Question 1

Ron starts out in consumer equilibrium,consuming two goods,X and Y.The price of Y rises.Immediately after the rise in price

Accepted Answer

A) MUX/PX > MUY/PY,and then Ron increases his consumption of Y. 
B) MUX/PX > MUY/PY,and then Ron decreases his consumption of Y. 
C) MUX/PX Y/PY,and then Ron increases his consumption of Y. 
D) MUX/PX Y/PY,and then Ron decreases his consumption of Y. 
E) none of the above. 
A) MUX/PX > MUY/PY,and then Ron increases his consumption of Y. 
B) MUX/PX > MUY/PY,and then Ron decreases his consumption of Y. 
C) MUX/PX Y/PY,and then Ron increases his consumption of Y. 
D) MUX/PX Y/PY,and then Ron decreases his consumption of Y. 
E) none of the above. B

Question 2

Use the table below to answer the following questions.
Table 8.2.2
 $$\begin{array} { c c c c } 
\hline\begin{array} { c } 
\text { Bags of } \
\text { Popcorn }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Utility }
\end{array} & \begin{array} { c } 
\text { Bottles of } \
\text { Pop }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Utility }
\end{array} \
\hline 1 & 120 & 1 & 120 \
2 & 100 & 2 & 70 \
3 & 80 & 3 & 60 \
4 & 70 & 4 & 40
\end{array}$$
-Refer to Table 8.2.2.What is the total utility if 3 bags of popcorn and 2 bottles of pop are consumed?

Accepted Answer

A) 150 
B) 310 
C) 490 
D) 660 
E) 100. 
A) 150 
B) 310 
C) 490 
D) 660 
E) 100. C

Question 3

If income rises,then in the new consumer equilibrium

Accepted Answer

A) the marginal utility from normal goods increases. 
B) the marginal utility from normal goods decreases. 
C) the marginal utility from inferior goods increases. 
D) total utility from inferior goods increases. 
E) both B and C. 
A) the marginal utility from normal goods increases. 
B) the marginal utility from normal goods decreases. 
C) the marginal utility from inferior goods increases. 
D) total utility from inferior goods increases. 
E) both B and C. E

Question 4

Which of the following statements is true?

Accepted Answer

A) Marginal utility theory predicts that an increase in a consumer's income increases consumption of all goods. 
B) It is possible to derive the law of demand - that a higher price decreases the quantity demanded - using marginal utility theory. 
C) Marginal utility theory makes no prediction about a consumer's responses to hikes in the prices of the goods and services he or she consumes. 
D) Marginal utility theory predicts that all goods are normal goods and that all goods are substitutes for each other. 
E) None of the above. 
A) Marginal utility theory predicts that an increase in a consumer's income increases consumption of all goods. 
B) It is possible to derive the law of demand - that a higher price decreases the quantity demanded - using marginal utility theory. 
C) Marginal utility theory makes no prediction about a consumer's responses to hikes in the prices of the goods and services he or she consumes. 
D) Marginal utility theory predicts that all goods are normal goods and that all goods are substitutes for each other. 
E) None of the above.

Question 5

Marginal utility equals

Accepted Answer

A) total utility divided by price. 
B) total utility divided by the total number of units consumed. 
C) the slope of the total utility curve. 
D) the inverse of total utility. 
E) the area below the demand curve but above market price. 
A) total utility divided by price. 
B) total utility divided by the total number of units consumed. 
C) the slope of the total utility curve. 
D) the inverse of total utility. 
E) the area below the demand curve but above market price.

Question 6

Sam buys gasoline and coffee each week.To draw his budget line for gasoline and coffee,Sam needs to know

Accepted Answer

A) if his income is expected to rise in the future. 
B) if the price of gasoline is expected to rise in the future. 
C) if the price of coffee is expected to fall in the future. 
D) the goods that he considers to be substitutes for gasoline and for coffee. 
E) how much income he has to spend and the prices of one litre of gasoline and one cup of coffee. 
A) if his income is expected to rise in the future. 
B) if the price of gasoline is expected to rise in the future. 
C) if the price of coffee is expected to fall in the future. 
D) the goods that he considers to be substitutes for gasoline and for coffee. 
E) how much income he has to spend and the prices of one litre of gasoline and one cup of coffee.

