Question 1

If total utility is a positive number,marginal utility must also be a positive number.

Accepted Answer

A) True 
 B)False  False

Question 2

If income rises,the budget constraint

Accepted Answer

A)  moves inward toward the origin. 
B)  moves outward away from the origin. 
C)  does not move. 
D)  moves farther down the vertical axis. 
A)  moves inward toward the origin. 
B)  moves outward away from the origin. 
C)  does not move. 
D)  moves farther down the vertical axis. B

Question 3

If Dan's marginal utility from eating one apple is 100 utils and Jorge's marginal utility from eating one apple is 200 utils,it follows that Jorge likes apples more than Dan,assuming that Dan and Jorge measure the marginal utility of apples in exactly the same way.

Accepted Answer

A) True 
 B)False  False

Question 4

Exhibit 21-7
  
-Refer to Exhibit 21-7.For graph (2),if the price of X is $60,what is the consumer's income?

Accepted Answer

A)  $1,000 
B)  $2,000 
C)  $3,000 
D)  $6,000 
E)  This cannot be determined from the information provided. 
A)  $1,000 
B)  $2,000 
C)  $3,000 
D)  $6,000 
E)  This cannot be determined from the information provided.

Question 5

The marginal utility curve for units 1 through 5 of good Z lies above the horizontal axis. What does this imply must be true about the total utility curve for units 1 through 5 of good Z?

Accepted Answer

A)  That portion of good Z's total utility curve must be upward sloping. 
B)  That portion of good Z's total utility curve must be downward sloping. 
C)  That portion of good Z's total utility curve must be horizontal. 
D)  That portion of good Z's total utility curve must also lie above the horizontal axis. 
A)  That portion of good Z's total utility curve must be upward sloping. 
B)  That portion of good Z's total utility curve must be downward sloping. 
C)  That portion of good Z's total utility curve must be horizontal. 
D)  That portion of good Z's total utility curve must also lie above the horizontal axis.

Question 6

Exhibit 21-7
  
-Refer to Exhibit 21-7.The price of X is $40 and the price of Y is $80.Assuming that the consumer allocates all of his income to good X,how many units of X will he purchase? (Request: Do not ask the instructor to which graph the question is referring.)

Accepted Answer

A)  40 
B)  50 
C)  80 
D)  90 
E)  120 
A)  40 
B)  50 
C)  80 
D)  90 
E)  120

Question 7

If the marginal utility of a good is negative,then

Accepted Answer

A)  consumers should buy less of it. 
B)  consumers will consume it only if it is free. 
C)  consumers should buy more of it to make its marginal utility positive. 
D)  the law of diminishing marginal utility is being violated. 
A)  consumers should buy less of it. 
B)  consumers will consume it only if it is free. 
C)  consumers should buy more of it to make its marginal utility positive. 
D)  the law of diminishing marginal utility is being violated.

Question 8

To an economist,utility refers to the

Accepted Answer

A)  usefulness of a good or service. 
B)  satisfaction that results from the consumption of a good. 
C)  relative scarcity of a good. 
D)  rate of decline in the demand curve. 
A)  usefulness of a good or service. 
B)  satisfaction that results from the consumption of a good. 
C)  relative scarcity of a good. 
D)  rate of decline in the demand curve.

Question 9

Suppose you are consuming a particular good and you could somehow give back the last unit you consumed.What would happen to total and marginal utility (assuming that the marginal utility of the unit given back is positive)?

Accepted Answer

A)  Both total and marginal utility would decrease. 
B)  Both total and marginal utility would increase. 
C)  Total utility would increase but marginal utility would decrease. 
D)  Total utility would decrease but marginal utility would increase. 
E)  There would be no change in marginal utility but total utility would decrease. 
A)  Both total and marginal utility would decrease. 
B)  Both total and marginal utility would increase. 
C)  Total utility would increase but marginal utility would decrease. 
D)  Total utility would decrease but marginal utility would increase. 
E)  There would be no change in marginal utility but total utility would decrease.

Question 10

Adam Smith observed that often things that have the greatest value in use,or are the most useful,have a relatively low price,and things that have little or no value in use have a high price.

Accepted Answer

A) True 
 B)False

Question 11

Jack receives 30 utils from one apple,45 utils from two apples,and 55 utils from three apples.It follows that the marginal utility of the third apple is __________ utils and that Jack's __________utility rises as his __________ declines.

Accepted Answer

A)  55; marginal; total 
B)  10; total; marginal 
C)  130; total; marginal 
D)  100; marginal; total 
E)  none of the above 
A)  55; marginal; total 
B)  10; total; marginal 
C)  130; total; marginal 
D)  100; marginal; total 
E)  none of the above

Question 12

Suppose a consumer is purchasing Coke and pretzels in quantities such that she is achieving consumer equilibrium.Then the price of Coke decreases.The consumer will likely __________ her consumption of Coke and the marginal utility of Coke will __________ while the total utility from Coke will __________.

Accepted Answer

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

Question 13

Marginal utility is always a positive number.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements does not invoke interpersonal utility comparisons?

Accepted Answer

A)  The total utility a millionaire derives from $100 is less than the total utility a poor person derives from $100. 
B)  The marginal utility a millionaire derives from the one-millionth dollar is less than the marginal utility a poor person derives from the one-hundredth dollar. 
C)  For both the millionaire and the pauper, the marginal utility they derive from the one-thousandth dollar is less than the marginal utility they derive from the five-hundredth dollar. 
D)  None of the above, because all rely on interpersonal utility comparisons. 
A)  The total utility a millionaire derives from $100 is less than the total utility a poor person derives from $100. 
B)  The marginal utility a millionaire derives from the one-millionth dollar is less than the marginal utility a poor person derives from the one-hundredth dollar. 
C)  For both the millionaire and the pauper, the marginal utility they derive from the one-thousandth dollar is less than the marginal utility they derive from the five-hundredth dollar. 
D)  None of the above, because all rely on interpersonal utility comparisons.

