Question 1

Which one of the following statements is true?

Accepted Answer

A) Since consumers of a good consume this good until the price equals the value of the last unit,they clearly get no benefit from consuming this good. 
B) Consumers choosing between goods X and Y will set MUX = MUY. 
C) The value of a good to a consumer is measured by the price. 
D) Consumer surplus on a unit of a good will never be zero. 
E) If the marginal utility per dollar of good X is less than the marginal utility per dollar of good Y,then the consumer should shift some spending from X to Y. 
A) Since consumers of a good consume this good until the price equals the value of the last unit,they clearly get no benefit from consuming this good. 
B) Consumers choosing between goods X and Y will set MUX = MUY. 
C) The value of a good to a consumer is measured by the price. 
D) Consumer surplus on a unit of a good will never be zero. 
E) If the marginal utility per dollar of good X is less than the marginal utility per dollar of good Y,then the consumer should shift some spending from X to Y.

Question 2

Bikes and roller blades are substitutes.Marginal utility theory predicts that when the price of a bike rises,the quantity of bikes demanded

Accepted Answer

A) decreases and the demand curve for roller blades shifts rightward. 
B) decreases and the demand curve for roller blades shifts leftward. 
C) decreases and a movement occurs down along the demand curve for roller blades. 
D) increases and the demand curve for roller blades shifts rightward. 
E) increases and the demand curve for roller blades shifts leftward. 
A) decreases and the demand curve for roller blades shifts rightward. 
B) decreases and the demand curve for roller blades shifts leftward. 
C) decreases and a movement occurs down along the demand curve for roller blades. 
D) increases and the demand curve for roller blades shifts rightward. 
E) increases and the demand curve for roller blades shifts leftward.

Question 3

A budget line is drawn with

Accepted Answer

A) quantity of one good on the vertical axis and the quantity of the second good on the horizontal axis. 
B) price of one good on the vertical axis and the price of the second good on the horizontal axis. 
C) quantity of one good on the vertical axis and its price on the horizontal axis. 
D) quantity of one good on the horizontal axis and its price on the vertical axis. 
E) quantity of one good on the horizontal axis and its total utility on the vertical axis. 
A) quantity of one good on the vertical axis and the quantity of the second good on the horizontal axis. 
B) price of one good on the vertical axis and the price of the second good on the horizontal axis. 
C) quantity of one good on the vertical axis and its price on the horizontal axis. 
D) quantity of one good on the horizontal axis and its price on the vertical axis. 
E) quantity of one good on the horizontal axis and its total utility on the vertical axis.

Question 4

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

Accepted Answer

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

Question 5

As more of a good is consumed its

Accepted Answer

A) marginal utility increases. 
B) marginal utility decreases. 
C) marginal utility remains unchanged. 
D) total utility decreases. 
E) total utility increases at an increasing rate. 
A) marginal utility increases. 
B) marginal utility decreases. 
C) marginal utility remains unchanged. 
D) total utility decreases. 
E) total utility increases at an increasing rate.

Question 6

With respect to water and diamonds,water

Accepted Answer

A) has a higher marginal utility. 
B) has a lower marginal utility. 
C) has a lower total utility. 
D) is cheaper than diamonds because it has a lower total utility. 
E) none of the above. 
A) has a higher marginal utility. 
B) has a lower marginal utility. 
C) has a lower total utility. 
D) is cheaper than diamonds because it has a lower total utility. 
E) none of the above.

Question 7

Total utility equals

Accepted Answer

A) the sum of the marginal utilities of each unit consumed. 
B) the area below the demand curve but above the market price. 
C) the slope of the marginal utility curve. 
D) the marginal utility of the last unit divided by price. 
E) the marginal utility of the last unit consumed multiplied by the total number of units consumed. 
A) the sum of the marginal utilities of each unit consumed. 
B) the area below the demand curve but above the market price. 
C) the slope of the marginal utility curve. 
D) the marginal utility of the last unit divided by price. 
E) the marginal utility of the last unit consumed multiplied by the total number of units consumed.

Question 8

Advise Sarah how to maximize her utility if MUA=8, MUB=20, PA=4 and PB=5.

Accepted Answer

A) Consume equal amounts of both goods. 
B) Consume more of good A and less of good B. 
C) Consume more of good B and less of good A. 
D) Lower the price of good B. 
E) Raise the price of good A. 
A) Consume equal amounts of both goods. 
B) Consume more of good A and less of good B. 
C) Consume more of good B and less of good A. 
D) Lower the price of good B. 
E) Raise the price of good A.

Question 9

The fact that your fourth slice of pizza does not generate as much satisfaction as your third slice is an example of

Accepted Answer

A) consumer surplus. 
B) diminishing total utility. 
C) diminishing marginal utility. 
D) the paradox of value. 
E) the law of demand. 
A) consumer surplus. 
B) diminishing total utility. 
C) diminishing marginal utility. 
D) the paradox of value. 
E) the law of demand.

Question 10

Use the table below to answer the following questions.
Table 8.2.1
 $$\begin{array} { c c c } 
\hline \text { Hours Spent } & \text { Total Utility from Sailing } & \text { Total Utility from Skiing } \
\hline 1 & 100 & 70 \
2 & 140 & 110 \
3 & 170 & 140 \
4 & 190 & 150
\end{array}$$
-Refer to Table 8.2.1.Consider Sam's utility from sailing and skiing.The price of sailing is $10 per hour and the price of skiing is $20 per hour;Sam's income to spend on these activities is $80.In consumer equilibrium,Sam will sail for

Accepted Answer

A) 3 hours and ski for 2 hours. 
B) 2 hours and ski for 4 hours. 
C) 4 hours. 
D) 4 hours and ski for 2 hours. 
E) 8 hours. 
A) 3 hours and ski for 2 hours. 
B) 2 hours and ski for 4 hours. 
C) 4 hours. 
D) 4 hours and ski for 2 hours. 
E) 8 hours.

Question 11

Bounded self-interest

Accepted Answer

A) is limited by the computing power of the human brain. 
B) prevents us from making a decision that we know,at the time of implementing the decision,we will later regret. 
C) is the tendency for people to value something more highly simply because they own it. 
D) results in sometimes suppressing our own interests to help others. 
E) is the tendency for people to value something more highly simply because a friend owns it. 
A) is limited by the computing power of the human brain. 
B) prevents us from making a decision that we know,at the time of implementing the decision,we will later regret. 
C) is the tendency for people to value something more highly simply because they own it. 
D) results in sometimes suppressing our own interests to help others. 
E) is the tendency for people to value something more highly simply because a friend owns it.

Question 12

The budget line shows the boundary between those combinations of goods and services that

Accepted Answer

A) have positive marginal utility and those that have negative marginal utility. 
B) are available and those that are unavailable. 
C) are desirable and those that are undesirable. 
D) are affordable and those that are unaffordable. 
E) are normal goods and those that are inferior goods. 
A) have positive marginal utility and those that have negative marginal utility. 
B) are available and those that are unavailable. 
C) are desirable and those that are undesirable. 
D) are affordable and those that are unaffordable. 
E) are normal goods and those that are inferior goods.

Question 13

Which one of the following is not an assumption of marginal utility theory?

Accepted Answer

A) People derive utility from their consumption. 
B) More consumption yields more total utility. 
C) Utility can be measured. 
D) Marginal utility diminishes with more consumption. 
E) Consumers maximize total utility. 
A) People derive utility from their consumption. 
B) More consumption yields more total utility. 
C) Utility can be measured. 
D) Marginal utility diminishes with more consumption. 
E) Consumers maximize total utility.