Question 7

In consumer equilibrium

Accepted Answer

A) total utility is maximized given the consumer's income and the prices of goods. 
B) marginal utility is maximized given the consumer's income and the prices of goods. 
C) marginal utility per dollar is maximized given the consumer's income and the prices of goods. 
D) the marginal utility from each good is equal. 
E) marginal utility per dollar is zero. 
A) total utility is maximized given the consumer's income and the prices of goods. 
B) marginal utility is maximized given the consumer's income and the prices of goods. 
C) marginal utility per dollar is maximized given the consumer's income and the prices of goods. 
D) the marginal utility from each good is equal. 
E) marginal utility per dollar is zero.

Question 8

Samir consumes apples and bananas and is in consumer equilibrium.The marginal utility from his last apple is 10 and the marginal utility from his last banana is 5.If the price of an apple is $0.50,then what is the price of a banana?

Accepted Answer

A) $0.05 
B) $0.10 
C) $0.25 
D) $0.50 
E) $1.00 
A) $0.05 
B) $0.10 
C) $0.25 
D) $0.50 
E) $1.00

Question 9

If Ms.Petersen is maximizing her utility in the consumption of goods A and B,which one of the following statements must be true?

Accepted Answer

A) MUA = MUB 
B) MUA/PA = MUB/PB 
C) MUA/PB = MUB/PA 
D) TUA = TUB 
E) TUA/PA = TUB/PB 
A) MUA = MUB 
B) MUA/PA = MUB/PB 
C) MUA/PB = MUB/PA 
D) TUA = TUB 
E) TUA/PA = TUB/PB

Question 10

Use the table below to answer the following questions.
Table 8.2.3
 $$\begin{array} { c c c c } 
\text { Good } X ( \$ 2 \text { each } ) && { \text { Good } Y ( \$ 1 \text { each } ) } \
\hline \text { Quantity } & \text { Utility } & \text { Quantity } & \text { Utility } \
\hline 1 & 20 & 1 & 14 \
2 & 32 & 2 & 24 \
3 & 42 & 3 & 32 \
4 & 48 & 4 & 37 \
5 & 52 & 5 & 40 \
6 & 54 & 6 & 42 \
7 & 55 & 7 & 43
\end{array}$$
-Refer to Table 8.2.3.To attain consumer equilibrium,the first $4 of income is used to purchase

Accepted Answer

A) 2 units of good X. 
B) 3 units of good X. 
C) 4 units of good Y. 
D) an amount of X and Y that cannot be determined from the table. 
E) 2 units of good Y and 1 unit of X. 
A) 2 units of good X. 
B) 3 units of good X. 
C) 4 units of good Y. 
D) an amount of X and Y that cannot be determined from the table. 
E) 2 units of good Y and 1 unit of X.

Question 11

The first can of Sprite Jack drinks give him 22 units of utility and the second can gives him an additional 12 units of utility.How much units of utility do the two cans of Sprite give Jack?

Accepted Answer

A) 17 
B) 46 
C) 34 
D) 2 
E) 36 
A) 17 
B) 46 
C) 34 
D) 2 
E) 36

Question 12

The relative price of beer to back bacon is 2:1.If Bob's current consumption is at a level where MUbeer/MUback bacon is 1:2,then to maximize total utility Bob must

Accepted Answer

A) consume more beer and less back bacon. 
B) not change his current consumption of beer and back bacon. 
C) consume less beer and more back bacon. 
D) raise the price of beer. 
E) consume twice as much beer and half as much back bacon. 
A) consume more beer and less back bacon. 
B) not change his current consumption of beer and back bacon. 
C) consume less beer and more back bacon. 
D) raise the price of beer. 
E) consume twice as much beer and half as much back bacon.

Question 13

Behavioural economics and neuroeconomics seek to achieve

Accepted Answer

A) the reason why we do not always make rational economic decisions. 
B) a method of using will-power and self-interest to gain utility maximization. 
C) a theory in which consumers are always utility-maximizers. 
D) a new method for the human brain to work out rational choice. 
E) the rational concepts that support the law of demand and the law of supply. 
A) the reason why we do not always make rational economic decisions. 
B) a method of using will-power and self-interest to gain utility maximization. 
C) a theory in which consumers are always utility-maximizers. 
D) a new method for the human brain to work out rational choice. 
E) the rational concepts that support the law of demand and the law of supply.

Question 14

Which of the following is not a prediction of marginal utility theory?

