Question 1

Consumer equilibrium requires that the marginal utility per dollar spent be unequal for all goods.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 6-5 Marginal utility data for desserts $$\begin{array} { | c | c | c | c | } 
\hline \text { Quantity } & \text { Brownies } & \text { I ce Cream } & \text { Pie } \
\hline 1 & 20 & 18 & 16 \
2 & 18 & 17 & 13 \
3 & 15 & 14 & 9 \
4 & 12 & 11 & 7 \
5 & 10 & 8 & 5 \
\hline
\end{array}$$
-Refer to Exhibit 6-5. Each dessert is priced at $1. If you had $10 to spend on desserts, which of the following combinations of goods would you buy?

Accepted Answer

A)  5 units of brownies, 4 units of ice cream, and 1 unit of pie. 
B)  4 units of brownies, 5 units of ice cream, and 1 unit of pie. 
C)  4 units of brownies, 4 units of ice cream, and 2 units of pie. 
D)  4 units of brownies, 3 units of ice cream, and 3 units of pie. 
E)  3 units of brownies, 4 units of ice cream, and 3 units of pie. 
A)  5 units of brownies, 4 units of ice cream, and 1 unit of pie. 
B)  4 units of brownies, 5 units of ice cream, and 1 unit of pie. 
C)  4 units of brownies, 4 units of ice cream, and 2 units of pie. 
D)  4 units of brownies, 3 units of ice cream, and 3 units of pie. 
E)  3 units of brownies, 4 units of ice cream, and 3 units of pie.

Question 3

Marginal utility (MU) equals:

Accepted Answer

A)  P/Q. 
B)  Q/TU. 
C)  PQ/TU. 
D)  TU/P. 
E)  TU/Q. 
A)  P/Q. 
B)  Q/TU. 
C)  PQ/TU. 
D)  TU/P. 
E)  TU/Q.

Question 4

Justin Field just stopped at the Exxon station on the way to campus and bought four Butterfinger candy bars, two 20-ounce bottles of grape-watermelon Snapple, and 10 gallons of gas. His marginal-utility-to-price ratios are 3.21 for the Butterfingers, 4.8 for the Snapples, and 5.7 for the gas. Explain why this set of purchases did not maximize Ryan's utility and how could he have increased his utility.

Accepted Answer

He has not maximized utility because the

Question 5

The vertical and horizontal axes intercepts of the budget line represent the:

Accepted Answer

A)  quantity of goods that will be purchase if only that good is purchased. 
B)  preference of one good compared to another good. 
C)  quantity of each good that is outside the consumer's income. 
D)  only two choices that will spend the entire budget. 
A)  quantity of goods that will be purchase if only that good is purchased. 
B)  preference of one good compared to another good. 
C)  quantity of each good that is outside the consumer's income. 
D)  only two choices that will spend the entire budget.

Question 6

The conceptual measure of the satisfaction a person obtains by consuming all the units of a good or service during a given time period is:

Accepted Answer

A)  total product. 
B)  total revenue. 
C)  total utility. 
D)  total product 
A)  total product. 
B)  total revenue. 
C)  total utility. 
D)  total product

Question 7

The law of diminishing marginal utility is the principle that the marginal utility curve ____ as people consume more of a product in a given period.

Accepted Answer

A)  rises. 
B)  falls. 
C)  remains unchanged. 
D)  first falls and then rises. 
A)  rises. 
B)  falls. 
C)  remains unchanged. 
D)  first falls and then rises.

Question 8

The change in total utility due to a 1-unit change in the quantity consumed is:

Accepted Answer

A)  marginal utility. 
B)  average utility. 
C)  per capita utility. 
D)  total utility. 
E)  the principle of diminishing marginal utility. 
A)  marginal utility. 
B)  average utility. 
C)  per capita utility. 
D)  total utility. 
E)  the principle of diminishing marginal utility.

Question 9

Exhibit 6A-2 Consumer Equilibrium
​  
-Given the budget lines and indifference curves shown in Exhibit 6A-2, point D yields:

Accepted Answer

A)  more total utility than point A. 
B)  more total utility than point E. 
C)  less total utility than point F. 
D)  less total utility than points B, F, and C 
A)  more total utility than point A. 
B)  more total utility than point E. 
C)  less total utility than point F. 
D)  less total utility than points B, F, and C

Question 10

Marginal utility tends to fall as a person increases his or her consumption.

Accepted Answer

A) True 
 B)False

Question 11

The total utility of a good is equal to the marginal utility of the last unit consumed.

