Question 1

According to a behavioral economists, people are assumed to have the following three impediments that prevent rational choice:

Accepted Answer

A)  endowment effect, wealth effect, bounded rationality. 
B)  bounded rationality, bounded self-interest, bounded willpower. 
C)  bounded self-interest, endowment effect, bounded willpower. 
D)  bounded willpower, wealth effect, bounded rationality. 
A)  endowment effect, wealth effect, bounded rationality. 
B)  bounded rationality, bounded self-interest, bounded willpower. 
C)  bounded self-interest, endowment effect, bounded willpower. 
D)  bounded willpower, wealth effect, bounded rationality. B

Question 2

-The above table shows Tammy's total utility from streaming videos and CDs. If Tammy has $110 to spend on videos and CDs and if the price of a streamed video is $10 and the price of a CD is $20, then Tammy maximizes her utility by purchasing

Accepted Answer

A)  3 CDs and 5 videos. 
B)  5 CDs and 1 video. 
C)  4 CDs and 3 videos. 
D)  none of the above. 
A)  3 CDs and 5 videos. 
B)  5 CDs and 1 video. 
C)  4 CDs and 3 videos. 
D)  none of the above. A

Question 3

A consumer maximizes total utility when all available income is spent and the

Accepted Answer

A)  marginal utility from each good is equal for all goods. 
B)  marginal utility per dollar from each good is equal for all goods. 
C)  dollars spent on the last unit of each good are equal for all goods. 
D)  total utility from all goods purchased is equal. 
A)  marginal utility from each good is equal for all goods. 
B)  marginal utility per dollar from each good is equal for all goods. 
C)  dollars spent on the last unit of each good are equal for all goods. 
D)  total utility from all goods purchased is equal. B

Question 4

Bianca consumes pizza. Marginal utility theory predicts that when the price of pizza increases

Accepted Answer

A)  Bianca's total utility from pizza will increase. 
B)  Bianca will buy less pizza. 
C)  Bianca's marginal utility from pizza will increase. 
D)  Bianca's demand curve for pizza will shift leftward. 
A)  Bianca's total utility from pizza will increase. 
B)  Bianca will buy less pizza. 
C)  Bianca's marginal utility from pizza will increase. 
D)  Bianca's demand curve for pizza will shift leftward.

Question 5

What is the water and diamonds paradox of value and what is its resolution?

Accepted Answer

The paradox is that water is critical to

Question 6

-Steve has two goods he can spend his income on, skiing and skating, and his marginal utilities from each are in the table above. The price of each unit of skiing is $10 and the price of each unit of skating is $5. Steve has $40 to spend. What quantities of skiing and skating should Steve consume to maximize his utility?

Accepted Answer

A)  4 units of skiing and 4 units of skating 
B)  2 units of skiing and 4 units of skating 
C)  1 unit of skiing and 2 units of skating 
D)  5 units of skiing and 5 units of skating 
A)  4 units of skiing and 4 units of skating 
B)  2 units of skiing and 4 units of skating 
C)  1 unit of skiing and 2 units of skating 
D)  5 units of skiing and 5 units of skating

Question 7

The principle of diminishing marginal utility says that

Accepted Answer

A)  marginal utility is negative as the quantity of the good consumed increases. 
B)  total utility decreases as the quantity of the good consumed increases. 
C)  total utility increases by smaller and smaller amounts as the quantity of the good consumed increases. 
D)  total utility increases by larger and larger amounts as the quantity of the good consumed increases. 
A)  marginal utility is negative as the quantity of the good consumed increases. 
B)  total utility decreases as the quantity of the good consumed increases. 
C)  total utility increases by smaller and smaller amounts as the quantity of the good consumed increases. 
D)  total utility increases by larger and larger amounts as the quantity of the good consumed increases.

Question 8

Pizza Pepsi
  
-The table shows Elaine's utility from pizza and Pepsi. If Elaine consumes 2 slices of pizza and 3 Pepsis, her marginal utility from the fourth Pepsi is ________ units.

Accepted Answer

A)  60 
B)  54 
C)  40 
D)  220 
A)  60 
B)  54 
C)  40 
D)  220

Question 9

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. David maximizes his utility by buying only sodas and pizza. He buys 5 sodas and 10 slices of pizza. If the price of a soda increases to $3 each, David will

Accepted Answer

A)  decrease the number of sodas bought and the demand curve for sodas will shift leftward. 
B)  decrease the number of sodas bought and move along the demand curve for soda. 
C)  buy more pizza and move along the demand curve for pizza. 
D)  buy less pizza and the demand curve for pizza will shift leftward. 
A)  decrease the number of sodas bought and the demand curve for sodas will shift leftward. 
B)  decrease the number of sodas bought and move along the demand curve for soda. 
C)  buy more pizza and move along the demand curve for pizza. 
D)  buy less pizza and the demand curve for pizza will shift leftward.