Accepted Answer

A) Other things remaining the same,the higher the price of a good,the smaller the quantity demanded. 
B) Other things remaining the same,the lower the price of a good,the greater the quantity demanded. 
C) Other things remaining the same,the lower the price of a good,the smaller is the consumption of substitutes for that good. 
D) The law of demand. 
E) Diminishing marginal utility. 
A) Other things remaining the same,the higher the price of a good,the smaller the quantity demanded. 
B) Other things remaining the same,the lower the price of a good,the greater the quantity demanded. 
C) Other things remaining the same,the lower the price of a good,the smaller is the consumption of substitutes for that good. 
D) The law of demand. 
E) Diminishing marginal utility.

Question 15

Billy likes candy bars and popcorn.Candy bars sell for $0.50 each and popcorn sells for $1 a bag.Currently he is in consumer equilibrium with marginal utility per dollar on popcorn equal to 100.What is the marginal utility per dollar on candy bars?

Accepted Answer

A) 50 
B) 100 
C) 200 
D) 25 
E) 0.5 
A) 50 
B) 100 
C) 200 
D) 25 
E) 0.5

Question 16

Use the table below to answer the following questions.
Table 8.1.1
 $\begin{array}{ll}\text { Quantity }&\text {Total Utility }&\text {Marginal Utility }\
0 & 0&30 \
1 & 30&12 \
2 & A&5 \
3 & B&C \
4 & 50
\end{array}$
-Refer to Table 8.1.1.The value of B is

Accepted Answer

A) 30. 
B) 47. 
C) 42. 
D) 18. 
E) 0. 
A) 30. 
B) 47. 
C) 42. 
D) 18. 
E) 0.

Question 17

Use the table below to answer the following questions.
Table 8.2.2
 $$\begin{array} { c c c c } 
\hline\begin{array} { c } 
\text { Bags of } \
\text { Popcorn }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Utility }
\end{array} & \begin{array} { c } 
\text { Bottles of } \
\text { Pop }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Utility }
\end{array} \
\hline 1 & 120 & 1 & 120 \
2 & 100 & 2 & 70 \
3 & 80 & 3 & 60 \
4 & 70 & 4 & 40
\end{array}$$
-Refer to Table 8.2.2.Henry is maximizing his utility by consuming 3 bags of popcorn and 3 bottles of pop.What is the ratio of the price of popcorn to the price of pop?

Accepted Answer

A) 1/2 
B) 1 
C) 3/4 
D) 4/3 
E) 6/5 
A) 1/2 
B) 1 
C) 3/4 
D) 4/3 
E) 6/5

Question 18

John likes to eat apples,oranges,and pears.If John increases his consumption of oranges,ceteris paribus,marginal utility theory tell us that John's marginal utility of

Accepted Answer

A) oranges decreases. 
B) apples decreases. 
C) pears decreases. 
D) oranges remains constant. 
E) oranges,apples,and pears all decrease. 
A) oranges decreases. 
B) apples decreases. 
C) pears decreases. 
D) oranges remains constant. 
E) oranges,apples,and pears all decrease.

Question 19

Use the table below to answer the following questions.
Table 8.2.1
Windsurfing equipment rents for $10 per hour,snorkeling equipment for $5 per hour.
 $$\begin{array}{l}
\hline  \text { Hours }&\text { Total Utility }&\text { Total Utility }\\text { per Month }&\text { from Windsurfing }&\text { from Snorkeling }\
\hline 1 & 60 & 20 \
2 & 110 & 38 \
3 & 150 & 53 \
4 & 180 & 64 \
5 & 200 & 70
\end{array}$$
-Consider Devon's total utility from snorkeling and windsurfing in Table 8.2.1.Suppose Devon's total income is $35.If the price of windsurfing rises to $20 per hour,what is Devon's elasticity of demand for windsurfing?

Accepted Answer

A) 1.0 
B) 0.67 
C) 1.5 
D) 10 
E) 1.33 
A) 1.0 
B) 0.67 
C) 1.5 
D) 10 
E) 1.33

Question 20

The first can of Coke gives 15 units of utility to Witney,while the second can of Coke increases her total utility to 23.What is the marginal utility of the second can of Coke?

Accepted Answer

A) 24 units 
B) 8 units 
C) 38 units 
D) 11.5 units 
E) 7.5 units 
A) 24 units 
B) 8 units 
C) 38 units 
D) 11.5 units 
E) 7.5 units

Ron starts out in consumer equilibrium,consuming two goods,X and Y.The price of Y rises.Immediately after the rise in price

Use the table below to answer the following questions. Table 8.2.2 Bags of Popcorn Marginal Utility Bottles of Pop Marginal Utility 1 120 1 120 2 100 2 70 3 80 3 60 4 70 4 40 -Refer to Table 8.2.2.What is the total utility if 3 bags of popcorn and 2 bottles of pop are consumed?