Question 14

Behavioural economics

Accepted Answer

A) studies the activity of the human brain when a person makes an economic decision. 
B) studies psychology by using the economist's toolbox. 
C) studies the ways in which limits on the human brain's ability to compute and implement rational decisions influences economic behaviour. 
D) was used extensively in the development of marginal utility theory. 
E) all of the above. 
A) studies the activity of the human brain when a person makes an economic decision. 
B) studies psychology by using the economist's toolbox. 
C) studies the ways in which limits on the human brain's ability to compute and implement rational decisions influences economic behaviour. 
D) was used extensively in the development of marginal utility theory. 
E) all of the above.

Question 15

Ron starts out in consumer equilibrium,consuming two goods,X and Y.Ron's income rises.At this point,we can definitely conclude that

Accepted Answer

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

Question 16

Martha and Sarah have the same preferences,face the same prices,and have the same income.Sarah's utility is measured in units while Martha's is measured in units squared.Select the best response.

Accepted Answer

A) Martha and Sarah will choose to consume the same set of goods. 
B) Martha's and Sarah's marginal utility per dollar will be equal. 
C) Martha's and Sarah's marginal utilities will be equal. 
D) Martha and Sarah will have equal total utility. 
E) Martha and Sarah will not choose to consume the same set of goods. 
A) Martha and Sarah will choose to consume the same set of goods. 
B) Martha's and Sarah's marginal utility per dollar will be equal. 
C) Martha's and Sarah's marginal utilities will be equal. 
D) Martha and Sarah will have equal total utility. 
E) Martha and Sarah will not choose to consume the same set of goods.

Question 17

If the price of a good rises,then in the new consumer equilibrium all of the following are true except

Accepted Answer

A) the marginal utility from consuming the good will be higher than before the price rise. 
B) the quantity of the good consumed decreases. 
C) the quantity of substitutes consumed increases. 
D) the marginal utility from substitutes will be lower than before the price rise. 
E) the marginal utility from the good equals its new higher price. 
A) the marginal utility from consuming the good will be higher than before the price rise. 
B) the quantity of the good consumed decreases. 
C) the quantity of substitutes consumed increases. 
D) the marginal utility from substitutes will be lower than before the price rise. 
E) the marginal utility from the good equals its new higher price.

Question 18

Use the table below to answer the following question.
Table 8.1.2
 $$\begin{array} { c c c } 
\text { Units Consumed } & \text { Jim's Total Utility } & \text { Sally's Total Utility } \
\hline 1 & 12 & 16 \
2 & 22 & 26 \
3 & 30 & 34 \
4 & 36 & 40
\end{array}$$
-Table 8.1.2 gives total utilities for Jim and Sally.Which one of the following statements is true?

Accepted Answer

A) Jim has increasing marginal utility. 
B) For Sally,the marginal utility of the third unit consumed is 6. 
C) If Jim consumes 2 units,his total utility is 34 units. 
D) Jim and Sally receive the same marginal utility from the third unit consumed. 
E) If Sally consumes 2 units,her total utility is 10 units. 
A) Jim has increasing marginal utility. 
B) For Sally,the marginal utility of the third unit consumed is 6. 
C) If Jim consumes 2 units,his total utility is 34 units. 
D) Jim and Sally receive the same marginal utility from the third unit consumed. 
E) If Sally consumes 2 units,her total utility is 10 units.

Question 19

According to the principle of diminishing marginal utility,as consumption of a good increases,total utility

Accepted Answer

A) decreases and then eventually increases. 
B) decreases at an increasing rate. 
C) decreases at a decreasing rate. 
D) increases at an increasing rate. 
E) increases at a decreasing rate. 
A) decreases and then eventually increases. 
B) decreases at an increasing rate. 
C) decreases at a decreasing rate. 
D) increases at an increasing rate. 
E) increases at a decreasing rate.

Question 20

Billy likes candy bars and popcorn.Candy bars sell for $0.50 each and popcorn sells for $1 per bag.Currently he is in consumer equilibrium.Then the price of a candy bar rises to $1.Which statement is true in the new consumer equilibrium?

