Question 1

The table shows a consumer's utility schedule.   Based on the data in the table, you can conclude that the

Accepted Answer

A) marginal utility of the second unit is 14. 
B) total utility of 3 units is 54. 
C) total utility of 4 units is 5. 
D) marginal utility of the fifth unit is 2. 
A) marginal utility of the second unit is 14. 
B) total utility of 3 units is 54. 
C) total utility of 4 units is 5. 
D) marginal utility of the fifth unit is 2.

Question 2

Describe the relationship between raising the marginal cost of crime and the quantity of crime committed. Explain the implications of this relationship as applied to property crimes.

Accepted Answer

The potential criminal compares the marg

Question 3

The table shows a consumer's utility schedule.   Based on the data, you can conclude that the consumer

Accepted Answer

A) receives increasing marginal utility from consuming the first three units. 
B) experiences diminishing marginal utility after consuming the first unit. 
C) experiences diminishing marginal utility only after consuming the fourth unit. 
D) will never consume just one unit of the product. 
A) receives increasing marginal utility from consuming the first three units. 
B) experiences diminishing marginal utility after consuming the first unit. 
C) experiences diminishing marginal utility only after consuming the fourth unit. 
D) will never consume just one unit of the product.

Question 4

A child is given $4 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents and hard candies 80 cents each. The marginal utilities derived from each product are as shown in the following table.   Based on taste and preference alone, which good does the child prefer?

Accepted Answer

A) chocolates 
B) hard candies 
C) The child equally likes chocolates and hard candies. 
D) One cannot tell from the given data. 
A) chocolates 
B) hard candies 
C) The child equally likes chocolates and hard candies. 
D) One cannot tell from the given data.

Question 5

Marginal utility is the

Accepted Answer

A) sensitivity of consumer purchases of a good to changes in the price of that good. 
B) change in total utility obtained by consuming one more unit of a good. 
C) change in total utility obtained by consuming another unit of a good divided by the change in the price of that good. 
D) total utility associated with the consumption of a certain number of units of a good divided by the number of units consumed. 
A) sensitivity of consumer purchases of a good to changes in the price of that good. 
B) change in total utility obtained by consuming one more unit of a good. 
C) change in total utility obtained by consuming another unit of a good divided by the change in the price of that good. 
D) total utility associated with the consumption of a certain number of units of a good divided by the number of units consumed.

Question 6

A consumer is in equilibrium and is spending income in such a way that the marginal utility of product X is 40 units and that of Y is 32 units. If the unit price of X is $5, then the price of Y must be

Accepted Answer

A) $5 per unit. 
B) $4 per unit. 
C) $8 per unit. 
D) $7 per unit. 
A) $5 per unit. 
B) $4 per unit. 
C) $8 per unit. 
D) $7 per unit.

Question 7

A consumer has an income of $200, and the price of X is $5, while the price of Y is $10. If the consumer buys 8 units of X, then the maximum quantity of Y that she could also buy is

Accepted Answer

A) 16 
B) 18 
C) 20 
D) 14 
A) 16 
B) 18 
C) 20 
D) 14

Question 8

Refer to the diagram, in which the downsloping lines are budget lines and I₁, I₂, and I₃ comprise an indifference map. The combinations of products M and N indicated by points 1, 2, and 5 are such that

Accepted Answer

A) point 2 yields more utility than either 1 or 5. 
B) points 1 and 5 yield more utility than point 2. 
C) points 1, 2, and 5 yield equal amounts of utility. 
D) the levels of utility associated with these three points cannot be compared. 
A) point 2 yields more utility than either 1 or 5. 
B) points 1 and 5 yield more utility than point 2. 
C) points 1, 2, and 5 yield equal amounts of utility. 
D) the levels of utility associated with these three points cannot be compared.

Question 9

Assume that a consumer purchases a combination of products Y and Z and that the MU y/ Pᵧ = 48/8 and MU z/ Pz = 30/5. To maximize utility, without spending more money, the consumer should

Accepted Answer

A) purchase less of Z and more of Y. 
B) purchase more of Z and less of Y. 
C) purchase more of both Y and Z. 
D) make no change in the quantities Y and Z. 
A) purchase less of Z and more of Y. 
B) purchase more of Z and less of Y. 
C) purchase more of both Y and Z. 
D) make no change in the quantities Y and Z.