Question 15

Suppose for a consumer the marginal utility (MU)of bread is 20 utils and the MU of milk is 10 utils; the price of bread is $3 and the price of milk is $1.Given this,

Accepted Answer

A)  more utility per dollar is gained from consuming bread than milk. 
B)  more utility per dollar is gained from consuming milk than bread. 
C)  the same amount of utility per dollar is gained from consuming milk as bread. 
D)  the consumer is in consumer equilibrium. 
A)  more utility per dollar is gained from consuming bread than milk. 
B)  more utility per dollar is gained from consuming milk than bread. 
C)  the same amount of utility per dollar is gained from consuming milk as bread. 
D)  the consumer is in consumer equilibrium.

Question 16

Exhibit 21-7
  
-Refer to Exhibit 21-7.For graph (3),if the price of Y is $200,the price of X is

Accepted Answer

A)  $50. 
B)  $40. 
C)  $30. 
D)  $25. 
E)  $15. 
A)  $50. 
B)  $40. 
C)  $30. 
D)  $25. 
E)  $15.

Question 17

Economists usually assume that money has __________ marginal utility.

Accepted Answer

A)  increasing 
B)  constant 
C)  decreasing 
D)  zero 
A)  increasing 
B)  constant 
C)  decreasing 
D)  zero

Question 18

Consider two options: (A)you receive a guaranteed payment of $100; (B)a coin is tossed and if heads comes up,you win nothing; if tails comes up,you win $200.The expected payoff for option B is:

Accepted Answer

A)  $200 
B)  $100 
C)  $300 
D)  $75 
E)  There is not enough information to answer the question. 
A)  $200 
B)  $100 
C)  $300 
D)  $75 
E)  There is not enough information to answer the question.

Question 19

Economist David Friedman pointed out that

Accepted Answer

A)  the endowment effect is not limited to humans. 
B)  the law of diminishing marginal utility does not hold for money. 
C)  the diamond-water paradox would not exist if water was scarce and diamonds were plentiful. 
D)  the government should provide the necessities of life for free. 
A)  the endowment effect is not limited to humans. 
B)  the law of diminishing marginal utility does not hold for money. 
C)  the diamond-water paradox would not exist if water was scarce and diamonds were plentiful. 
D)  the government should provide the necessities of life for free.

Question 20

Because there are so few diamonds in the world,the consumption of diamonds

Accepted Answer

A)  takes priority over the consumption of water. 
B)  takes place at relatively high marginal utility. 
C)  takes place at relatively low marginal utility. 
D)  is more important than the consumption of water. 
A)  takes priority over the consumption of water. 
B)  takes place at relatively high marginal utility. 
C)  takes place at relatively low marginal utility. 
D)  is more important than the consumption of water.

Exam 21: Consumer Choice: Maximizing Utility and Behavioral Economics

If total utility is a positive number,marginal utility must also be a positive number.

If income rises,the budget constraint

If Dan's marginal utility from eating one apple is 100 utils and Jorge's marginal utility from eating one apple is 200 utils,it follows that Jorge likes apples more than Dan,assuming that Dan and Jorge measure the marginal utility of apples in exactly the same way.

Exhibit 21-7 -Refer to Exhibit 21-7.For graph (2),if the price of X is $60,what is the consumer's income?

The marginal utility curve for units 1 through 5 of good Z lies above the horizontal axis. What does this imply must be true about the total utility curve for units 1 through 5 of good Z?

Exhibit 21-7 -Refer to Exhibit 21-7.The price of X is $40 and the price of Y is $80.Assuming that the consumer allocates all of his income to good X,how many units of X will he purchase? (Request: Do not ask the instructor to which graph the question is referring.)

If the marginal utility of a good is negative,then

To an economist,utility refers to the

Suppose you are consuming a particular good and you could somehow give back the last unit you consumed.What would happen to total and marginal utility (assuming that the marginal utility of the unit given back is positive)?

Adam Smith observed that often things that have the greatest value in use,or are the most useful,have a relatively low price,and things that have little or no value in use have a high price.

Jack receives 30 utils from one apple,45 utils from two apples,and 55 utils from three apples.It follows that the marginal utility of the third apple is __________ utils and that Jack's __________utility rises as his __________ declines.

Marginal utility is always a positive number.

Which of the following statements does not invoke interpersonal utility comparisons?

Suppose for a consumer the marginal utility (MU)of bread is 20 utils and the MU of milk is 10 utils; the price of bread is $3 and the price of milk is $1.Given this,

Exhibit 21-7 -Refer to Exhibit 21-7.For graph (3),if the price of Y is $200,the price of X is

Economists usually assume that money has __________ marginal utility.

Consider two options: (A)you receive a guaranteed payment of $100; (B)a coin is tossed and if heads comes up,you win nothing; if tails comes up,you win $200.The expected payoff for option B is:

Economist David Friedman pointed out that

Because there are so few diamonds in the world,the consumption of diamonds

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

Jack receives 30 utils from one apple,45 utils from two apples,and 55 utils from three apples.It follows that the marginal utility of the third apple is utils and that Jack's utility rises as his __ declines.