Deck 7: Demand: Consumer Choice

Question 1

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
As a consumer eats additional pieces of pizza, total utility will _____.

A)always keep increasing
B)always keep decreasing
C)keep increasing until dissatisfaction sets in
D)keep decreasing until dissatisfaction sets in
E)initially keep decreasing until it becomes zero and then increase

Answer 1

keep increasing until dissatisfaction sets in

Question 2

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
To economists, feelings such as peace, serenity, religious devotion, and self-esteem are captured in the concept known as _____.

A)rational self-interest
B)utility
C)profit
D)total revenue
E)surplus

Answer 2

utility

Question 3

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
_____ is a measure of the total satisfaction derived from consuming a quantity of some good or service.

A)Disutility
B)Diminishing marginal utility
C)Total utility
D)Marginal utility
E)Ordinal utility

Answer 3

Total utility

Question 4

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
The prices that people are willing to pay for goods and services mostly depend on:

A)the total utility derived from the goods and services.
B)the marginal utility derived from the goods and services.
C)the availability of raw materials for producing the goods and services.
D)the cost of producing the goods and services.
E)whether the goods are legal, since the laws affect the position of both supply and demand curves.

Question 5

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
Suppose you go out with your friend for coffee and donuts at the local donut store. The first donut you eat tastes incredibly good. The second one also tastes pretty good. The third donut seems just okay. With the fourth donut you are turning somewhat green. The fifth donut makes you sick. Your friend, an economist, describes your experience as the principle of:

A)utility maximization.
B)irrationality in consumer behavior.
C)instant gratification.
D)differing tastes and preferences.
E)diminishing marginal utility.

Question 6

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
Marginal utility is _____.

A)always greater than total utility
B)utility that is not as good as normal utility
C)the extra utility derived from consuming one additional unit of a good or service
D)always positive
E)not related to total utility

Question 7

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
_____ is the change in total utility that occurs because one more unit of a good is consumed or acquired.

A)Total utility
B)Marginal utility
C)Disutility
D)Diminishing marginal utility
E)Expected utility

Question 8

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
If a consumer purchases more of a product, then most likely the marginal utility of _____.

A)that product decreases
B)that product remains the same
C)other products decrease
D)other products increase
E)that product increases

Question 9

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
When attempting to explain why a consumer purchases a Ford automobile instead of a Honda automobile, or a Compaq computer instead of an IBM computer, an economist would assert:

A)that the consumer is making a decision based on what gives him maximum utility.
B)that everyone knows Hondas are superior to Fords; the consumer cannot possibly be maximizing his utility.
C)that everyone knows IBM computers are superior to Compaq computers; the consumer may be maximizing his utility at the margin, but is not maximizing total utility.
D)that there is no standard explanation for consumer choices because consumers have varied tastes and preferences.
E)that since rationality is bounded by lack of information, a consumer purchases goods based on convenience rather than on utility maximization.

Question 10

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
Total utility is determined by:

A)multiplying the quantity purchased of a good by the price of the good.
B)finding the additional utility gained from consuming one more unit of a product.
C)summing the marginal utilities for each successive units of a product consumed.
D)summing the number of units of a good consumed.
E)dividing the marginal utility derived from consuming a good by its price.

Question 11

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
The additional satisfaction that a consumer receives from one more unit of a good or service is known as _____.

A)marginal utility
B)total utility
C)disutility
D)profit
E)the law of diminishing marginal utility

Question 12

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
If the marginal utility of a product is diminishing relative to the marginal utility of other products, then _____.

A)the consumer is in equilibrium
B)the consumer has been purchasing relatively less of the product
C)the consumer has been purchasing relatively more of the product
D)the price of the product must have increased
E)the price of the product must have decreased

Question 13

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
When economists describe the theory of consumer choice, they

A)portray people as simple and methodical with perfectly predictable patterns of behavior.
B)assert that consumer's decisions are based on which goods and services give them the greatest utility within their limited incomes.
C)point out that consumers rarely consider utility in their purchase decisions; they look at other factors like convenience, peer behavior, and price.
D)assert that the retail price is the only variable consumers really consider in making their purchasing decisions.
E)admit that consumer behavior is random and there is no credible economic theory to explain the phenomenon.

Question 14

The table given below depicts the total utility derived from the consumption of a good.Table 7.1

According to Table 7.1, the total utility from consuming all 5 units is _____ utils.

