Question 1

A person's consumption possibilities is defined by the budget line because

Accepted Answer

A)  it marks the boundary between what is affordable and unaffordable. 
B)  it represents the individual's preference for different combinations of goods. 
C)  it marks the boundary between what can be produced and what is unattainable given the current state of technology and resources. 
D)  all consumers must consume on their budget line. 
A)  it marks the boundary between what is affordable and unaffordable. 
B)  it represents the individual's preference for different combinations of goods. 
C)  it marks the boundary between what can be produced and what is unattainable given the current state of technology and resources. 
D)  all consumers must consume on their budget line.

Question 2

-Betsy's utility depending from her consumption of coffee is shown in the table above. If the price of a cup of coffee is $2, Betsy's marginal utility per dollar from the 2nd cup of coffee per day is

Accepted Answer

A)  15. 
B)  40. 
C)  20. 
D)  32.5. 
A)  15. 
B)  40. 
C)  20. 
D)  32.5.

Question 3

-The above table shows Homer's utility from boxes of doughnuts. If Homer decreases his consumption of doughnuts from 4 boxes to 3 boxes, his

Accepted Answer

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

Question 4

When the price of popcorn falls, before there is any change in consumption, the

Accepted Answer

A)  marginal utility of popcorn definitely increases. 
B)  marginal utility per dollar from popcorn definitely increases. 
C)  total expenditure on popcorn definitely rises. 
D)  entire total utility of popcorn curve definitely shifts rightward. 
A)  marginal utility of popcorn definitely increases. 
B)  marginal utility per dollar from popcorn definitely increases. 
C)  total expenditure on popcorn definitely rises. 
D)  entire total utility of popcorn curve definitely shifts rightward.

Question 5

-Suppose that you consume only pizza, which costs $4 per slice, and Diet Pepsi, which costs $2 each. The table above gives your utility from consuming these two goods. If your income is $14, which of the following consumption combinations will you choose?

Accepted Answer

A)  3 slices of pizza and 1 Diet Pepsi 
B)  2 slices of pizza and 3 Diet Pepsis 
C)  1 slice of pizza and 5 Diet Pepsis 
D)  0 slices of pizza and 7 Diet Pepsis 
A)  3 slices of pizza and 1 Diet Pepsi 
B)  2 slices of pizza and 3 Diet Pepsis 
C)  1 slice of pizza and 5 Diet Pepsis 
D)  0 slices of pizza and 7 Diet Pepsis

Question 6

Tom's consumption possibilities is defined by

Accepted Answer

A)  his income and the prices of the goods that he consumes. 
B)  his preferences for consumption of the goods that he consumes. 
C)  the prices of the goods that he consumes only. 
D)  his income only. 
A)  his income and the prices of the goods that he consumes. 
B)  his preferences for consumption of the goods that he consumes. 
C)  the prices of the goods that he consumes only. 
D)  his income only.

Question 7

-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 and Jane's budget is $88. What is Jane's marginal utility per dollar spent on magazines at her consumer equilibrium?

Accepted Answer

A)  36 units 
B)  15 units 
C)  9 units 
D)  5 units 
A)  36 units 
B)  15 units 
C)  9 units 
D)  5 units

Question 8

-The above table shows Tammy's total utility from videos and CDs. If Tammy has $70 to spend on videos and CDs and if the price of a video is $10 and the price of a CD is $20, then Tammy maximizes her utility by purchasing

Accepted Answer

A)  3 CDs and 1 video. 
B)  1 CD and 5 videos. 
C)  2 CDs and 3 videos. 
D)  none of the above 
A)  3 CDs and 1 video. 
B)  1 CD and 5 videos. 
C)  2 CDs and 3 videos. 
D)  none of the above

Question 9

Milkshakes Sodas  
-The table above shows Tom's total utility from milkshakes and sodas. A milkshake costs $2.00. How much marginal utility per dollar would Tom get if he purchased the ninth milkshake?

Accepted Answer

A)  1728 units per dollar 
B)  20 units per dollar 
C)  10 units per dollar 
D)  none of the above 
A)  1728 units per dollar 
B)  20 units per dollar 
C)  10 units per dollar 
D)  none of the above

Question 10

The principle of diminishing marginal utility means that as you eat fewer slices of pizza, your total utility from pizza will ________ and your marginal utility from each additional slice of pizza will ________.

Accepted Answer

A)  increase; decrease 
B)  decrease; increase 
C)  increase; increase 
D)  decrease; decrease 
A)  increase; decrease 
B)  decrease; increase 
C)  increase; increase 
D)  decrease; decrease

Question 11

Betty consumes only milkshakes and sandwiches and maximizes her total utility. Suppose that the prices of a milkshakes and sandwiches both double and at the same time Betty's income doubles. Betty buys ________ sandwiches and her marginal utility from sandwiches ________.

Accepted Answer

A)  more; increases 
B)  fewer; decreases 
C)  more; decreases 
D)  the same number of; remains the same 
A)  more; increases 
B)  fewer; decreases 
C)  more; decreases 
D)  the same number of; remains the same

Question 12

The tendency of people to value something more highly when they own it is called the

Accepted Answer

A)  wealth effect. 
B)  endowment effect. 
C)  path dependent effect. 
D)  endorsement effect. 
A)  wealth effect. 
B)  endowment effect. 
C)  path dependent effect. 
D)  endorsement effect.

Question 13

The only goods you consume are pizza and soda. Both are normal goods. For you, pizza and soda are substitutes. Which of the following leads you to buy more of both goods?

Accepted Answer

A)  The price of a pizza falls. 
B)  The price of a soda falls. 
C)  Your income increases. 
D)  Both answers A and B are correct. 
A)  The price of a pizza falls. 
B)  The price of a soda falls. 
C)  Your income increases. 
D)  Both answers A and B are correct.

Question 14

In consumer equilibrium, Harold consumes pizza, sodas, and other goods. Pizza and soda are complements for Harold. The price of a pizza rises while his income remains the same. Harold then consumes

Accepted Answer

A)  more pizza and less soda. 
B)  more pizza and more soda. 
C)  less pizza and less soda. 
D)  less pizza and more soda. 
A)  more pizza and less soda. 
B)  more pizza and more soda. 
C)  less pizza and less soda. 
D)  less pizza and more soda.

Question 15

Eclairs Cream puffs  
-The table gives the total utility Jamal derives from the consumption of eclairs and cream puffs. Jamal has $12 to spend on these two confectionery goods. The price of an eclair is $3 and the price of a cream puff is $1.50.
a) Jamal's budget is $12. In order for Jamal to maximize his utility, how many eclairs and cream puffs should he buy?
b) Suppose the price of an eclair increase to $6. Jamal's income does not change and neither does the price of a cream puff. What combination of eclairs and cream puffs will Jamal buy now?
c) Using your answers to parts (a) and (b), derive two points on Jamal's demand curve for eclairs.

Accepted Answer

a) Jamal's utility maximizing combinatio

Question 16

How are total and marginal utility related?

Accepted Answer

Marginal utility is

Question 17

When Tom's income increases, his demand curve for Mountain Dew shifts rightward because the higher income increases his marginal utility of Mountain Dew.

Accepted Answer

A) True 
 B)False

Question 18

A consumer maximizes total utility when all available income is spent and the

Accepted Answer

A)  marginal utility from each good is equal for all goods. 
B)  marginal utility per dollar from each good is equal for all goods. 
C)  dollars spent on the last unit of each good are equal for all goods. 
D)  total utility from all goods purchased is equal. 
A)  marginal utility from each good is equal for all goods. 
B)  marginal utility per dollar from each good is equal for all goods. 
C)  dollars spent on the last unit of each good are equal for all goods. 
D)  total utility from all goods purchased is equal.

Question 19

The paradox of value refers to the fact that

Accepted Answer

A)  different consumers value the same items differently. 
B)  the value of a good depends on its total utility. 
C)  water costs little, while diamonds cost a lot. 
D)  water brings little consumer surplus. 
A)  different consumers value the same items differently. 
B)  the value of a good depends on its total utility. 
C)  water costs little, while diamonds cost a lot. 
D)  water brings little consumer surplus.

Question 20

Total utility describes

Accepted Answer

A)  the benefit gained from all consumption. 
B)  an increase in consumption multiplied by the gain in utility. 
C)  total consumption multiplied by marginal utility. 
D)  total consumption divided by marginal utility. 
A)  the benefit gained from all consumption. 
B)  an increase in consumption multiplied by the gain in utility. 
C)  total consumption multiplied by marginal utility. 
D)  total consumption divided by marginal utility.

Exam 8: Utility and Demand

A person's consumption possibilities is defined by the budget line because

-Betsy's utility depending from her consumption of coffee is shown in the table above. If the price of a cup of coffee is $2, Betsy's marginal utility per dollar from the 2nd cup of coffee per day is

-The above table shows Homer's utility from boxes of doughnuts. If Homer decreases his consumption of doughnuts from 4 boxes to 3 boxes, his

When the price of popcorn falls, before there is any change in consumption, the

-Suppose that you consume only pizza, which costs $4 per slice, and Diet Pepsi, which costs $2 each. The table above gives your utility from consuming these two goods. If your income is $14, which of the following consumption combinations will you choose?

Tom's consumption possibilities is defined by

-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 and Jane's budget is $88. What is Jane's marginal utility per dollar spent on magazines at her consumer equilibrium?

-The above table shows Tammy's total utility from videos and CDs. If Tammy has $70 to spend on videos and CDs and if the price of a video is $10 and the price of a CD is $20, then Tammy maximizes her utility by purchasing

Milkshakes Sodas -The table above shows Tom's total utility from milkshakes and sodas. A milkshake costs $2.00. How much marginal utility per dollar would Tom get if he purchased the ninth milkshake?

The principle of diminishing marginal utility means that as you eat fewer slices of pizza, your total utility from pizza will ________ and your marginal utility from each additional slice of pizza will ________.

Betty consumes only milkshakes and sandwiches and maximizes her total utility. Suppose that the prices of a milkshakes and sandwiches both double and at the same time Betty's income doubles. Betty buys ________ sandwiches and her marginal utility from sandwiches ________.

The tendency of people to value something more highly when they own it is called the

The only goods you consume are pizza and soda. Both are normal goods. For you, pizza and soda are substitutes. Which of the following leads you to buy more of both goods?

In consumer equilibrium, Harold consumes pizza, sodas, and other goods. Pizza and soda are complements for Harold. The price of a pizza rises while his income remains the same. Harold then consumes

How are total and marginal utility related?

When Tom's income increases, his demand curve for Mountain Dew shifts rightward because the higher income increases his marginal utility of Mountain Dew.

A consumer maximizes total utility when all available income is spent and the

The paradox of value refers to the fact that

Total utility describes

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

Filters

The principle of diminishing marginal utility means that as you eat fewer slices of pizza, your total utility from pizza will and your marginal utility from each additional slice of pizza will .

Betty consumes only milkshakes and sandwiches and maximizes her total utility. Suppose that the prices of a milkshakes and sandwiches both double and at the same time Betty's income doubles. Betty buys sandwiches and her marginal utility from sandwiches .