Question 1

People who use drive-through windows at restaurants and eat while on the road tend to

Accepted Answer

A)  have a low opportunity cost of time 
B)  have a high opportunity cost of time 
C)  not maximize their utility 
D)  act irrationally 
E)  value their money more than their time 
A)  have a low opportunity cost of time 
B)  have a high opportunity cost of time 
C)  not maximize their utility 
D)  act irrationally 
E)  value their money more than their time B

Question 2

If the marginal utility of each good a consumer buys does not diminish but remains constant, we should see consumers

Accepted Answer

A)  buying no goods at all 
B)  spending all of their income on the good with the highest marginal utility 
C)  buying one unit of each good 
D)  buying only the least expensive good 
E)  leaving the store in total confusion 
A)  buying no goods at all 
B)  spending all of their income on the good with the highest marginal utility 
C)  buying one unit of each good 
D)  buying only the least expensive good 
E)  leaving the store in total confusion B

Question 3

NARRBEGIN: Exhibit 6-13
Exhibit 6-13
  
-Which area in Exhibit 6-13 represents consumer surplus at market equilibrium?

Accepted Answer

A)  area a 
B)  area b 
C)  area c 
D)  areas a + b + c 
E)  areas a + b 
A)  area a 
B)  area b 
C)  area c 
D)  areas a + b + c 
E)  areas a + b A

Question 4

Elvis values the first gravy sandwich at $5, the second at $4.50, the third at $4. If he buys three for $4 each, his consumer surplus is

Accepted Answer

A)  $5 
B)  $4 
C)  $1.50 
D)  $9.50 
E)  $12 
A)  $5 
B)  $4 
C)  $1.50 
D)  $9.50 
E)  $12

Question 5

Your marginal utility of a third waffle is 10 and your marginal utility of a second piece of ham is 30. If you eat the third waffle, which of the following must be true?

Accepted Answer

A)  You are irrational. 
B)  You prefer waffles. 
C)  The price of a waffle is less than one third the price of a piece of ham. 
D)  The price of a waffle is more than the price of a piece of ham. 
E)  The price of a waffle is three times the price of a piece of ham. 
A)  You are irrational. 
B)  You prefer waffles. 
C)  The price of a waffle is less than one third the price of a piece of ham. 
D)  The price of a waffle is more than the price of a piece of ham. 
E)  The price of a waffle is three times the price of a piece of ham.

Question 6

Suppose Enid could increase her total utility by purchasing one more book and one less video rental. Which of the following is true?

Accepted Answer

A)  The marginal utility of video rentals exceeds the marginal utility of books. 
B)  The marginal utility of books exceeds the marginal utility of video rentals. 
C)  The marginal utility of video rentals is negative. 
D)  The marginal utility per dollar spent on books exceeds that of video rentals. 
E)  Total utility is at a maximum. 
A)  The marginal utility of video rentals exceeds the marginal utility of books. 
B)  The marginal utility of books exceeds the marginal utility of video rentals. 
C)  The marginal utility of video rentals is negative. 
D)  The marginal utility per dollar spent on books exceeds that of video rentals. 
E)  Total utility is at a maximum.

Question 7

In terms of utility theory, "equilibrium" in the real world means that

Accepted Answer

A)  households are consuming as much of every commodity as they would like 
B)  households have spent their incomes in such a way that their overall satisfaction is maximized 
C)  households have spent their incomes in such a way that their marginal utility is maximized 
D)  households have spent their incomes in such a way that their marginal utility is zero for every product consumed 
E)  households have spent their incomes in such a way that their total utility is zero 
A)  households are consuming as much of every commodity as they would like 
B)  households have spent their incomes in such a way that their overall satisfaction is maximized 
C)  households have spent their incomes in such a way that their marginal utility is maximized 
D)  households have spent their incomes in such a way that their marginal utility is zero for every product consumed 
E)  households have spent their incomes in such a way that their total utility is zero

Question 8

Suppose Ferd truthfully tells the car dealer the maximum amount he's willing to pay for a Ford Mustang: $20,000. The dealer says, "You're in luck; we have one on the lot for $20,000." Which of the following statements is true?

Accepted Answer

A)  Ferd will not buy the car. 
B)  The car is not worth $20,000. 
C)  Ferd gets $20,000 in consumer surplus. 
D)  Ferd gets no consumer surplus. 
E)  The dealer earns $20,000 in consumer surplus. 
A)  Ferd will not buy the car. 
B)  The car is not worth $20,000. 
C)  Ferd gets $20,000 in consumer surplus. 
D)  Ferd gets no consumer surplus. 
E)  The dealer earns $20,000 in consumer surplus.

Question 9

NARRBEGIN: Exhibit 6-3
Exhibit 6-3
  
-In Exhibit 6-3, the marginal utility of consuming the fourth scone is

Accepted Answer

A)  4 
B)  7 
C)  6 
D)  24 
E)  2 
A)  4 
B)  7 
C)  6 
D)  24 
E)  2

Question 10

NARRBEGIN: Exhibit 6-14
Exhibit 6-14
  
-Exhibit 6-14 shows Reggie's demand for apples. If there are 100 people in this economy, and each has the same demand for apples as Reggie, what is the total quantity demanded in the market for apples at P = $6?

Accepted Answer

A)  600 pounds of apples 
B)  200 pounds of apples 
C)  the average of all the quantities demanded 
D)  the average of all the prices 
E)  the average quantity demanded divided by the average price 
A)  600 pounds of apples 
B)  200 pounds of apples 
C)  the average of all the quantities demanded 
D)  the average of all the prices 
E)  the average quantity demanded divided by the average price

Question 11

NARRBEGIN: Exhibit 6-9
Exhibit 6-9
  
-At point a in Exhibit 6-9, consumer surplus is

Accepted Answer

A)  $0 
B)  $5 
C)  $6 
D)  $20 
E)  $26 
A)  $0 
B)  $5 
C)  $6 
D)  $20 
E)  $26

Question 12

Which of the following statements is true?

Accepted Answer

A)  The money price is usually the same as the time price for most consumers. 
B)  The money price of a good is always greater than the time price. 
C)  The money price is always greater for high-wage earners than for low-wage earners. 
D)  The time price is usually less for low-wage earners than for high-wage earners. 
E)  The time price of a good is directly proportional to the money price. 
A)  The money price is usually the same as the time price for most consumers. 
B)  The money price of a good is always greater than the time price. 
C)  The money price is always greater for high-wage earners than for low-wage earners. 
D)  The time price is usually less for low-wage earners than for high-wage earners. 
E)  The time price of a good is directly proportional to the money price.

Question 13

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 14

"I don't feel so good. I shouldn't have had that last doughnut." Which statement 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 15

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 16

If marginal utility is negative, total utility is negative.

Accepted Answer

A) True 
 B)False

Question 17

After paying admission and entering King's Island Amusement Park near Cincinnati, Alan Fujiwara sees a list of waiting times for each attraction and ride. At this point, Alan's marginal dollar cost is

Accepted Answer

A)  zero and so are the marginal time costs of each attraction or ride 
B)  zero, so he will base his next move on the marginal time costs of each attraction or ride 
C)  greater than zero based on the admission price, so he will base his next move on the marginal time costs of each attraction or ride 
D)  greater than zero based on the admission price, so he will ignore the marginal time costs of each attraction or ride 
E)  less than zero and so are the marginal time costs of each attraction or ride 
A)  zero and so are the marginal time costs of each attraction or ride 
B)  zero, so he will base his next move on the marginal time costs of each attraction or ride 
C)  greater than zero based on the admission price, so he will base his next move on the marginal time costs of each attraction or ride 
D)  greater than zero based on the admission price, so he will ignore the marginal time costs of each attraction or ride 
E)  less than zero and so are the marginal time costs of each attraction or ride

Question 18

Marginal utility is negative only when quantity demanded is negative.

Accepted Answer

A) True 
 B)False

Question 19

Suppose that for Jason the marginal utility of $50-per-serving caviar is 100 and the marginal utility of $1-per-serving 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 20

NARRBEGIN: Exhibit 6-6
Exhibit 6-6
    
-Consider Exhibit 6-6. Which of the following best describes what it reveals about total and marginal utility for baseball game tickets?

Accepted Answer

A)  Marginal utility is constantly pulling total utility down, until eventually it becomes negative. 
B)  Marginal utility is constantly pulling total utility up and will continue to increase total utility as long as the person consumes more goods. 
C)  Marginal utility is constantly pulling total utility up, but by less each time. 
D)  At first marginal utility is positive and pulls total utility up but at a decreasing rate; then marginal utility becomes negative and pulls total utility down. 
E)  At first marginal utility is positive and pulls total utility up, but then it becomes negative and makes total utility become negative as well. 
A)  Marginal utility is constantly pulling total utility down, until eventually it becomes negative. 
B)  Marginal utility is constantly pulling total utility up and will continue to increase total utility as long as the person consumes more goods. 
C)  Marginal utility is constantly pulling total utility up, but by less each time. 
D)  At first marginal utility is positive and pulls total utility up but at a decreasing rate; then marginal utility becomes negative and pulls total utility down. 
E)  At first marginal utility is positive and pulls total utility up, but then it becomes negative and makes total utility become negative as well.

Exam 6: Consumer Choice and Demand

People who use drive-through windows at restaurants and eat while on the road tend to

If the marginal utility of each good a consumer buys does not diminish but remains constant, we should see consumers

NARRBEGIN: Exhibit 6-13 Exhibit 6-13 -Which area in Exhibit 6-13 represents consumer surplus at market equilibrium?

Elvis values the first gravy sandwich at $5, the second at $4.50, the third at $4. If he buys three for $4 each, his consumer surplus is

Your marginal utility of a third waffle is 10 and your marginal utility of a second piece of ham is 30. If you eat the third waffle, which of the following must be true?

Suppose Enid could increase her total utility by purchasing one more book and one less video rental. Which of the following is true?

In terms of utility theory, "equilibrium" in the real world means that

Suppose Ferd truthfully tells the car dealer the maximum amount he's willing to pay for a Ford Mustang: $20,000. The dealer says, "You're in luck; we have one on the lot for $20,000." Which of the following statements is true?

NARRBEGIN: Exhibit 6-3 Exhibit 6-3 -In Exhibit 6-3, the marginal utility of consuming the fourth scone is

NARRBEGIN: Exhibit 6-14 Exhibit 6-14 -Exhibit 6-14 shows Reggie's demand for apples. If there are 100 people in this economy, and each has the same demand for apples as Reggie, what is the total quantity demanded in the market for apples at P = $6?

NARRBEGIN: Exhibit 6-9 Exhibit 6-9 -At point a in Exhibit 6-9, consumer surplus is

Which of the following statements is true?

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

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

Newspaper vending machines illustrate that publishers believe

If marginal utility is negative, total utility is negative.

After paying admission and entering King's Island Amusement Park near Cincinnati, Alan Fujiwara sees a list of waiting times for each attraction and ride. At this point, Alan's marginal dollar cost is

Marginal utility is negative only when quantity demanded is negative.

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

NARRBEGIN: Exhibit 6-6 Exhibit 6-6 -Consider Exhibit 6-6. Which of the following best describes what it reveals about total and marginal utility for baseball game tickets?

The Art and Science of Economic Analysis

Appendix: Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Production and Cost in the Firm

A: Perfect Competition

B: Perfect Competition

A: Monopoly

B: Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

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