Question 10

Jeremiah spends all of his income on oranges and cookies, which are normal goods. If Jeremiah's income decreases, he will buy ________ oranges and ________ cookies. His marginal utility from oranges will ________ and his marginal utility from cookies will ________.

Accepted Answer

A)  fewer; fewer; decrease; increase 
B)  more; more; decrease; decrease 
C)  the same quantity of; fewer; remain constant; decrease 
D)  fewer; fewer; increase; increase 
A)  fewer; fewer; decrease; increase 
B)  more; more; decrease; decrease 
C)  the same quantity of; fewer; remain constant; decrease 
D)  fewer; fewer; increase; increase

Question 11

Tom spends $20 a month on CDs and magazines. The price of a CD is $6 and the price of a magazine is $4. When Tom maximizes his utility, the marginal utility from CDs is ________ the marginal utility from newspapers.

Accepted Answer

A)  the same as 
B)  1/2 
C)  20 times 
D)  1 1/2 times 
A)  the same as 
B)  1/2 
C)  20 times 
D)  1 1/2 times

Question 12

Fritos Fruit drinks
  
-The table above shows the total utility from the two goods Freddy likes to consume. The marginal utility Freddy receives from consuming an extra bag of Fritos

Accepted Answer

A)  depends on the quantity of fruit drinks consumed. 
B)  decreases as he consumes more bags of Fritos. 
C)  decreases as he consumes more fruit drinks. 
D)  equals 75 when he consumes 2 bags of Fritos. 
A)  depends on the quantity of fruit drinks consumed. 
B)  decreases as he consumes more bags of Fritos. 
C)  decreases as he consumes more fruit drinks. 
D)  equals 75 when he consumes 2 bags of Fritos.

Question 13

-The table above gives Jane's total utility from magazines and CDs. The price of a magazine is $4 and the price of a CD is $10. Which of the following CORRECTLY illustrates the principle of diminishing marginal utility? The fact that

Accepted Answer

A)  the sixth magazine has less marginal utility than the sixth CD. 
B)  Jane's marginal utility per dollar from the second magazine is the same as her marginal utility per dollar from the third CD. 
C)  the marginal utility per dollar from the sixth magazine is less than the total utility from six magazines. 
D)  the marginal utility of the third CD is less than the marginal utility of second CD. 
A)  the sixth magazine has less marginal utility than the sixth CD. 
B)  Jane's marginal utility per dollar from the second magazine is the same as her marginal utility per dollar from the third CD. 
C)  the marginal utility per dollar from the sixth magazine is less than the total utility from six magazines. 
D)  the marginal utility of the third CD is less than the marginal utility of second CD.

Question 14

Emma consumes only hot dogs and hamburgers. She is at her consumer equilibrium. Hot dogs and hamburgers have the same marginal utility. Thus

Accepted Answer

A)  her total utility from all the hot dogs eaten must be the same as her total utility from all the hamburgers eaten. 
B)  the price of a hot dog and the price of a hamburger must be the same. 
C)  she must be eating the same number of hot dogs and hamburgers. 
D)  Both answers B and C are correct. 
A)  her total utility from all the hot dogs eaten must be the same as her total utility from all the hamburgers eaten. 
B)  the price of a hot dog and the price of a hamburger must be the same. 
C)  she must be eating the same number of hot dogs and hamburgers. 
D)  Both answers B and C are correct.

Question 15

At Revolution Doughnuts in Fort Collins, Colorado, a cup of coffee or a doughnut is $1. Suppose Hannah loves going to Revolution Doughnuts. Currently, her marginal utility per dollar from doughnuts is 14 and her marginal utility per dollar from coffee is 10. Is Hannah maximizing her total utility?

Accepted Answer

A)  No, she needs to buy more doughnuts and less coffee. 
B)  No, she needs to buy more coffee and fewer doughnuts. 
C)  Yes, she is maximizing utility. 
D)  No, she needs to buy fewer doughnuts and less coffee. 
A)  No, she needs to buy more doughnuts and less coffee. 
B)  No, she needs to buy more coffee and fewer doughnuts. 
C)  Yes, she is maximizing utility. 
D)  No, she needs to buy fewer doughnuts and less coffee.

Question 16

-Becky decides to spend $50 per month on DVD rentals and movie tickets. Her marginal utility schedules from these two goods are shown in the table above. The price of a DVD rental is $2.50, and the price of a movie ticket is $5. Suppose Becky rents 8 DVDs and buys 6 movie tickets per month. She

Accepted Answer

A)  cannot increase her total utility because she already gets the maximum possible utility from DVD rentals and movies within her budget. 
B)  can increase her total utility if she rents more DVDs and buys more movie tickets. 
C)  can increase her total utility if she rents more DVDs and buys fewer movie tickets. 
D)  can increase her total utility if she rents fewer DVDs and buys more movie tickets. 
A)  cannot increase her total utility because she already gets the maximum possible utility from DVD rentals and movies within her budget. 
B)  can increase her total utility if she rents more DVDs and buys more movie tickets. 
C)  can increase her total utility if she rents more DVDs and buys fewer movie tickets. 
D)  can increase her total utility if she rents fewer DVDs and buys more movie tickets.

