Question 1

The marginal utility of a second copy of today's New York Times is

Accepted Answer

A) infinite 
B) practically zero 
C) positive and greater than the marginal utility of the first copy 
D) equal to the marginal utility of the first copy 
E) 50 cents 
A) infinite 
B) practically zero 
C) positive and greater than the marginal utility of the first copy 
D) equal to the marginal utility of the first copy 
E) 50 cents B

Question 2

Joe the Economist tells his wife, Jane, that he wants to spend a weekendfishing with his friends.She replies, "You don't love me anymore." Justbefore she hits Joe with a croquet mallet, Joe explains to her that she hasconfused the concepts of

Accepted Answer

A) marginal utility and price 
B) income and price 
C) marginal utility and total utility 
D) love and death 
E) consumer surplus and utility 
A) marginal utility and price 
B) income and price 
C) marginal utility and total utility 
D) love and death 
E) consumer surplus and utility C

Question 3

Marginal utility is negative only when quantity demanded is negative.

Accepted Answer

A) True 
 B)False  False

Question 4

In order to derive a demand curve for cheese, we would change

Accepted Answer

A) income and hold other things constant 
B) tastes and hold other things constant 
C) the price of other goods and hold everything else constant 
D) the price of cheese and hold other things constant 
E) the price of all goods, including cheese and hold other things constant 
A) income and hold other things constant 
B) tastes and hold other things constant 
C) the price of other goods and hold everything else constant 
D) the price of cheese and hold other things constant 
E) the price of all goods, including cheese and hold other things constant

Question 5

Marginal utility is the

Accepted Answer

A) overall satisfaction obtained from consuming a good 
B) additional satisfaction obtained from consuming one more unit of a good 
C) average satisfaction obtained from consuming a good 
D) the change in satisfaction obtained from consuming 
A) overall satisfaction obtained from consuming a good 
B) additional satisfaction obtained from consuming one more unit of a good 
C) average satisfaction obtained from consuming a good 
D) the change in satisfaction obtained from consuming

Question 6

Negative marginal utility means that

Accepted Answer

A) total utility is also negative 
B) marginal utility increases as additional units are consumed 
C) the price of the product increases as additional units are consumed 
D) the total revenue spent on the product decreases as more of the product is purchased 
E) total utility decreases as additional units are consumed 
A) total utility is also negative 
B) marginal utility increases as additional units are consumed 
C) the price of the product increases as additional units are consumed 
D) the total revenue spent on the product decreases as more of the product is purchased 
E) total utility decreases as additional units are consumed

Question 7

The fact that the washroom usually has paper towels left (free to theconsumer) suggests that the marginal utility of paper towels quicklydiminishes to 0 for each consumer.

Accepted Answer

A) True 
 B)False

Question 8

Newspaper vending machines illustrate that publishers believe

Accepted Answer

A) the average utility of two identical papers is zero or less 
B) the total utility from two identical newspapers is zero or less 
C) the marginal utility of a second identical newspaper is zero or less 
D) the marginal utility of a second identical newspaper is greater than the marginal utility of the first
Newspaper 
E) the total utility from two identical newspapers is less than the total utility from the first newspaper 
A) the average utility of two identical papers is zero or less 
B) the total utility from two identical newspapers is zero or less 
C) the marginal utility of a second identical newspaper is zero or less 
D) the marginal utility of a second identical newspaper is greater than the marginal utility of the first
Newspaper 
E) the total utility from two identical newspapers is less than the total utility from the first newspaper

Question 9

As long as scarcity exists,

Accepted Answer

A) product prices play no role in utility maximization 
B) income plays no role in utility maximization 
C) income and product prices must both be considered in utility maximization 
D) consumers maximize utility by consuming all products until their marginal utility is zero 
E) product prices will be zero 
A) product prices play no role in utility maximization 
B) income plays no role in utility maximization 
C) income and product prices must both be considered in utility maximization 
D) consumers maximize utility by consuming all products until their marginal utility is zero 
E) product prices will be zero

Question 10

Suppose you go to a wedding reception that has free drinks.What is likelyto be the marginal utility of the last drink you had?

Accepted Answer

A) infinite 
B) 0 
C) 1 
D) less than 0 
E) greater than 1 
A) infinite 
B) 0 
C) 1 
D) less than 0 
E) greater than 1

Question 11

The reason that you don't drink five cups of coffee at breakfast is that

Accepted Answer

A) the marginal utility of extra cups of coffee eventually diminishes 
B) most people cannot afford five cups 
C) the total utility of coffee rises as you consume more cups 
D) the price of coffee rises as you buy more cups 
E) the marginal satisfaction derived from cups of coffee remains constant 
A) the marginal utility of extra cups of coffee eventually diminishes 
B) most people cannot afford five cups 
C) the total utility of coffee rises as you consume more cups 
D) the price of coffee rises as you buy more cups 
E) the marginal satisfaction derived from cups of coffee remains constant

Question 12

The law of diminishing marginal utility implies it is possible that themarginal utility of my tenth pistachio nut is less than the marginal utility ofmy third pistachio nut, other things constant.