Question 10

The table shows the marginal-utility schedules for goods A and B for a hypothetical consumer. The price of good A is $1, and the price of good B is $2. The income of the consumer is $8.   If the consumer spends the given budget and gets maximum utility out of it, then she is receiving how much satisfaction from each dollar spent on the final unit of good A consumed?

Accepted Answer

A) 14 utils per dollar 
B) 7 utils per dollar 
C) 8 utils per dollar 
D) 4 utils per dollar 
A) 14 utils per dollar 
B) 7 utils per dollar 
C) 8 utils per dollar 
D) 4 utils per dollar

Question 11

Which of the following best explains why most people don't consume units of goods to the point that their marginal utility falls to zero?

Accepted Answer

A) If marginal utility is falling, then total utility is falling. 
B) Consumers face budget constraints that limit how much they can purchase. 
C) Governments tend to limit how much of a good a person is allowed to consume. 
D) The price of a good tends to rise as an individual attempts to purchase more. 
A) If marginal utility is falling, then total utility is falling. 
B) Consumers face budget constraints that limit how much they can purchase. 
C) Governments tend to limit how much of a good a person is allowed to consume. 
D) The price of a good tends to rise as an individual attempts to purchase more.

Question 12

The first Pepsi yields Craig 15 units of utility and the second yields him an additional 13 units of utility. His total utility from threecans of Pepsi is 40 units of utility. The marginal utility of the third Pepsi is

Accepted Answer

A) 27 units of utility. 
B) 28 units of utility. 
C) 12 units of utility. 
D) 40 units of utility. 
A) 27 units of utility. 
B) 28 units of utility. 
C) 12 units of utility. 
D) 40 units of utility.

Question 13

If a consumer has an income of $200, the price of X is $5, and the price of Y is $10, what is the maximum quantity of X the consumer is able to purchase?

Accepted Answer

A) 5 
B) 10 
C) 20 
D) 40 
A) 5 
B) 10 
C) 20 
D) 40

Question 14

Why do people tend to eat more at all-you-can-eat buffet restaurants than at restaurants where each item is purchased separately?

Accepted Answer

A) Once the all-you-can-eat meal is purchased, consumers view additional trips back to the buffet as having a price of zero. 
B) MU/P is consistently greater at all-you-can-eat restaurants. 
C) People who eat at all-you-can-eat restaurants do not experience diminishing marginal utility. 
D) Food at all-you-can-eat restaurants tends to have fewer calories, so consumers feel the need to consume a greater volume of food. 
A) Once the all-you-can-eat meal is purchased, consumers view additional trips back to the buffet as having a price of zero. 
B) MU/P is consistently greater at all-you-can-eat restaurants. 
C) People who eat at all-you-can-eat restaurants do not experience diminishing marginal utility. 
D) Food at all-you-can-eat restaurants tends to have fewer calories, so consumers feel the need to consume a greater volume of food.

Question 15

The table shows an indifference schedule for several combinations of X and Y.   In moving from combination b to c, the consumer

Accepted Answer

A) gets 1 unit of X for 1 unit of Y. 
B) gets 2 units of X for 2 units of Y. 
C) gives up 3 units of X for 1 unit of Y. 
D) gives up 4 units of X for 1 unit of Y. 
A) gets 1 unit of X for 1 unit of Y. 
B) gets 2 units of X for 2 units of Y. 
C) gives up 3 units of X for 1 unit of Y. 
D) gives up 4 units of X for 1 unit of Y.

Question 16

Refer to the diagram. The budget line shift that moves the consumer's equilibrium from point A to point B suggests

Accepted Answer

A) an increase in the demand for product X. 
B) a decrease in the demand for product X. 
C) no change in the demand for product X. 
D) that X is an inferior good. 
A) an increase in the demand for product X. 
B) a decrease in the demand for product X. 
C) no change in the demand for product X. 
D) that X is an inferior good.

Question 17

Which situation is consistent with the law of diminishing marginal utility?

Accepted Answer

A) The more pizza Joe eats, the more he enjoys an additional slice. 
B) The more pizza Joe eats, the less he enjoys an additional slice. 
C) Joe's marginal utility from eating pizza becomes positive after eating three slices. 
D) Joe's marginal utility from eating pizza reaches a maximum when total utility is zero. 
A) The more pizza Joe eats, the more he enjoys an additional slice. 
B) The more pizza Joe eats, the less he enjoys an additional slice. 
C) Joe's marginal utility from eating pizza becomes positive after eating three slices. 
D) Joe's marginal utility from eating pizza reaches a maximum when total utility is zero.

Question 18

Use diminishing marginal utility to explain why millionaires often do not have many homes, even if they can afford it.

Accepted Answer

Millionaires often do not have many home

Question 19

Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2, respectively, and that the consumer's income is $18.   What level of total utility will the utility-maximizing consumer realize?

Accepted Answer

A) 96 utils 
B) 108 utils 
C) 72 utils 
D) 142 utils 
A) 96 utils 
B) 108 utils 
C) 72 utils 
D) 142 utils

Question 20

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $3 and $4, respectively, and that consumer income is $18.   Which of the following price-quantity schedules would represent the demand for X in the $2 and $3 price range?

Accepted Answer

A) option A 
B) option B 
C) option C 
D) option D 
A) option A 
B) option B 
C) option C 
D) option D

Exam 7: Utility Maximization

The table shows a consumer's utility schedule. Based on the data in the table, you can conclude that the

Describe the relationship between raising the marginal cost of crime and the quantity of crime committed. Explain the implications of this relationship as applied to property crimes.

The table shows a consumer's utility schedule. Based on the data, you can conclude that the consumer

A child is given $4 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents and hard candies 80 cents each. The marginal utilities derived from each product are as shown in the following table. Based on taste and preference alone, which good does the child prefer?

Marginal utility is the

A consumer is in equilibrium and is spending income in such a way that the marginal utility of product X is 40 units and that of Y is 32 units. If the unit price of X is $5, then the price of Y must be

A consumer has an income of $200, and the price of X is $5, while the price of Y is $10. If the consumer buys 8 units of X, then the maximum quantity of Y that she could also buy is

Refer to the diagram, in which the downsloping lines are budget lines and I₁, I₂, and I₃ comprise an indifference map. The combinations of products M and N indicated by points 1, 2, and 5 are such that

Assume that a consumer purchases a combination of products Y and Z and that the MU y/ Pᵧ = 48/8 and MU z/ Pz = 30/5. To maximize utility, without spending more money, the consumer should

Which of the following best explains why most people don't consume units of goods to the point that their marginal utility falls to zero?

The first Pepsi yields Craig 15 units of utility and the second yields him an additional 13 units of utility. His total utility from threecans of Pepsi is 40 units of utility. The marginal utility of the third Pepsi is

If a consumer has an income of $200, the price of X is $5, and the price of Y is $10, what is the maximum quantity of X the consumer is able to purchase?

Why do people tend to eat more at all-you-can-eat buffet restaurants than at restaurants where each item is purchased separately?

The table shows an indifference schedule for several combinations of X and Y. In moving from combination b to c, the consumer

Refer to the diagram. The budget line shift that moves the consumer's equilibrium from point A to point B suggests

Which situation is consistent with the law of diminishing marginal utility?

Use diminishing marginal utility to explain why millionaires often do not have many homes, even if they can afford it.

Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2, respectively, and that the consumer's income is $18. What level of total utility will the utility-maximizing consumer realize?

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $3 and $4, respectively, and that consumer income is $18. Which of the following price-quantity schedules would represent the demand for X in the $2 and $3 price range?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

Elasticity

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

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The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

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Immigration

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The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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Assume that a consumer purchases a combination of products Y and Z and that the MU y/ Pᵧ = 48/8 and MU z/ P_z = 30/5. To maximize utility, without spending more money, the consumer should