Joe consumes pizza and movies. He is currently spending his entire income and his marginal utility of pizza is 10 and his marginal utility of movies is 5. If the price of a pizza is $10 and the price of a movie is $5, then to maximize his utility Joe should

Accepted Answer

A)  increase consumption of pizza and decrease consumption of movies. 
B)  increase consumption of movies and decrease consumption of pizza. 
C)  not change his current bundle of movies and pizza. 
D)  increase consumption of both goods. 
A)  increase consumption of pizza and decrease consumption of movies. 
B)  increase consumption of movies and decrease consumption of pizza. 
C)  not change his current bundle of movies and pizza. 
D)  increase consumption of both goods.

Exam 8: Utility and Demand

Apples Tacos -If Katie purchases two slices of pizza and six breadsticks to maximize her total utility, then

When Alex eats 1 slice of pizza, his total utility is 80; when Alex eats 2 slices of pizza, his total utility is 120. Alex's marginal utility from the second pizza is

-The table above gives the utility from pens and pencils. If the consumer has an income of $4, pens cost $1, and pencils cost $.20, what is the consumer's total utility when he or she maximizes utility?

At the utility maximizing equilibrium for two goods, X and Y, which of the following must be true?

Pizza Pepsi -The above table shows Priscilla's marginal utility from the two goods she consumes, pizza and Pepsi. The price of a slice of pizza is $2 and of a can of Pepsi is $1. Suppose Priscilla has $6 to spend. If Priscilla chooses to eat 3 slices of pizza,

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. Jean maximizes utility and buys only sodas and slices of pizza. If the price of a soda increases to $3 each, Jean's marginal utility per soda

-When Alex eats 1 slice of pizza, his total utility is 80; when Alex eats 2 slices of pizza, his total utility is 120. Alex's marginal utility from the second pizza is

Bananas Apples -Marginal utility diminishes as consumption of a good decreases.

-With a given income and prices of goods, Marcus will be in a consumer equilibrium if ________.

-The table above gives the utility from pens and pencils. If the consumer has an income of $4, pens cost $1, and pencils cost $.20, which of the following combinations maximizes the consumer's utility?

According to the principle of diminishing marginal utility, as the quantity of a good or service consumed increases, total utility

-The above table shows Homer's total utility from boxes of doughnuts. As Homer's consumption of doughnuts increases,

At Revolution Doughnuts in Fort Collins, Colorado, a cup of coffee or a doughnut is $1. Suppose Hannah loves going to Revolution Doughnuts. Currently, her marginal utility per dollar from doughnuts is 14 and her marginal utility per dollar from coffee is 10. Is Hannah maximizing her total utility?

Because we cannot observe or measure utility

-Given the data in the above table, income of $13, a price of $1 for a bottle of water and $2.00 for a hamburger, what is the marginal utility per dollar spent on the fifth hamburger?

Joe consumes pizza and movies. He is currently spending his entire income and his marginal utility of pizza is 10 and his marginal utility of movies is 5. If the price of a pizza is $10 and the price of a movie is $5, then to maximize his utility Joe should

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

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

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