Accepted Answer

A) The marginal utility from popcorn will increase. 
B) Marginal utility per dollar on candy bars will be equal to 2. 
C) Total utility will increase. 
D) The marginal utility from candy will decrease. 
E) The marginal utility from candy will be equal to the marginal utility from popcorn. 
A) The marginal utility from popcorn will increase. 
B) Marginal utility per dollar on candy bars will be equal to 2. 
C) Total utility will increase. 
D) The marginal utility from candy will decrease. 
E) The marginal utility from candy will be equal to the marginal utility from popcorn.

Which one of the following statements is true?

Bikes and roller blades are substitutes.Marginal utility theory predicts that when the price of a bike rises,the quantity of bikes demanded

A budget line is drawn with

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

As more of a good is consumed its

With respect to water and diamonds,water

Total utility equals

Advise Sarah how to maximize her utility if MU_A_=8, MU_B_=20, P_A₌₄ and P_B₌₅.

The fact that your fourth slice of pizza does not generate as much satisfaction as your third slice is an example of

Bounded self-interest

The budget line shows the boundary between those combinations of goods and services that

Which one of the following is not an assumption of marginal utility theory?

Behavioural economics

Ron starts out in consumer equilibrium,consuming two goods,X and Y.Ron's income rises.At this point,we can definitely conclude that

Martha and Sarah have the same preferences,face the same prices,and have the same income.Sarah's utility is measured in units while Martha's is measured in units squared.Select the best response.

If the price of a good rises,then in the new consumer equilibrium all of the following are true except

Use the table below to answer the following question. Table 8.1.2 Units Consumed Jim's Total Utility Sally's Total Utility 1 12 16 2 22 26 3 30 34 4 36 40 -Table 8.1.2 gives total utilities for Jim and Sally.Which one of the following statements is true?

According to the principle of diminishing marginal utility,as consumption of a good increases,total utility

Billy likes candy bars and popcorn.Candy bars sell for $0.50 each and popcorn sells for $1 per bag.Currently he is in consumer equilibrium.Then the price of a candy bar rises to $1.Which statement is true in the new consumer equilibrium?

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

Which one of the following statements is true?

Bikes and roller blades are substitutes.Marginal utility theory predicts that when the price of a bike rises,the quantity of bikes demanded

A budget line is drawn with

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

As more of a good is consumed its

With respect to water and diamonds,water

Total utility equals

Advise Sarah how to maximize her utility if MUA=8, MUB=20, PA=4 and PB=5.

The fact that your fourth slice of pizza does not generate as much satisfaction as your third slice is an example of

Bounded self-interest

The budget line shows the boundary between those combinations of goods and services that

Which one of the following is not an assumption of marginal utility theory?

Behavioural economics

Ron starts out in consumer equilibrium,consuming two goods,X and Y.Ron's income rises.At this point,we can definitely conclude that

Martha and Sarah have the same preferences,face the same prices,and have the same income.Sarah's utility is measured in units while Martha's is measured in units squared.Select the best response.

If the price of a good rises,then in the new consumer equilibrium all of the following are true except

Use the table below to answer the following question. Table 8.1.2 Units Consumed Jim's Total Utility Sally's Total Utility 1 12 16 2 22 26 3 30 34 4 36 40 -Table 8.1.2 gives total utilities for Jim and Sally.Which one of the following statements is true?

According to the principle of diminishing marginal utility,as consumption of a good increases,total utility

Billy likes candy bars and popcorn.Candy bars sell for $0.50 each and popcorn sells for $1 per bag.Currently he is in consumer equilibrium.Then the price of a candy bar rises to $1.Which statement is true in the new consumer equilibrium?

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

Advise Sarah how to maximize her utility if MU_A_=8, MU_B_=20, P_A₌₄ and P_B₌₅.