Exam 8: Utility and Demand

-The above table gives the total utility that Homer obtains from consuming various quantities of chocolate chip cookies. The marginal utility from the fifth pound of cookies is

-When Ramona is in consumer equilibrium,

Which of the following statements is true?

-Lisa spends all her income on pizzas and DVDs. The above table shows Lisa's marginal utility for pizza and marginal utility for DVDs. If the price of a pizza is $10 and the price of a DVD is $10 and Lisa has $40 to spend on the two goods, what combination of pizza and DVDs will maximize her utility?

The only goods you consume are pizza and soda. Both are normal goods. You consider pizza and soda to be substitutes. Which of the following will lead you to eat more pizza?

Pizza Pepsi -The above table shows Priscilla's marginal utility from the two goods she consumes, pizza and Pepsi. Initially, a slice of pizza costs $4 and a can of Pepsi $2. Suppose Priscilla has $12 to spend. If the price of pizza falls to $2, Priscilla will choose to

Bags of Popcorn Bottles of soda -Suppose Hank spends his entire budget buying 2 bagels and 3 cups of coffee each day. Also, suppose the marginal utility of the second bagel is 100 and the marginal utility of the third cup of coffee is 200. Which of the following statements is true?

According to marginal utility theory, a rise in income will

Marginal utility theory predicts that when income increases a

Bags of Popcorn Bottles of soda -Sarah consumes pizzas and hamburgers. The price of a hamburger is $1 and the marginal utility from her last hamburger is 5. Let P_p be the price of a pizza and MU_p be the marginal utility of pizzas. In consumer equilibrium, the ratio MU_p/P_p for Sarah's last pizza must equal

Apples Tacos -A consumer has maximized his or her utility by consuming

-The table above gives Jane's total utility from magazines and CDs. The price of a magazine is $4 and the price of a CD is $10. Which of the following correctly illustrates the principle of diminishing marginal utility? The fact that

The water and diamonds paradox of value

Bananas Apples -According to the principle of diminishing marginal utility, as an individual consumes more and more of a good or service, the total utility increases while the marginal utility decreases.

Rembrandt paintings are expensive and not as vital for life as milk, which is cheap. Marginal utility theory explains this paradox of value: The total utility from a Rembrandt painting is ________ than the total utility from milk, and the marginal utility from a Rembrandt painting is ________ than the marginal utility from milk.

Pizza Pepsi -Elaine spends $10 a week on pizza and Pepsi. The price of pizza is $2 a slice and the price of a Pepsi is $2. The table shows Elaine's total utility from pizza and hamburgers. Elaine maximizes her total utility by buying ________ slices of pizza and ________ hamburgers a week.

-Gunther rents Nintendo games and videos. The marginal utility from his last Nintendo game is 10 and that from his last video is 5. Nintendo games rent for $2 each. Gunther's demand curve for games is shown in the figure above. How many videos a week does Gunther rent?

If a consumer is consuming a combination of goods and services on his budget line, has the consumer allocated his or her entire budget?

The diamond-water paradox of value can be explained by

Ricardo likes to rent DVDs and attend concerts. The DVDs cost $4 and the concerts cost $40. Ricardo's marginal utility from the last DVD is 20 units. Ricardo is maximizing his utility. What is his marginal utility from the last concert he attended?