Question 1

The law of diminishing marginal utility does not apply to goods that a person really enjoys.

Accepted Answer

A) True 
 B)False  False

Question 2

Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. Table 19.3
Michael's Utility Schedule
$\begin{array} { | c | r | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Units of } \
\text { Cola }
\end{array} & \text { TU of Cola } & \begin{array} { c } 
\text { MU of } \
\text { Cola }
\end{array} & \begin{array} { c } 
\text { Units of } \
\text { Pretzels }
\end{array} & \begin{array} { c } 
\text { TU of } \
\text { Pretzels }
\end{array} & \begin{array} { c } 
\text { MU of } \
\text { Pretzels }
\end{array} \
\hline 1 & 46 & 40 & 1 & 30 & 30 \
\hline 2 & & 32 & 2 & & 20 \
\hline 3 & 96 & 24 & 3 & 66 & 16 \
\hline 4 & 112 & & 4 & 78 & \
\hline 5 & 124 & & 5 & 84 & \
\hline
\end{array}$ In Table 19.3 the marginal utility per dollar of the second cola is

Accepted Answer

A) 10. 
B) 6. 
C) 4. 
D) 12. 
A) 10. 
B) 6. 
C) 4. 
D) 12. C

Question 3

Price discrimination works best when

Accepted Answer

A) Sellers cannot meet collectively. 
B) Buyers do not have perfect information about the price. 
C) Buyers have information about prices charged to different customers. 
D) A product is purchased frequently by consumers. 
A) Sellers cannot meet collectively. 
B) Buyers do not have perfect information about the price. 
C) Buyers have information about prices charged to different customers. 
D) A product is purchased frequently by consumers. B

Question 4

As more satisfaction is achieved from consuming a good with diminishing marginal utility,then total utility

Accepted Answer

A) Increases at a decreasing rate. 
B) Decreases as long as marginal utility is negative. 
C) Decreases as long as marginal utility is positive. 
D) Is negative as long as marginal utility is decreasing. 
A) Increases at a decreasing rate. 
B) Decreases as long as marginal utility is negative. 
C) Decreases as long as marginal utility is positive. 
D) Is negative as long as marginal utility is decreasing.

Question 5

The four determinants of demand that are held constant when we consider a movement along a demand curve include all of the following except

Accepted Answer

A) Price. 
B) Income. 
C) Tastes. 
D) Availability and price of substitute goods. 
A) Price. 
B) Income. 
C) Tastes. 
D) Availability and price of substitute goods.

Question 6

Assume that Anna buys peanut butter and bread.If the price of peanut butter falls,then

Accepted Answer

A) One end of her budget constraint will move away from the origin. 
B) Her entire budget constraint will shift toward the origin. 
C) Her entire budget constraint will shift away from the origin. 
D) Her indifference curves will shift away from the origin. 
A) One end of her budget constraint will move away from the origin. 
B) Her entire budget constraint will shift toward the origin. 
C) Her entire budget constraint will shift away from the origin. 
D) Her indifference curves will shift away from the origin.

Question 7

Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. Table 19.3
Michael's Utility Schedule
$\begin{array} { | c | r | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Units of } \
\text { Cola }
\end{array} & \text { TU of Cola } & \begin{array} { c } 
\text { MU of } \
\text { Cola }
\end{array} & \begin{array} { c } 
\text { Units of } \
\text { Pretzels }
\end{array} & \begin{array} { c } 
\text { TU of } \
\text { Pretzels }
\end{array} & \begin{array} { c } 
\text { MU of } \
\text { Pretzels }
\end{array} \
\hline 1 & 46 & 40 & 1 & 30 & 30 \
\hline 2 & & 32 & 2 & & 20 \
\hline 3 & 96 & 24 & 3 & 66 & 16 \
\hline 4 & 112 & & 4 & 78 & \
\hline 5 & 124 & & 5 & 84 & \
\hline
\end{array}$ The marginal utility per dollar of the third pretzel is

Accepted Answer

A) 4. 
B) 5. 
C) 6. 
D) 12. 
A) 4. 
B) 5. 
C) 6. 
D) 12.

Question 8

Marginal utility is

Accepted Answer

A) The sum of the total utility of consuming a certain amount of a good. 
B) The change in total utility obtained by consuming one additional unit of a good or service. 
C) The diminishing nature of total utility. 
D) Always negative or zero. 
A) The sum of the total utility of consuming a certain amount of a good. 
B) The change in total utility obtained by consuming one additional unit of a good or service. 
C) The diminishing nature of total utility. 
D) Always negative or zero.

Question 9

Car dealers can easily price discriminate because

Accepted Answer

A) Buyers do not know the car's price. 
B) Sellers negotiate a separate price agreement with each individual buyer. 
C) Each seller knows the price but the buyer does not. 
D) Buyers get together to collectively negotiate a price. 
A) Buyers do not know the car's price. 
B) Sellers negotiate a separate price agreement with each individual buyer. 
C) Each seller knows the price but the buyer does not. 
D) Buyers get together to collectively negotiate a price.

Question 10

According to consumer choice theory,rational behavior requires that consumers compare the marginal utility of each purchase with its price.

Accepted Answer

A) True 
 B)False

Question 11

When choosing among products,consumers look at

Accepted Answer

A) The marginal utility per dollar and their budget constraint. 
B) The total utility that will be gained at the end of all consumption. 
C) Only their budget. 
D) The marginal utility of the good. 
A) The marginal utility per dollar and their budget constraint. 
B) The total utility that will be gained at the end of all consumption. 
C) Only their budget. 
D) The marginal utility of the good.

Question 12

Consumer surplus does not exist because some consumers cannot afford to purchase the product at all.

Accepted Answer

A) True 
 B)False

Question 13

Economic explanations of consumer behavior take into consideration

Accepted Answer

A) Ego gratification. 
B) Lack of self-confidence. 
C) Social status. 
D) Prices and income. 
A) Ego gratification. 
B) Lack of self-confidence. 
C) Social status. 
D) Prices and income.

Question 14

Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. Table 19.3
Michael's Utility Schedule
$\begin{array} { | c | r | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Units of } \
\text { Cola }
\end{array} & \text { TU of Cola } & \begin{array} { c } 
\text { MU of } \
\text { Cola }
\end{array} & \begin{array} { c } 
\text { Units of } \
\text { Pretzels }
\end{array} & \begin{array} { c } 
\text { TU of } \
\text { Pretzels }
\end{array} & \begin{array} { c } 
\text { MU of } \
\text { Pretzels }
\end{array} \
\hline 1 & 46 & 40 & 1 & 30 & 30 \
\hline 2 & & 32 & 2 & & 20 \
\hline 3 & 96 & 24 & 3 & 66 & 16 \
\hline 4 & 112 & & 4 & 78 & \
\hline 5 & 124 & & 5 & 84 & \
\hline
\end{array}$ In Table 19.3,what is the total utility of two units of cola?

Accepted Answer

A) 32. 
B) 40. 
C) 72. 
D) 96. 
A) 32. 
B) 40. 
C) 72. 
D) 96.

Question 15

Price discrimination is ________ in the United States and ________ practiced.

Accepted Answer

A) legal;rarely 
B) illegal;widely 
C) legal;often 
D) illegal;rarely 
A) legal;rarely 
B) illegal;widely 
C) legal;often 
D) illegal;rarely

Question 16

Assume Amanda always maximizes her total utility given her budget constraint.Every morning for breakfast she has two eggs and three sausages.If the marginal utility of the last egg is 10 utils and the price of eggs is $1 each,what can we say about the marginal utility of the last sausage if the price of each sausage is $2?

Accepted Answer

A) It must be equal to 20 utils. 
B) It must be equal to 10 utils. 
C) It must be equal to 5 utils. 
D) It must be equal to 1 utils. 
A) It must be equal to 20 utils. 
B) It must be equal to 10 utils. 
C) It must be equal to 5 utils. 
D) It must be equal to 1 utils.

Question 17

Josh is eating pizza at his favorite Italian restaurant.Below is his utility from this consumption: Table 19.1
$\begin{array}{|l|c|c|}
\hline{\text { Slice of Pizza }} & \text { Total Utility } & \text { Marginal Utility } \
\hline \text { First slice } & 20 & 20 \
\hline \text { Second slice } & 39 & 19 \
\hline \text { Third slice } & - & 15 \
\hline \text { Fourth slice } & 59 & - \
\hline
\end{array}$ Refer to Table 19.1.The marginal utility Josh enjoys from the fourth slice of pizza is

Accepted Answer

A) 20 utils. 
B) 54 utils. 
C) 5 utils. 
D) 0 utils. 
A) 20 utils. 
B) 54 utils. 
C) 5 utils. 
D) 0 utils.

Question 18

If marginal utility is rising,then total utility must be falling.

Accepted Answer

A) True 
 B)False

Question 19

Psychology and sociology focus on what creates desires for goods,but economics focuses on what consumers actually purchase.

Accepted Answer

A) True 
 B)False

Question 20

A budget constraint line represents combinations of two goods that provide an individual the same total utility.

Accepted Answer

A) True 
 B)False

Exam 19: Consumer Choice

The law of diminishing marginal utility does not apply to goods that a person really enjoys.

Price discrimination works best when

As more satisfaction is achieved from consuming a good with diminishing marginal utility,then total utility

The four determinants of demand that are held constant when we consider a movement along a demand curve include all of the following except

Assume that Anna buys peanut butter and bread.If the price of peanut butter falls,then

Marginal utility is

Car dealers can easily price discriminate because

According to consumer choice theory,rational behavior requires that consumers compare the marginal utility of each purchase with its price.

When choosing among products,consumers look at

Consumer surplus does not exist because some consumers cannot afford to purchase the product at all.

Economic explanations of consumer behavior take into consideration

Price discrimination is ________ in the United States and ________ practiced.

If marginal utility is rising,then total utility must be falling.

Psychology and sociology focus on what creates desires for goods,but economics focuses on what consumers actually purchase.

A budget constraint line represents combinations of two goods that provide an individual the same total utility.

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty

Filters

Price discrimination is in the United States and practiced.