If income rises,then in the new consumer equilibrium

Which of the following statements is true?

Marginal utility equals

Sam buys gasoline and coffee each week.To draw his budget line for gasoline and coffee,Sam needs to know

In consumer equilibrium

Samir consumes apples and bananas and is in consumer equilibrium.The marginal utility from his last apple is 10 and the marginal utility from his last banana is 5.If the price of an apple is $0.50,then what is the price of a banana?

If Ms.Petersen is maximizing her utility in the consumption of goods A and B,which one of the following statements must be true?

The first can of Sprite Jack drinks give him 22 units of utility and the second can gives him an additional 12 units of utility.How much units of utility do the two cans of Sprite give Jack?

The relative price of beer to back bacon is 2:1.If Bob's current consumption is at a level where MU_beer/MU_{back bacon} is 1:2,then to maximize total utility Bob must

Behavioural economics and neuroeconomics seek to achieve

Which of the following is not a prediction of marginal utility theory?

Billy likes candy bars and popcorn.Candy bars sell for $0.50 each and popcorn sells for $1 a bag.Currently he is in consumer equilibrium with marginal utility per dollar on popcorn equal to 100.What is the marginal utility per dollar on candy bars?

Use the table below to answer the following questions. Table 8.1.1 Quantity Total Utility Marginal Utility 0 0 30 1 30 12 2 A 5 3 B C 4 50 -Refer to Table 8.1.1.The value of B is

John likes to eat apples,oranges,and pears.If John increases his consumption of oranges,ceteris paribus,marginal utility theory tell us that John's marginal utility of

The first can of Coke gives 15 units of utility to Witney,while the second can of Coke increases her total utility to 23.What is the marginal utility of the second can of Coke?

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

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

Exam 8: Utility and Demand

Ron starts out in consumer equilibrium,consuming two goods,X and Y.The price of Y rises.Immediately after the rise in price

Use the table below to answer the following questions. Table 8.2.2 Bags of Popcorn Marginal Utility Bottles of Pop Marginal Utility 1 120 1 120 2 100 2 70 3 80 3 60 4 70 4 40 -Refer to Table 8.2.2.What is the total utility if 3 bags of popcorn and 2 bottles of pop are consumed?

If income rises,then in the new consumer equilibrium

Which of the following statements is true?

Marginal utility equals

Sam buys gasoline and coffee each week.To draw his budget line for gasoline and coffee,Sam needs to know

In consumer equilibrium

Samir consumes apples and bananas and is in consumer equilibrium.The marginal utility from his last apple is 10 and the marginal utility from his last banana is 5.If the price of an apple is $0.50,then what is the price of a banana?

If Ms.Petersen is maximizing her utility in the consumption of goods A and B,which one of the following statements must be true?

The first can of Sprite Jack drinks give him 22 units of utility and the second can gives him an additional 12 units of utility.How much units of utility do the two cans of Sprite give Jack?

The relative price of beer to back bacon is 2:1.If Bob's current consumption is at a level where MUbeer/MUback bacon is 1:2,then to maximize total utility Bob must

Behavioural economics and neuroeconomics seek to achieve

Which of the following is not a prediction of marginal utility theory?

Billy likes candy bars and popcorn.Candy bars sell for $0.50 each and popcorn sells for $1 a bag.Currently he is in consumer equilibrium with marginal utility per dollar on popcorn equal to 100.What is the marginal utility per dollar on candy bars?

Use the table below to answer the following questions. Table 8.1.1 Quantity Total Utility Marginal Utility 0 0 30 1 30 12 2 A 5 3 B C 4 50 -Refer to Table 8.1.1.The value of B is

John likes to eat apples,oranges,and pears.If John increases his consumption of oranges,ceteris paribus,marginal utility theory tell us that John's marginal utility of

The first can of Coke gives 15 units of utility to Witney,while the second can of Coke increases her total utility to 23.What is the marginal utility of the second can of Coke?

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

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

The relative price of beer to back bacon is 2:1.If Bob's current consumption is at a level where MU_beer/MU_{back bacon} is 1:2,then to maximize total utility Bob must