Accepted Answer

A) True 
 B)False

Question 12

An indifference curve is:

Accepted Answer

A)  downward sloping and concave to the origin. 
B)  downward sloping and convex to the origin. 
C)  upward sloping and concave to the origin. 
D)  upward sloping and convex to the origin. 
A)  downward sloping and concave to the origin. 
B)  downward sloping and convex to the origin. 
C)  upward sloping and concave to the origin. 
D)  upward sloping and convex to the origin.

Question 13

If a consumer allocates income between goods A and B, total utility is maximized when:

Accepted Answer

A)  the marginal utility of A = the marginal utility of B. 
B)  the marginal utility of A = the marginal utility of B = 0. 
C)  the price of A = price of B. 
D)  marginal utility of A / price of A = marginal utility of B / price of B = 0. 
E)  marginal utility of A / price of A = marginal utility of B / price of B. 
A)  the marginal utility of A = the marginal utility of B. 
B)  the marginal utility of A = the marginal utility of B = 0. 
C)  the price of A = price of B. 
D)  marginal utility of A / price of A = marginal utility of B / price of B = 0. 
E)  marginal utility of A / price of A = marginal utility of B / price of B.

Question 14

Exhibit 6A-4 Consumer equilibrium
​  
-​Given the budget line and indifference curves shown in Exhibit 6A-4, consumer equilibrium occurs at point:

Accepted Answer

A)  ​A. 
B)  ​B. 
C)  ​C. 
D)  ​D. 
A)  ​A. 
B)  ​B. 
C)  ​C. 
D)  ​D.

Question 15

Utils are used by economists to measure the satisfaction a person obtains from consuming a good.

Accepted Answer

A) True 
 B)False

Question 16

Exhibit 6-7 Marginal utility for sandwiches and sodas $$\begin{array} { | c | c | c | } 
\hline \text { Quantity } & \text { Sandwiches } & \text { Sodas } \
\hline 1 & 10 & 5 \
2 & 8 & 4 \
3 & 6 & 3 \
4 & 3 & 1 \
5 & - 1 & 0 \
\hline
\end{array}$$
-Refer to Exhibit 6-7. Diminishing marginal utility for sandwiches sets in after the ____ sandwich.

Accepted Answer

A)  first 
B)  second 
C)  third 
D)  fourth 
E)  fifth 
A)  first 
B)  second 
C)  third 
D)  fourth 
E)  fifth

Question 17

As an individual consumes more of a good, the marginal utility of that good declines.

Accepted Answer

A) True 
 B)False

Question 18

Carla is spending all her income on only two goods: apples and bananas. The price of an apple is $2 and the price of a banana is $1. If Carla's marginal utility of an apple is 4 and her marginal utility of a banana is 3, she should consume:

Accepted Answer

A)  more apples and fewer bananas to maximize total utility. 
B)  more bananas and fewer apples to maximize total utility. 
C)  more apples and more bananas to maximize total utility. 
D)  fewer apples and fewer bananas to maximize total utility. 
E)  her current amounts of apples and bananas to maximize total utility. 
A)  more apples and fewer bananas to maximize total utility. 
B)  more bananas and fewer apples to maximize total utility. 
C)  more apples and more bananas to maximize total utility. 
D)  fewer apples and fewer bananas to maximize total utility. 
E)  her current amounts of apples and bananas to maximize total utility.

Question 19

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. What is the marginal utility of renting a third video?

Accepted Answer

A)  6 utils. 
B)  8 utils. 
C)  10 utils. 
D)  30 utils. 
A)  6 utils. 
B)  8 utils. 
C)  10 utils. 
D)  30 utils.

Question 20

In the theory of consumer choice, when a person is choosing which good or service to consume, how does he or she select the units of good or service to consume?

Accepted Answer

A)  ​The person selects the good or service based on need. 
B)  ​The person selects the units of a good or service that generates the greatest marginal utility. This process continues until there budget is spent. 
C)  ​The person selects the units of a good or service that generates the greatest marginal utility per dollar spent. This process continues until the person's budget is spent. 
D)  ​The person randomly selects what they buy until the budget is spent. ​ 
A)  ​The person selects the good or service based on need. 
B)  ​The person selects the units of a good or service that generates the greatest marginal utility. This process continues until there budget is spent. 
C)  ​The person selects the units of a good or service that generates the greatest marginal utility per dollar spent. This process continues until the person's budget is spent. 
D)  ​The person randomly selects what they buy until the budget is spent. ​

Consumer equilibrium requires that the marginal utility per dollar spent be unequal for all goods.

