Question 1

If finding the last stamp to complete your collection makes you happier than finding the first, then:

Accepted Answer

A)  marginal utility is zero. 
B)  marginal utility is negative. 
C)  total utility is decreasing. 
D)  total utility is constant. 
E)  marginal utility is not diminishing. 
A)  marginal utility is zero. 
B)  marginal utility is negative. 
C)  total utility is decreasing. 
D)  total utility is constant. 
E)  marginal utility is not diminishing.

Question 2

Eric is maximizing his total utility through his choices of two goods: clothes and food. His marginal utility of clothes is 60 and his marginal utility of food is 12. The price of clothes is $20. What must be the price of food?

Accepted Answer

A)  12. 
B)  6. 
C)  4. 
D)  1. 
E)  0. 
A)  12. 
B)  6. 
C)  4. 
D)  1. 
E)  0.

Question 3

The utility of a good is:

Accepted Answer

A)  different for different consumers. 
B)  the same for all consumers. 
C)  constant no matter how much is consumed. 
D)  related to the cost of producing it. 
E)  easily measured. 
A)  different for different consumers. 
B)  the same for all consumers. 
C)  constant no matter how much is consumed. 
D)  related to the cost of producing it. 
E)  easily measured.

Question 4

Utility refers to the:

Accepted Answer

A)  relationship of demand to the supply of a product. 
B)  satisfaction a consumer experiences after a good or service is purchased. 
C)  satisfaction a consumer expects to receive from a good or service. 
D)  ability of a good or a service to have value in the marketplace. 
E)  usefulness of the product consumed. 
A)  relationship of demand to the supply of a product. 
B)  satisfaction a consumer experiences after a good or service is purchased. 
C)  satisfaction a consumer expects to receive from a good or service. 
D)  ability of a good or a service to have value in the marketplace. 
E)  usefulness of the product consumed.

Question 5

If the first four units of a good consumed have marginal utilities of 8, 4, 2, and 1, respectively, this trend is an indication of the:

Accepted Answer

A)  law of consumer equilibrium. 
B)  law of diminishing marginal utility. 
C)  law of diminishing consumer surplus. 
D)  law of supply. 
A)  law of consumer equilibrium. 
B)  law of diminishing marginal utility. 
C)  law of diminishing consumer surplus. 
D)  law of supply.

Question 6

Assume Px is the price of good X on the horizontal axis and Py is the price of good Y on the vertical axis. The slope of the budget line equals:

Accepted Answer

A)  Py / PxY. 
B)  PyQy / Px Qx. 
C)  (1 − Py / Px). 
D)  Px / Py. 
A)  Py / PxY. 
B)  PyQy / Px Qx. 
C)  (1 − Py / Px). 
D)  Px / Py.

Question 7

If a consumer wishes to maximize satisfaction given limited income and MUx/Px y/Py then the consumer should:

Accepted Answer

A)  do nothing because she/he is in equilibrium. 
B)  buy more of X and less of Y. 
C)  buy more of Y and less of X. 
D)  buy more of both X and Y. 
E)  buy less of both X and Y. 
A)  do nothing because she/he is in equilibrium. 
B)  buy more of X and less of Y. 
C)  buy more of Y and less of X. 
D)  buy more of both X and Y. 
E)  buy less of both X and Y.

Question 8

If total utility increases from 10 to 15 for the second unit of a good consumed, the marginal utility of the second unit is 5.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is true concerning the indifference map?

Accepted Answer

A)  Each consumer has a map of indifference curves. 
B)  Consumers always prefer curves farther from the origin. 
C)  Each indifference curve in the map represents a different level of total utility. 
D)  All of the above are true. 
E)  None of the above is true. 
A)  Each consumer has a map of indifference curves. 
B)  Consumers always prefer curves farther from the origin. 
C)  Each indifference curve in the map represents a different level of total utility. 
D)  All of the above are true. 
E)  None of the above is true.

Question 10

Marginal utility is best computed as the ratio of:

Accepted Answer

A)  total utility to change in quantity consumed. 
B)  the change in total utility to total quantity consumed. 
C)  total quantity consumed to total utility. 
D)  the change in total utility to change in quantity consumed. 
A)  total utility to change in quantity consumed. 
B)  the change in total utility to total quantity consumed. 
C)  total quantity consumed to total utility. 
D)  the change in total utility to change in quantity consumed.

Question 11

As a general rule, marginal utility will be less:

Accepted Answer

A)  as less of the good is consumed. 
B)  as more of the good is consumed. 
C)  when average utility is at a maximum. 
D)  only when the good is inferior. 
E)  when satisfaction is less than cost. 
A)  as less of the good is consumed. 
B)  as more of the good is consumed. 
C)  when average utility is at a maximum. 
D)  only when the good is inferior. 
E)  when satisfaction is less than cost.

Question 12

Exhibit 6-4 Total utility for multiplex tickets, video rentals, and popcorn $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Total Utility } \
\text { from Multiplex Tickets }
\end{array} & \begin{array} { c } 
\text { T otal Utility } \
\text { from Video Rentals }
\end{array} & \begin{array} { c } 
\text { Total Utility } \
\text { from Popcorn }
\end{array} \
\hline 1 \text { movie ( } 30 \text { utils) } & 1 \text { video (14 utils) } & 1 \text { bag (8 utils) } \
2 \text { movies (54 utils) } & 2 \text { videos (24 utils) } & 2 \text { bags (13 utils) } \
3 \text { movies (72 utils) } & 3 \text { videos (30 utils) } & 3 \text { bags } ( 15 \text { utils) } \
4 \text { movies (84 utils) } & 4 \text { videos (32utils) } & 4 \text { bags (16 utils) } \
\hline
\end{array}$$
-In Exhibit 6-4, assume the Multiplex tickets cost $6 each, video rentals cost $2 each, and bags of popcorn cost $1 each. Suppose the consumer has $12 per week to spend on multiplex tickets, video rentals, and popcorn. In the consumer equilibrium, what is the marginal utility per dollar for each of the three goods?

Accepted Answer

A)  5 utils per dollar. 
B)  9 utils per dollar. 
C)  13 utils per dollar. 
D)  22 utils per dollar. 
A)  5 utils per dollar. 
B)  9 utils per dollar. 
C)  13 utils per dollar. 
D)  22 utils per dollar.

Question 13

A rational consumer will always shift a dollar from a good whose marginal-utility-to-price ratio is lower to one whose marginal-utility-to-price is higher.

Accepted Answer

A) True 
 B)False

Question 14

Exhibit 6A-6 Consumer equilibrium
​  
-Given the budget lines and indifference curves shown in Exhibit 6A-6, if the budget line shifts, then the equilibrium points X and Y:

Accepted Answer

A)  result from a decrease in the price of good X. 
B)  result from a decrease in the consumer's budget. 
C)  are two points along a downward sloping demand curve for good X. 
D)  result from a decrease in the price of good Y. 
A)  result from a decrease in the price of good X. 
B)  result from a decrease in the consumer's budget. 
C)  are two points along a downward sloping demand curve for good X. 
D)  result from a decrease in the price of good Y.

Question 15

Michael spends $10 a month on Pez dispensers and Superman action figures. His marginal-utility-to-price ratio for the Pez dispensers is 40, while his marginal-utility-to-price ratio for Superman action figures is 47. Explain why Michael is not maximizing his utility and how can he change his behavior to increase his utility?

Accepted Answer

To maximize utility, one must consume th

Question 16

Along an indifference curve for goods X and Y, the vertical and horizontal axes measure the:

Accepted Answer

A)  prices of X and Y. 
B)  total utilities of X and Y. 
C)  quantities of X and Y. 
D)  marginal utilities of X and Y. 
A)  prices of X and Y. 
B)  total utilities of X and Y. 
C)  quantities of X and Y. 
D)  marginal utilities of X and Y.

Question 17

Assume that an individual consumes only hotdogs and colas and that the last hotdog consumed yields 15 utils and the last cola 10 utils. If the price of a hotdog is $1 and the price of a cola is $.50, we can conclude that the:

Accepted Answer

A)  consumer should consume more hotdogs and less cola. 
B)  price of hotdogs is too high. 
C)  consumer should consume fewer hotdogs and more cola. 
D)  consumer is in equilibrium. 
A)  consumer should consume more hotdogs and less cola. 
B)  price of hotdogs is too high. 
C)  consumer should consume fewer hotdogs and more cola. 
D)  consumer is in equilibrium.

Question 18

Greg spends his entire budget on two goods: he plays video games at the mall arcade and he buys pizza. He discovers that his MU/P of video games is lower than his MU/P of pizza. From this, we know that he would be:

Accepted Answer

A)  happier eating less pizza and playing fewer video games. 
B)  happier eating less pizza and playing more video games. 
C)  happier eating more pizza and playing fewer video games. 
D)  indifferent to which selection he makes. 
E)  as happy as possible, since he is already maximizing total utility. 
A)  happier eating less pizza and playing fewer video games. 
B)  happier eating less pizza and playing more video games. 
C)  happier eating more pizza and playing fewer video games. 
D)  indifferent to which selection he makes. 
E)  as happy as possible, since he is already maximizing total utility.

Question 19

Georgia has a MU/P of 10 for tennis lessons, a MU/P of 6 for sewing lessons, and a U/P of 2 for cooking lessons. In order to maximize utility, she should:

Accepted Answer

A)  take more cooking lessons. 
B)  take more sewing lessons. 
C)  take more tennis lessons. 
D)  stay with her current choices. 
E)  take fewer lessons of each choice. 
A)  take more cooking lessons. 
B)  take more sewing lessons. 
C)  take more tennis lessons. 
D)  stay with her current choices. 
E)  take fewer lessons of each choice.

Question 20

Consider a consumer who spends all income on only two goods: bread and wine. An extra loaf of bread would give the consumer 10 extra util, while an extra bottle of wine would give the consumer 60 extra utils. Bread costs 50¢ per loaf, and wine costs $6 per bottle. In this situation, the consumer:

Accepted Answer

A)  could increase utility by buying more bread and less wine. 
B)  could increase utility by purchasing more wine and less bread. 
C)  has maximized utility and attained consumer equilibrium. 
D)  is violating the law of diminishing marginal utility. 
A)  could increase utility by buying more bread and less wine. 
B)  could increase utility by purchasing more wine and less bread. 
C)  has maximized utility and attained consumer equilibrium. 
D)  is violating the law of diminishing marginal utility.

If finding the last stamp to complete your collection makes you happier than finding the first, then:

Eric is maximizing his total utility through his choices of two goods: clothes and food. His marginal utility of clothes is 60 and his marginal utility of food is 12. The price of clothes is $20. What must be the price of food?

The utility of a good is:

Utility refers to the:

If the first four units of a good consumed have marginal utilities of 8, 4, 2, and 1, respectively, this trend is an indication of the:

Assume P_x is the price of good X on the horizontal axis and P_y is the price of good Y on the vertical axis. The slope of the budget line equals:

If a consumer wishes to maximize satisfaction given limited income and MU_x/P_x < MU_y/P_y then the consumer should:

If total utility increases from 10 to 15 for the second unit of a good consumed, the marginal utility of the second unit is 5.

Which of the following is true concerning the indifference map?

Marginal utility is best computed as the ratio of:

As a general rule, marginal utility will be less:

A rational consumer will always shift a dollar from a good whose marginal-utility-to-price ratio is lower to one whose marginal-utility-to-price is higher.

Exhibit 6A-6 Consumer equilibrium -Given the budget lines and indifference curves shown in Exhibit 6A-6, if the budget line shifts, then the equilibrium points X and Y:

Along an indifference curve for goods X and Y, the vertical and horizontal axes measure the:

Assume that an individual consumes only hotdogs and colas and that the last hotdog consumed yields 15 utils and the last cola 10 utils. If the price of a hotdog is $1 and the price of a cola is $.50, we can conclude that the:

Greg spends his entire budget on two goods: he plays video games at the mall arcade and he buys pizza. He discovers that his MU/P of video games is lower than his MU/P of pizza. From this, we know that he would be:

Georgia has a MU/P of 10 for tennis lessons, a MU/P of 6 for sewing lessons, and a U/P of 2 for cooking lessons. In order to maximize utility, she should:

Consider a consumer who spends all income on only two goods: bread and wine. An extra loaf of bread would give the consumer 10 extra util, while an extra bottle of wine would give the consumer 60 extra utils. Bread costs 50¢ per loaf, and wine costs $6 per bottle. In this situation, the consumer:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exam 6: Consumer Choice Theory

If finding the last stamp to complete your collection makes you happier than finding the first, then:

Eric is maximizing his total utility through his choices of two goods: clothes and food. His marginal utility of clothes is 60 and his marginal utility of food is 12. The price of clothes is $20. What must be the price of food?

The utility of a good is:

Utility refers to the:

If the first four units of a good consumed have marginal utilities of 8, 4, 2, and 1, respectively, this trend is an indication of the:

Assume Px is the price of good X on the horizontal axis and Py is the price of good Y on the vertical axis. The slope of the budget line equals:

If a consumer wishes to maximize satisfaction given limited income and MUx/Px < MUy/Py then the consumer should:

If total utility increases from 10 to 15 for the second unit of a good consumed, the marginal utility of the second unit is 5.

Which of the following is true concerning the indifference map?

Marginal utility is best computed as the ratio of:

As a general rule, marginal utility will be less:

A rational consumer will always shift a dollar from a good whose marginal-utility-to-price ratio is lower to one whose marginal-utility-to-price is higher.

Exhibit 6A-6 Consumer equilibrium ​ -Given the budget lines and indifference curves shown in Exhibit 6A-6, if the budget line shifts, then the equilibrium points X and Y:

Along an indifference curve for goods X and Y, the vertical and horizontal axes measure the:

Assume that an individual consumes only hotdogs and colas and that the last hotdog consumed yields 15 utils and the last cola 10 utils. If the price of a hotdog is $1 and the price of a cola is $.50, we can conclude that the:

Greg spends his entire budget on two goods: he plays video games at the mall arcade and he buys pizza. He discovers that his MU/P of video games is lower than his MU/P of pizza. From this, we know that he would be:

Georgia has a MU/P of 10 for tennis lessons, a MU/P of 6 for sewing lessons, and a U/P of 2 for cooking lessons. In order to maximize utility, she should:

Consider a consumer who spends all income on only two goods: bread and wine. An extra loaf of bread would give the consumer 10 extra util, while an extra bottle of wine would give the consumer 60 extra utils. Bread costs 50¢ per loaf, and wine costs $6 per bottle. In this situation, the consumer:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Assume P_x is the price of good X on the horizontal axis and P_y is the price of good Y on the vertical axis. The slope of the budget line equals:

If a consumer wishes to maximize satisfaction given limited income and MU_x/P_x < MU_y/P_y then the consumer should:

Exhibit 6A-6 Consumer equilibrium -Given the budget lines and indifference curves shown in Exhibit 6A-6, if the budget line shifts, then the equilibrium points X and Y: