Question 1

When total utility is at a maximum, marginal utility is:

Accepted Answer

A)  rising. 
B)  at its average value. 
C)  at a maximum. 
D)  zero. 
A)  rising. 
B)  at its average value. 
C)  at a maximum. 
D)  zero.

Question 2

-(Exhibit: Consumer Equilibrium 3) Assume that you are consuming the combination of goods at point G. Given budget constraint FL, utility can be increased by moving to point:

Accepted Answer

A)  H. 
B)  I. 
C)  J. 
D)  K. 
A)  H. 
B)  I. 
C)  J. 
D)  K.

Question 3

If a consumer purchases a combination of commodities a and b such that MUa/Pa = 100
And MUb/Pb = 80, to maximize utility, the consumer should buy:

Accepted Answer

A)  less of both a and b. 
B)  more of a and less of b. 
C)  less of a and more of b. 
D)  more of both a and b. 
A)  less of both a and b. 
B)  more of a and less of b. 
C)  less of a and more of b. 
D)  more of both a and b.

Question 4

If the price of a good falls and the consumer decides to buy more of the good solely because it is relatively less expensive, this describes the:

Accepted Answer

A)  income effect. 
B)  substitution effect. 
C)  consumer surplus effect. 
D)  marginal maximizing rule. 
A)  income effect. 
B)  substitution effect. 
C)  consumer surplus effect. 
D)  marginal maximizing rule.

Question 5

-(Exhibit: Consumer Equilibrium 1) Assume that the price of both goods X and Y is $1 per unit, and you have $4 of income to spend on both goods. To maximize utility, you would consume ______ units of X and _______ units of Y.

Accepted Answer

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

Question 6

The total utility of a good is equal to the marginal utility of the last unit consumed.

Accepted Answer

A) True 
 B)False

Question 7

A consumer's total utility is greater at the upper end of an indifference curve than at the lower end.

Accepted Answer

A) True 
 B)False

Question 8

Assume that the total utilities for the fifth and sixth units of a good consumed are 83 and 97, respectively. The marginal utility for the sixth unit is:

Accepted Answer

A)  -14. 
B)  14. 
C)  83. 
D)  97. 
A)  -14. 
B)  14. 
C)  83. 
D)  97.

Question 9

Total utility is maximized when marginal utility per additional dollar spent is the same for all goods.

Accepted Answer

A) True 
 B)False

Question 10

Consumer equilibrium is achieved at the point of tangency between the budget line and the highest attainable indifference curve.

Accepted Answer

A) True 
 B)False

Question 11

Assume that the total utilities corresponding to the first five units of a product consumed are 14, 20, 25, 29, and 32, respectively. The marginal utility of the third unit is:

Accepted Answer

A)  5. 
B)  6. 
C)  20. 
D)  25. 
A)  5. 
B)  6. 
C)  20. 
D)  25.

Question 12

The utility of a good is determined by how much _______ a particular consumer obtains from it.

Accepted Answer

A)  satisfaction 
B)  usefulness 
C)  cost 
D)  need fulfillment 
A)  satisfaction 
B)  usefulness 
C)  cost 
D)  need fulfillment

Question 13

In indifference curve analysis, a line that shows all combinations of two goods a consumer can buy is called a(n):

Accepted Answer

A)  indifference curve. 
B)  utility line. 
C)  budget line. 
D)  income possibility line 
A)  indifference curve. 
B)  utility line. 
C)  budget line. 
D)  income possibility line

Question 14

If a consumer moves upward along an indifference curve, his or her total utility:

Accepted Answer

A)  remains constant. 
B)  first decreases, then increases. 
C)  increases. 
D)  first increases, then decreases. 
A)  remains constant. 
B)  first decreases, then increases. 
C)  increases. 
D)  first increases, then decreases.

Question 15

Total Utility and Marginal Utility from Consumption of Good A
  
-(Exhibit: Total Utility and Marginal Utility from Consumption of Good A) If 4 units of good A are consumed, the total utility received is _______ and the marginal utility of the 4th unit is _______ .

Accepted Answer

A)   26; 5 
B)   14; 2 
C)   12; 3 
D)   None of the above is correct. 
A)   26; 5 
B)   14; 2 
C)   12; 3 
D)   None of the above is correct.

Question 16

The textbook states that the law of demand:

Accepted Answer

A)  is nonsense. 
B)  is difficult to verify. 
C)  is confirmed by our real-world experience. 
D)  is not valid in theory. 
A)  is nonsense. 
B)  is difficult to verify. 
C)  is confirmed by our real-world experience. 
D)  is not valid in theory.

Question 17

Suppose that the price of Cracker Jacks is 50 cents a box and the price of M&Ms is 25 cents a bag. If you have $10 to spend and decide to purchase 8 bags of M&Ms, the maximum quantity of Cracker Jacks that you can purchase is ________ boxes.