Exhibit 6-5 Marginal utility data for desserts Quantity Brownies I ce Cream Pie 1 20 18 16 2 18 17 13 3 15 14 9 4 12 11 7 5 10 8 5 -Refer to Exhibit 6-5. Each dessert is priced at $1. If you had $10 to spend on desserts, which of the following combinations of goods would you buy?

Marginal utility (MU) equals:

The vertical and horizontal axes intercepts of the budget line represent the:

The conceptual measure of the satisfaction a person obtains by consuming all the units of a good or service during a given time period is:

The law of diminishing marginal utility is the principle that the marginal utility curve ____ as people consume more of a product in a given period.

The change in total utility due to a 1-unit change in the quantity consumed is:

Exhibit 6A-2 Consumer Equilibrium -Given the budget lines and indifference curves shown in Exhibit 6A-2, point D yields:

Marginal utility tends to fall as a person increases his or her consumption.

The total utility of a good is equal to the marginal utility of the last unit consumed.

An indifference curve is:

If a consumer allocates income between goods A and B, total utility is maximized when:

Exhibit 6A-4 Consumer equilibrium -Given the budget line and indifference curves shown in Exhibit 6A-4, consumer equilibrium occurs at point:

Utils are used by economists to measure the satisfaction a person obtains from consuming a good.

Exhibit 6-7 Marginal utility for sandwiches and sodas Quantity Sandwiches Sodas 1 10 5 2 8 4 3 6 3 4 3 1 5 -1 0 -Refer to Exhibit 6-7. Diminishing marginal utility for sandwiches sets in after the ____ sandwich.

As an individual consumes more of a good, the marginal utility of that good declines.

Carla is spending all her income on only two goods: apples and bananas. The price of an apple is $2 and the price of a banana is $1. If Carla's marginal utility of an apple is 4 and her marginal utility of a banana is 3, she should consume:

In the theory of consumer choice, when a person is choosing which good or service to consume, how does he or she select the units of good or service to consume?

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

Consumer equilibrium requires that the marginal utility per dollar spent be unequal for all goods.

Exhibit 6-5 Marginal utility data for desserts Quantity Brownies I ce Cream Pie 1 20 18 16 2 18 17 13 3 15 14 9 4 12 11 7 5 10 8 5 -Refer to Exhibit 6-5. Each dessert is priced at $1. If you had $10 to spend on desserts, which of the following combinations of goods would you buy?

Marginal utility (MU) equals:

The vertical and horizontal axes intercepts of the budget line represent the:

The conceptual measure of the satisfaction a person obtains by consuming all the units of a good or service during a given time period is:

The law of diminishing marginal utility is the principle that the marginal utility curve ____ as people consume more of a product in a given period.

The change in total utility due to a 1-unit change in the quantity consumed is:

Exhibit 6A-2 Consumer Equilibrium ​ -Given the budget lines and indifference curves shown in Exhibit 6A-2, point D yields:

Marginal utility tends to fall as a person increases his or her consumption.

The total utility of a good is equal to the marginal utility of the last unit consumed.

An indifference curve is:

If a consumer allocates income between goods A and B, total utility is maximized when:

Exhibit 6A-4 Consumer equilibrium ​ -​Given the budget line and indifference curves shown in Exhibit 6A-4, consumer equilibrium occurs at point:

Utils are used by economists to measure the satisfaction a person obtains from consuming a good.

Exhibit 6-7 Marginal utility for sandwiches and sodas Quantity Sandwiches Sodas 1 10 5 2 8 4 3 6 3 4 3 1 5 -1 0 -Refer to Exhibit 6-7. Diminishing marginal utility for sandwiches sets in after the ____ sandwich.

As an individual consumes more of a good, the marginal utility of that good declines.

Carla is spending all her income on only two goods: apples and bananas. The price of an apple is $2 and the price of a banana is $1. If Carla's marginal utility of an apple is 4 and her marginal utility of a banana is 3, she should consume:

In the theory of consumer choice, when a person is choosing which good or service to consume, how does he or she select the units of good or service to consume?

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

Exhibit 6A-2 Consumer Equilibrium -Given the budget lines and indifference curves shown in Exhibit 6A-2, point D yields:

Exhibit 6A-4 Consumer equilibrium -Given the budget line and indifference curves shown in Exhibit 6A-4, consumer equilibrium occurs at point: