Question 1

Which one of the following is not true in consumer equilibrium?

Accepted Answer

A) The total utilities of all goods are equal. 
B) The consumer is maximizing utility, given her income and the prices of goods and services. 
C) The marginal utility per dollar is equal for all goods. 
D) Given prices and her income, the consumer finds that any other choice of goods to consume would lower her utility. 
E) The consumer will not change her choices unless prices or income change. 
A) The total utilities of all goods are equal. 
B) The consumer is maximizing utility, given her income and the prices of goods and services. 
C) The marginal utility per dollar is equal for all goods. 
D) Given prices and her income, the consumer finds that any other choice of goods to consume would lower her utility. 
E) The consumer will not change her choices unless prices or income change.

Question 2

What is marginal utility?

Accepted Answer

A) the change in total utility divided by the price of a good 
B) the maximum amount of satisfaction from consuming a good 
C) the total satisfaction received from consuming as much of the good that is available for consumption 
D) the additional satisfaction received from consuming one more unit of a good 
E) the change in the price of a good divided by the change in total utility 
A) the change in total utility divided by the price of a good 
B) the maximum amount of satisfaction from consuming a good 
C) the total satisfaction received from consuming as much of the good that is available for consumption 
D) the additional satisfaction received from consuming one more unit of a good 
E) the change in the price of a good divided by the change in total utility

Question 3

Use the table below to answer the following questions.
Table 8.2.1
  
-Refer to Table 8.2.1.Consider Sam's utility from sailing and skiing.The price of sailing is $10 per hour and the price of skiing is $20 per hour; Sam's income to spend on these activities is $80.In consumer equilibrium, Sam will sail for

Accepted Answer

A) 3 hours and ski for 2 hours. 
B) 2 hours and ski for 4 hours. 
C) 4 hours. 
D) 4 hours and ski for 2 hours. 
E) 8 hours. 
A) 3 hours and ski for 2 hours. 
B) 2 hours and ski for 4 hours. 
C) 4 hours. 
D) 4 hours and ski for 2 hours. 
E) 8 hours.

Question 4

Gene plays another hour of computer games rather than study for the hour even though he knows that the next day when he takes his test he will regret his decision.Gene is showing

Accepted Answer

A) the endowment effect. 
B) bounded rationality. 
C) bounded self-interest. 
D) bounded willpower. 
E) bad judgment. 
A) the endowment effect. 
B) bounded rationality. 
C) bounded self-interest. 
D) bounded willpower. 
E) bad judgment.

Question 5

Use the table below to answer the following question.
Table 8.2.5
  
-Refer to Table 8.2.5.Cindy enjoys golf and tennis.The table shows the marginal utility she gets from each activity. Cindy has $70 a month to spend, and she can spend as much time as she likes on her leisure pursuits.The price of an hour of golf is $10, and the price of an hour of tennis is $5.
Cindy decides to golf for 5 hours a month and play tennis for 4 hours a month.
If Cindy spends a dollar more on golf and a dollar less on tennis, her total utility ________.
If Cindy spends a dollar less on golf and a dollar more on tennis, her total utility ________.

Accepted Answer

A) decreases; decreases 
B) increases; decreases 
C) decreases; increases 
D) increases; increases 
E) does not change; does not change 
A) decreases; decreases 
B) increases; decreases 
C) decreases; increases 
D) increases; increases 
E) does not change; does not change

Question 6

The first can of Sprite Jack drinks give him 22 units of utility and the second can gives him an additional 12 units of utility.How many units of utility do the two cans of Sprite give Jack?

Accepted Answer

A) 17 
B) 46 
C) 34 
D) 2 
E) 36 
A) 17 
B) 46 
C) 34 
D) 2 
E) 36

Question 7

If income rises, then in the new consumer equilibrium

Accepted Answer

A) the marginal utility from normal goods increases. 
B) the marginal utility from normal goods decreases. 
C) the marginal utility from inferior goods increases. 
D) total utility from inferior goods increases. 
E) both B and C 
A) the marginal utility from normal goods increases. 
B) the marginal utility from normal goods decreases. 
C) the marginal utility from inferior goods increases. 
D) total utility from inferior goods increases. 
E) both B and C

Question 8

According to the principle of diminishing marginal utility, as consumption of a good increases, total utility

Accepted Answer

A) decreases and then eventually increases. 
B) decreases at an increasing rate. 
C) decreases at a decreasing rate. 
D) increases at an increasing rate. 
E) increases at a decreasing rate. 
A) decreases and then eventually increases. 
B) decreases at an increasing rate. 
C) decreases at a decreasing rate. 
D) increases at an increasing rate. 
E) increases at a decreasing rate.

Question 9

Shelley is maximizing utility in her consumption of mansions and Porsches.If the marginal utility of her last purchased mansion is twice the marginal utility of her last purchased Porsche, then we know

Accepted Answer

A) Shelley buys twice as many mansions as Porsches. 
B) Shelley buys twice as many Porsches as mansions. 
C) Shelley buys more Porsches than mansions, but we do not know how many more. 
D) the price of a mansion is twice the price of a Porsche. 
E) the price of a Porsche is twice the price of a mansion. 
A) Shelley buys twice as many mansions as Porsches. 
B) Shelley buys twice as many Porsches as mansions. 
C) Shelley buys more Porsches than mansions, but we do not know how many more. 
D) the price of a mansion is twice the price of a Porsche. 
E) the price of a Porsche is twice the price of a mansion.

Question 10

Marginal utility theory derives

Accepted Answer

A) an upward-sloping demand curve. 
B) a downward-sloping demand curve. 
C) an upward-sloping supply curve. 
D) a downward-sloping supply curve. 
E) a vertical supply curve. 
A) an upward-sloping demand curve. 
B) a downward-sloping demand curve. 
C) an upward-sloping supply curve. 
D) a downward-sloping supply curve. 
E) a vertical supply curve.

Question 11

Ron starts out in consumer equilibrium, consuming two goods, X and Y.The price of Y rises.Immediately after the rise in price

Accepted Answer

A) MUX/PX > MUY/PY, and then Ron increases his consumption of Y. 
B) MUX/PX > MUY/PY, and then Ron decreases his consumption of Y. 
C) MUX/PX  MUY/PY, and then Ron increases his consumption of X and Y. 
A) MUX/PX > MUY/PY, and then Ron increases his consumption of Y. 
B) MUX/PX > MUY/PY, and then Ron decreases his consumption of Y. 
C) MUX/PX  MUY/PY, and then Ron increases his consumption of X and Y.

Question 12

If the marginal utilities from two goods are not equal, then the consumer

Accepted Answer

A) cannot be in equilibrium. 
B) should increase consumption of the good with the lower marginal utility. 
C) should decrease consumption of the good with the lower marginal utility. 
D) may possibly be in equilibrium. 
E) will definitely be in equilibrium. 
A) cannot be in equilibrium. 
B) should increase consumption of the good with the lower marginal utility. 
C) should decrease consumption of the good with the lower marginal utility. 
D) may possibly be in equilibrium. 
E) will definitely be in equilibrium.

Question 13

Neuroeconomics studies all of the following concepts except

Accepted Answer

A) the prefrontal cortex. 
B) the hippocampus. 
C) the production possibilities frontier. 
D) dopamine. 
E) anxiety and fear. 
A) the prefrontal cortex. 
B) the hippocampus. 
C) the production possibilities frontier. 
D) dopamine. 
E) anxiety and fear.

Question 14

Billy likes chocolate bars and popcorn.Chocolate bars sell for $1.50 each and popcorn sells for $3 a bag.Currently he is in consumer equilibrium with marginal utility per dollar on popcorn equal to 100.What is the marginal utility per dollar on chocolate bars?

Accepted Answer

A) 50 
B) 100 
C) 200 
D) 25 
E) 0.5 
A) 50 
B) 100 
C) 200 
D) 25 
E) 0.5

Question 15

Which one of the following is not an assumption of marginal utility theory?

Accepted Answer

A) People derive utility from their consumption. 
B) More consumption yields more total utility. 
C) Utility can be measured. 
D) Marginal utility diminishes with more consumption. 
E) Consumers maximize total utility. 
A) People derive utility from their consumption. 
B) More consumption yields more total utility. 
C) Utility can be measured. 
D) Marginal utility diminishes with more consumption. 
E) Consumers maximize total utility.

Question 16

Ron starts out in consumer equilibrium, consuming two goods, X and Y.Ron's income rises.At this point, we can definitely conclude that

Accepted Answer

A) MUX/PX > MUY/PY, and then Ron increases his consumption of X. B) MUX/PX > MUY/PY, and then Ron decreases his consumption of X. C) MUX/PX < MUY/PY, and then Ron increases his consumption of X. D) MUX/PX < MUY/PY, and then Ron decreases his consumption of X. E) none of the above. A) MUX/PX > MUY/PY, and then Ron increases his consumption of X. B) MUX/PX > MUY/PY, and then Ron decreases his consumption of X. C) MUX/PX < MUY/PY, and then Ron increases his consumption of X. D) MUX/PX < MUY/PY, and then Ron decreases his consumption of X. E) none of the above.

Question 17

Use the table below to answer the following questions.
Table 8.1.1
  
-Refer to Table 8.1.1.The value of B is

Accepted Answer

A) 30. 
B) 47. 
C) 42. 
D) 18. 
E) 0. 
A) 30. 
B) 47. 
C) 42. 
D) 18. 
E) 0.

Question 18

John likes to eat apples, oranges, and pears.If John increases his consumption of oranges, ceteris paribus, marginal utility theory tell us that John's marginal utility of

Accepted Answer

A) oranges decreases. 
B) apples decreases. 
C) pears decreases. 
D) oranges remains constant. 
E) oranges, apples, and pears all decrease. 
A) oranges decreases. 
B) apples decreases. 
C) pears decreases. 
D) oranges remains constant. 
E) oranges, apples, and pears all decrease.

Question 19

Use the table below to answer the following questions.
Windsurfing equipment rents for $10 per hour and snorkeling equipment rents for $5 per hour.
Table 8.2.1
  
-Consider Devon's total utility from snorkeling and windsurfing in Table 8.2.1.Suppose Devon's total income is $35.If the price of windsurfing rises to $20 per hour, what is Devon's elasticity of demand for windsurfing?

Accepted Answer

A) 1.0 
B) 0.67 
C) 1.5 
D) 10 
E) 1.33 
A) 1.0 
B) 0.67 
C) 1.5 
D) 10 
E) 1.33

Question 20

Suppose a consumer spends all his income.His marginal utility per dollar on X is 4 and marginal utility per dollar on Y is 2.We know that

Accepted Answer

A) utility can be increased by increasing the consumption of X and decreasing the consumption of Y. 
B) utility can be increased by decreasing the consumption of X and increasing the consumption of Y. 
C) the price of Y must be eight times the price of X. 
D) utility is maximized. 
E) the price of Y must be one-third the price of X. 
A) utility can be increased by increasing the consumption of X and decreasing the consumption of Y. 
B) utility can be increased by decreasing the consumption of X and increasing the consumption of Y. 
C) the price of Y must be eight times the price of X. 
D) utility is maximized. 
E) the price of Y must be one-third the price of X.

Which one of the following is not true in consumer equilibrium?

What is marginal utility?

Gene plays another hour of computer games rather than study for the hour even though he knows that the next day when he takes his test he will regret his decision.Gene is showing

The first can of Sprite Jack drinks give him 22 units of utility and the second can gives him an additional 12 units of utility.How many units of utility do the two cans of Sprite give Jack?

If income rises, then in the new consumer equilibrium

According to the principle of diminishing marginal utility, as consumption of a good increases, total utility

Shelley is maximizing utility in her consumption of mansions and Porsches.If the marginal utility of her last purchased mansion is twice the marginal utility of her last purchased Porsche, then we know

Marginal utility theory derives

Ron starts out in consumer equilibrium, consuming two goods, X and Y.The price of Y rises.Immediately after the rise in price

If the marginal utilities from two goods are not equal, then the consumer

Neuroeconomics studies all of the following concepts except

Billy likes chocolate bars and popcorn.Chocolate bars sell for $1.50 each and popcorn sells for $3 a bag.Currently he is in consumer equilibrium with marginal utility per dollar on popcorn equal to 100.What is the marginal utility per dollar on chocolate bars?

Which one of the following is not an assumption of marginal utility theory?

Ron starts out in consumer equilibrium, consuming two goods, X and Y.Ron's income rises.At this point, we can definitely conclude that

Use the table below to answer the following questions. Table 8.1.1 -Refer to Table 8.1.1.The value of B is

John likes to eat apples, oranges, and pears.If John increases his consumption of oranges, ceteris paribus, marginal utility theory tell us that John's marginal utility of

Suppose a consumer spends all his income.His marginal utility per dollar on X is 4 and marginal utility per dollar on Y is 2.We know that

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Filters

Exam 8: Utility and Demand

Which one of the following is not true in consumer equilibrium?

What is marginal utility?

Gene plays another hour of computer games rather than study for the hour even though he knows that the next day when he takes his test he will regret his decision.Gene is showing

The first can of Sprite Jack drinks give him 22 units of utility and the second can gives him an additional 12 units of utility.How many units of utility do the two cans of Sprite give Jack?

If income rises, then in the new consumer equilibrium

According to the principle of diminishing marginal utility, as consumption of a good increases, total utility

Shelley is maximizing utility in her consumption of mansions and Porsches.If the marginal utility of her last purchased mansion is twice the marginal utility of her last purchased Porsche, then we know

Marginal utility theory derives

Ron starts out in consumer equilibrium, consuming two goods, X and Y.The price of Y rises.Immediately after the rise in price

If the marginal utilities from two goods are not equal, then the consumer

Neuroeconomics studies all of the following concepts except

Billy likes chocolate bars and popcorn.Chocolate bars sell for $1.50 each and popcorn sells for $3 a bag.Currently he is in consumer equilibrium with marginal utility per dollar on popcorn equal to 100.What is the marginal utility per dollar on chocolate bars?

Which one of the following is not an assumption of marginal utility theory?

Ron starts out in consumer equilibrium, consuming two goods, X and Y.Ron's income rises.At this point, we can definitely conclude that

Use the table below to answer the following questions. Table 8.1.1 -Refer to Table 8.1.1.The value of B is

John likes to eat apples, oranges, and pears.If John increases his consumption of oranges, ceteris paribus, marginal utility theory tell us that John's marginal utility of

Suppose a consumer spends all his income.His marginal utility per dollar on X is 4 and marginal utility per dollar on Y is 2.We know that

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Filters