Accepted Answer

A)  10 
B)  12 
C)  16 
D)  20 
A)  10 
B)  12 
C)  16 
D)  20

Question 18

The change in consumption of a good resulting from the implicit change in income because of a price change is called the _______ effect of a price change.

Accepted Answer

A)  substitution 
B)  demand 
C)  price 
D)  income 
A)  substitution 
B)  demand 
C)  price 
D)  income

Question 19

Economists assume that consumers behave in a manner consistent with the _______ of utility.

Accepted Answer

A)  maintenance 
B)  minimization 
C)  maximization 
D)  final degree 
A)  maintenance 
B)  minimization 
C)  maximization 
D)  final degree

Question 20

Suppose that the price of Cracker Jacks is 50 cents a box and the price of M&Ms is 25 cents a bag. If you have $10 to spend on both goods, the maximum quantity of M&Ms that you can purchase is ________ bags.

Accepted Answer

A)  5 
B)  10 
C)  20 
D)  40 
A)  5 
B)  10 
C)  20 
D)  40

Exam 7: Cost and Industry Structure

When total utility is at a maximum, marginal utility is:

-(Exhibit: Consumer Equilibrium 3) Assume that you are consuming the combination of goods at point G. Given budget constraint FL, utility can be increased by moving to point:

If a consumer purchases a combination of commodities a and b such that MUa/Pa = 100 And MUb/Pb = 80, to maximize utility, the consumer should buy:

If the price of a good falls and the consumer decides to buy more of the good solely because it is relatively less expensive, this describes the:

-(Exhibit: Consumer Equilibrium 1) Assume that the price of both goods X and Y is $1 per unit, and you have $4 of income to spend on both goods. To maximize utility, you would consume ______ units of X and _______ units of Y.

The total utility of a good is equal to the marginal utility of the last unit consumed.

A consumer's total utility is greater at the upper end of an indifference curve than at the lower end.

Assume that the total utilities for the fifth and sixth units of a good consumed are 83 and 97, respectively. The marginal utility for the sixth unit is:

Total utility is maximized when marginal utility per additional dollar spent is the same for all goods.

Consumer equilibrium is achieved at the point of tangency between the budget line and the highest attainable indifference curve.

Assume that the total utilities corresponding to the first five units of a product consumed are 14, 20, 25, 29, and 32, respectively. The marginal utility of the third unit is:

The utility of a good is determined by how much _______ a particular consumer obtains from it.

In indifference curve analysis, a line that shows all combinations of two goods a consumer can buy is called a(n):

If a consumer moves upward along an indifference curve, his or her total utility:

Total Utility and Marginal Utility from Consumption of Good A -(Exhibit: Total Utility and Marginal Utility from Consumption of Good A) If 4 units of good A are consumed, the total utility received is _______ and the marginal utility of the 4th unit is _______ .

The textbook states that the law of demand:

Suppose that the price of Cracker Jacks is 50 cents a box and the price of M&Ms is 25 cents a bag. If you have $10 to spend and decide to purchase 8 bags of M&Ms, the maximum quantity of Cracker Jacks that you can purchase is ________ boxes.

The change in consumption of a good resulting from the implicit change in income because of a price change is called the _______ effect of a price change.

Economists assume that consumers behave in a manner consistent with the _______ of utility.

Suppose that the price of Cracker Jacks is 50 cents a box and the price of M&Ms is 25 cents a bag. If you have $10 to spend on both goods, the maximum quantity of M&Ms that you can purchase is ________ bags.

Welcome to Economics

Demand and Supply

Labor and Financial Markets

Elasticity

Consumer Choices

Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly and Antitrust Policy

Environmental Protection and Negative Externalities

Positive Externalities and Public Goods

Poverty and Economic Inequality

Issues in Labor Markets: Unions, Discrimination, Immigration

Information, Risk, and Insurance

Financial Markets

Public Economy

The Macroeconomic Perspective

Economic Growth

Unemployment

Inflation

The International Trade and Capital Flows

The Aggregate Demandaggregate Supply Model

The Keynesian Perspective

The Neoclassical Perspective

Money and Banking

Monetary Policy and Bank Regulation

Exchange Rates and International Capital Flows

Government Budgets and Fiscal Policy

The Impacts of Government Borrowing

Macroeconomic Policy Around the World

International Trade

Globalization and Protectionism

Filters

If a consumer purchases a combination of commodities a and b such that MU_a/P_a = 100 And MU_b/P_b = 80, to maximize utility, the consumer should buy:

-(Exhibit: Consumer Equilibrium 1) Assume that the price of both goods X and Y is $1 per unit, and you have $4 of income to spend on both goods. To maximize utility, you would consume units of X and _ units of Y.

Total Utility and Marginal Utility from Consumption of Good A -(Exhibit: Total Utility and Marginal Utility from Consumption of Good A) If 4 units of good A are consumed, the total utility received is _ and the marginal utility of the 4th unit is _ .