Accepted Answer

A) True 
 B)False

Question 13

When a consumer spends income so that the ratio of marginal utilities(MUs) of all goods purchased equals the ratio of their prices, the consumeris

Accepted Answer

A) maximizing marginal utility 
B) spending too much on all goods 
C) maximizing total utility 
D) beyond the point of diminishing marginal utility 
E) behaving in opposition to the principal of rational behavior 
A) maximizing marginal utility 
B) spending too much on all goods 
C) maximizing total utility 
D) beyond the point of diminishing marginal utility 
E) behaving in opposition to the principal of rational behavior

Question 14

If other things constant, as more bananas are consumed, marginal utilityeventually

Accepted Answer

A) decreases at the same rate for all people 
B) decreases at the same rate for all goods for a given person 
C) increases at the same rate for all people 
D) decreases at different rates for different people and for other goods 
E) decreases at different rates for different people but at the same rate as other goods for an individual 
A) decreases at the same rate for all people 
B) decreases at the same rate for all goods for a given person 
C) increases at the same rate for all people 
D) decreases at different rates for different people and for other goods 
E) decreases at different rates for different people but at the same rate as other goods for an individual

Question 15

Which of the following varies along a given demand curve?

Accepted Answer

A) consumer preferences 
B) prices of substitutes 
C) prices of complements 
D) the price of the good itself 
E) income 
A) consumer preferences 
B) prices of substitutes 
C) prices of complements 
D) the price of the good itself 
E) income

Question 16

A utility­maximizing consumer equalizes marginal utilities across all goods.

Accepted Answer

A) True 
 B)False

Question 17

"I don't feel so good.I shouldn't have had that last doughnut." Whichstatement best describes this situation?

Accepted Answer

A) The marginal utility of the last doughnut was positive. 
B) The marginal utility of doughnuts is still increasing. 
C) The total utility from eating doughnuts is negative. 
D) The marginal utility of the last doughnut was negative. 
E) The marginal utility of the next doughnut will be positive. 
A) The marginal utility of the last doughnut was positive. 
B) The marginal utility of doughnuts is still increasing. 
C) The total utility from eating doughnuts is negative. 
D) The marginal utility of the last doughnut was negative. 
E) The marginal utility of the next doughnut will be positive.

Question 18

Suppose that for Jason the marginal utility of $50­per­serving caviar is 100and the marginal utility of $1­per­serving popcorn is 10.For his snack,Jason should buy

Accepted Answer

A) the caviar if he has the $50; otherwise the popcorn 
B) the caviar if he has the $50; otherwise nothing 
C) the popcorn, whether he has the $50 or not 
D) one serving each of the caviar and popcorn, if he has $51 
E) five servings of popcorn for each serving of caviar 
A) the caviar if he has the $50; otherwise the popcorn 
B) the caviar if he has the $50; otherwise nothing 
C) the popcorn, whether he has the $50 or not 
D) one serving each of the caviar and popcorn, if he has $51 
E) five servings of popcorn for each serving of caviar

Question 19

Which of the following statements concerning utility is correct?

Accepted Answer

A) It is possible to precisely measure the utility an individual receives from consuming a particular good or
Service 
B) It is always possible to determine whether Dalene or Juloy gets more utility from consuming two units of the
Same good 
C) The utility of goods can be measured while the same is not true for services 
D) Utility is a subjective measure of satisfaction an individual receives from consuming a good or service 
E) It is only useful if there is no scarcity 
A) It is possible to precisely measure the utility an individual receives from consuming a particular good or
Service 
B) It is always possible to determine whether Dalene or Juloy gets more utility from consuming two units of the
Same good 
C) The utility of goods can be measured while the same is not true for services 
D) Utility is a subjective measure of satisfaction an individual receives from consuming a good or service 
E) It is only useful if there is no scarcity

Question 20

If marginal utility is positive, then total utility is

Accepted Answer

A) constant 
B) negative 
C) increasing 
D) decreasing 
E) 0 
A) constant 
B) negative 
C) increasing 
D) decreasing 
E) 0

Exam 6: Consumer Choice and Demand

The marginal utility of a second copy of today's New York Times is

Joe the Economist tells his wife, Jane, that he wants to spend a weekendfishing with his friends.She replies, "You don't love me anymore." Justbefore she hits Joe with a croquet mallet, Joe explains to her that she hasconfused the concepts of

Marginal utility is negative only when quantity demanded is negative.

In order to derive a demand curve for cheese, we would change

Marginal utility is the

Negative marginal utility means that

The fact that the washroom usually has paper towels left (free to theconsumer) suggests that the marginal utility of paper towels quicklydiminishes to 0 for each consumer.

Newspaper vending machines illustrate that publishers believe

As long as scarcity exists,

Suppose you go to a wedding reception that has free drinks.What is likelyto be the marginal utility of the last drink you had?

The reason that you don't drink five cups of coffee at breakfast is that

The law of diminishing marginal utility implies it is possible that themarginal utility of my tenth pistachio nut is less than the marginal utility ofmy third pistachio nut, other things constant.

When a consumer spends income so that the ratio of marginal utilities(MUs) of all goods purchased equals the ratio of their prices, the consumeris

If other things constant, as more bananas are consumed, marginal utilityeventually

Which of the following varies along a given demand curve?

A utility­maximizing consumer equalizes marginal utilities across all goods.

"I don't feel so good.I shouldn't have had that last doughnut." Whichstatement best describes this situation?

Suppose that for Jason the marginal utility of $50­per­serving caviar is 100and the marginal utility of $1­per­serving popcorn is 10.For his snack,Jason should buy

Which of the following statements concerning utility is correct?

If marginal utility is positive, then total utility is

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A utilitymaximizing consumer equalizes marginal utilities across all goods.

Suppose that for Jason the marginal utility of $50perserving caviar is 100and the marginal utility of $1perserving popcorn is 10.For his snack,Jason should buy