Question 17

When the price of popcorn falls, before there is any change in consumption, the

Accepted Answer

A)  marginal utility of popcorn definitely increases. 
B)  marginal utility per dollar from popcorn definitely increases. 
C)  total expenditure on popcorn definitely rises. 
D)  entire total utility of popcorn curve definitely shifts rightward. 
A)  marginal utility of popcorn definitely increases. 
B)  marginal utility per dollar from popcorn definitely increases. 
C)  total expenditure on popcorn definitely rises. 
D)  entire total utility of popcorn curve definitely shifts rightward.

Question 18

Usharani consumes 35 apples a week and 14 loaves of bread. Apples cost $1 each and bread costs $2 per loaf. Usharani is maximizing his utility and finds that the marginal utility from his 35th apple

Accepted Answer

A)  equals his marginal utility from his 14th loaf of bread. 
B)  is twice his marginal utility from his 14th loaf of bread. 
C)  is half his marginal utility from his 14th loaf of bread. 
D)  is such that his total utility from apples equals his total utility from bread. 
A)  equals his marginal utility from his 14th loaf of bread. 
B)  is twice his marginal utility from his 14th loaf of bread. 
C)  is half his marginal utility from his 14th loaf of bread. 
D)  is such that his total utility from apples equals his total utility from bread.

Question 19

Sam consumes only sandwiches and soda and maximizes his total utility. Suppose that the price of a sandwich falls. At the new consumer equilibrium, Sam substitutes ________ for ________. Sam's marginal utility from soda ________ and his marginal utility per dollar spent on sandwiches ________.

Accepted Answer

A)  sandwiches; soda; increases; increases 
B)  soda; sandwiches; decreases; increases 
C)  sandwiches; soda; increases; decreases 
D)  soda; sandwiches; stays the same; stays the same 
A)  sandwiches; soda; increases; increases 
B)  soda; sandwiches; decreases; increases 
C)  sandwiches; soda; increases; decreases 
D)  soda; sandwiches; stays the same; stays the same

Question 20

If Katie purchases two slices of pizza and six breadsticks to maximize her total utility, then

Accepted Answer

A)  a slice of pizza costs three times as much as a breadstick. 
B)  a breadstick costs three times as much as a slice of pizza. 
C)  her marginal utility from the second slice of pizza divided by the price of a slice of pizza is equal to her marginal utility from the sixth breadstick divided by the price of a breadstick. 
D)  Both answers A and C are correct. 
A)  a slice of pizza costs three times as much as a breadstick. 
B)  a breadstick costs three times as much as a slice of pizza. 
C)  her marginal utility from the second slice of pizza divided by the price of a slice of pizza is equal to her marginal utility from the sixth breadstick divided by the price of a breadstick. 
D)  Both answers A and C are correct.

According to a behavioral economists, people are assumed to have the following three impediments that prevent rational choice:

-The above table shows Tammy's total utility from streaming videos and CDs. If Tammy has $110 to spend on videos and CDs and if the price of a streamed video is $10 and the price of a CD is $20, then Tammy maximizes her utility by purchasing

A consumer maximizes total utility when all available income is spent and the

Bianca consumes pizza. Marginal utility theory predicts that when the price of pizza increases

What is the water and diamonds paradox of value and what is its resolution?

The principle of diminishing marginal utility says that

Pizza Pepsi -The table shows Elaine's utility from pizza and Pepsi. If Elaine consumes 2 slices of pizza and 3 Pepsis, her marginal utility from the fourth Pepsi is ________ units.

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. David maximizes his utility by buying only sodas and pizza. He buys 5 sodas and 10 slices of pizza. If the price of a soda increases to $3 each, David will

Jeremiah spends all of his income on oranges and cookies, which are normal goods. If Jeremiah's income decreases, he will buy oranges and cookies. His marginal utility from oranges will and his marginal utility from cookies will .

Tom spends $20 a month on CDs and magazines. The price of a CD is $6 and the price of a magazine is $4. When Tom maximizes his utility, the marginal utility from CDs is ________ the marginal utility from newspapers.

Fritos Fruit drinks -The table above shows the total utility from the two goods Freddy likes to consume. The marginal utility Freddy receives from consuming an extra bag of Fritos

-The table above gives Jane's total utility from magazines and CDs. The price of a magazine is $4 and the price of a CD is $10. Which of the following CORRECTLY illustrates the principle of diminishing marginal utility? The fact that

Emma consumes only hot dogs and hamburgers. She is at her consumer equilibrium. Hot dogs and hamburgers have the same marginal utility. Thus

At Revolution Doughnuts in Fort Collins, Colorado, a cup of coffee or a doughnut is $1. Suppose Hannah loves going to Revolution Doughnuts. Currently, her marginal utility per dollar from doughnuts is 14 and her marginal utility per dollar from coffee is 10. Is Hannah maximizing her total utility?

-Becky decides to spend $50 per month on DVD rentals and movie tickets. Her marginal utility schedules from these two goods are shown in the table above. The price of a DVD rental is $2.50, and the price of a movie ticket is $5. Suppose Becky rents 8 DVDs and buys 6 movie tickets per month. She

When the price of popcorn falls, before there is any change in consumption, the

Usharani consumes 35 apples a week and 14 loaves of bread. Apples cost $1 each and bread costs $2 per loaf. Usharani is maximizing his utility and finds that the marginal utility from his 35th apple

Sam consumes only sandwiches and soda and maximizes his total utility. Suppose that the price of a sandwich falls. At the new consumer equilibrium, Sam substitutes for . Sam's marginal utility from soda and his marginal utility per dollar spent on sandwiches .

If Katie purchases two slices of pizza and six breadsticks to maximize her total utility, then

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 8: Utility and Demand

According to a behavioral economists, people are assumed to have the following three impediments that prevent rational choice:

-The above table shows Tammy's total utility from streaming videos and CDs. If Tammy has $110 to spend on videos and CDs and if the price of a streamed video is $10 and the price of a CD is $20, then Tammy maximizes her utility by purchasing

A consumer maximizes total utility when all available income is spent and the

Bianca consumes pizza. Marginal utility theory predicts that when the price of pizza increases

What is the water and diamonds paradox of value and what is its resolution?

The principle of diminishing marginal utility says that

Pizza Pepsi -The table shows Elaine's utility from pizza and Pepsi. If Elaine consumes 2 slices of pizza and 3 Pepsis, her marginal utility from the fourth Pepsi is ________ units.

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. David maximizes his utility by buying only sodas and pizza. He buys 5 sodas and 10 slices of pizza. If the price of a soda increases to $3 each, David will

Jeremiah spends all of his income on oranges and cookies, which are normal goods. If Jeremiah's income decreases, he will buy ________ oranges and ________ cookies. His marginal utility from oranges will ________ and his marginal utility from cookies will ________.

Tom spends $20 a month on CDs and magazines. The price of a CD is $6 and the price of a magazine is $4. When Tom maximizes his utility, the marginal utility from CDs is ________ the marginal utility from newspapers.

Fritos Fruit drinks -The table above shows the total utility from the two goods Freddy likes to consume. The marginal utility Freddy receives from consuming an extra bag of Fritos

-The table above gives Jane's total utility from magazines and CDs. The price of a magazine is $4 and the price of a CD is $10. Which of the following CORRECTLY illustrates the principle of diminishing marginal utility? The fact that

Emma consumes only hot dogs and hamburgers. She is at her consumer equilibrium. Hot dogs and hamburgers have the same marginal utility. Thus

At Revolution Doughnuts in Fort Collins, Colorado, a cup of coffee or a doughnut is $1. Suppose Hannah loves going to Revolution Doughnuts. Currently, her marginal utility per dollar from doughnuts is 14 and her marginal utility per dollar from coffee is 10. Is Hannah maximizing her total utility?

-Becky decides to spend $50 per month on DVD rentals and movie tickets. Her marginal utility schedules from these two goods are shown in the table above. The price of a DVD rental is $2.50, and the price of a movie ticket is $5. Suppose Becky rents 8 DVDs and buys 6 movie tickets per month. She

When the price of popcorn falls, before there is any change in consumption, the

Usharani consumes 35 apples a week and 14 loaves of bread. Apples cost $1 each and bread costs $2 per loaf. Usharani is maximizing his utility and finds that the marginal utility from his 35th apple

Sam consumes only sandwiches and soda and maximizes his total utility. Suppose that the price of a sandwich falls. At the new consumer equilibrium, Sam substitutes ________ for ________. Sam's marginal utility from soda ________ and his marginal utility per dollar spent on sandwiches ________.

If Katie purchases two slices of pizza and six breadsticks to maximize her total utility, then

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Jeremiah spends all of his income on oranges and cookies, which are normal goods. If Jeremiah's income decreases, he will buy oranges and cookies. His marginal utility from oranges will and his marginal utility from cookies will .

Sam consumes only sandwiches and soda and maximizes his total utility. Suppose that the price of a sandwich falls. At the new consumer equilibrium, Sam substitutes for . Sam's marginal utility from soda and his marginal utility per dollar spent on sandwiches .