A)13
B)55
C)64
D)188
E)303

Question 15

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
When the marginal utility derived from a good is negative, total utility is _____.

A)increasing
B)at a minimum
C)equal to zero
D)decreasing
E)at a maximum

Question 16

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
Due to the law of diminishing marginal utility, _____.

A)the first unit of a product offers more satisfaction than the last unit of the same product
B)the marginal utility curve is upward sloping
C)when marginal utility becomes negative, total utility increases
D)marginal utility is zero when total utility is zero
E)when marginal utility becomes positive, total utility declines

Question 17

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
Utility is most closely defined as _____.

A)the purchasing power of individuals
B)welfare maximization
C)a medium of exchange
D)satisfaction
E)an opportunity cost

Question 18

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
The law of diminishing marginal utility states that:

A)the marginal utility of the last unit consumed of any good is less than the marginal utility of all other products consumed.
B)as more of a good or service is consumed, the marginal utility derived from it, relative to other products, increases.
C)as more of a good or service is consumed, the marginal utility derived from it decreases.
D)as more of a good or service is consumed, the marginal utility derived from it, relative to other products, remains the same.
E)the marginal utility of all products consumed must be equal.

Question 19

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
_____ is the lack of satisfaction yielded after consuming too much of the same product.

A)Ordinal utility
B)Disutility
C)Total utility
D)Marginal utility
E)Cardinal utility

Question 20

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10.
Total utility is maximized when _____.

A)the marginal utility is maximized
B)the marginal utility is the same for all goods consumed
C)the marginal utility per dollar expenditure is maximized
D)the marginal utility per dollar expenditure is the same for all goods consumed
E)any change in purchases from good A to good B reduces marginal satisfaction

Question 21

The table given below depicts the total utility derived from the consumption of a good.Table 7.1

When total utility is at a maximum, marginal utility is:

A)increasing.
B)at a minimum.
C)equal to zero.
D)decreasing.
E)at a maximum.

Question 22

The table given below depicts the total utility derived from the consumption of a good.Table 7.1

Which one of the following is based on the idea that the marginal utility of income diminishes as income increases?

A)Progressive taxation
B)Capital controls
C)Minimum wages
D)Price controls
E)Employee compensation regulations

Question 23

The table given below depicts the total utility derived from the consumption of a good.Table 7.1

In the theory of utility, it is assumed that marginal utility:

A)increases as the consumption of a product increases.
B)is always zero irrespective of any increase or decrease in consumption.
C)remains constant when consumption of a product increases.
D)diminishes as the consumption of a product increases.
E)remains constant when the consumption of a product decreases.

Question 24

The table given below records the total utility derived from the consumption of avocados.Table 7.2

According to Table 7.2, marginal utility is positive _____.

A)for any number of avocados
B)for up to five avocados
C)for one or two avocados
D)only after five avocados are consumed
E)for the first four avocados

Question 25

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

Refer to Table 7.3. Which of the following statements is false?

A)The consumer prefers the first unit of B to the first unit of A
B)The consumer prefers the sixth unit of A to the sixth unit of B
C)The marginal utility from the consumption of the fourth unit of A is 3
D)The marginal utility from the consumption of the second unit of B is 7
E)The marginal utility from the consumption of the second unit of A is 9

Question 26

The table given below depicts the total utility derived from the consumption of a good.Table 7.1

According to Table 7.1, which of the following units of the good yields disutility?

A)Units 1 and 4
B)Units 2 and 3
C)Unit 3
D)Units 3, 4, and 5
E)Units 4 and 5

Question 27

The table given below depicts the total utility derived from the consumption of a good.Table 7.1

If total utility increases by smaller and smaller amounts as more units of a product are consumed, then marginal utility is:

A)decreasing and is a negative amount.
B)decreasing and is a positive amount.
C)zero.
D)increasing and is a negative amount.
E)increasing and is a positive amount.

Question 28

The table given below depicts the total utility derived from the consumption of a good.Table 7.1

When marginal utility is positive and increasing, then

A)total utility must be negative.
B)total utility must be increasing at an increasing rate.
C)total utility must be increasing at a decreasing rate.
D)total utility is decreasing.
E)total utility is at its maximum point.

Question 29

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

Refer to Table 7.3. The total utility of the third unit of A is _____ utils.

A)15
B)12
C)21
D)20
E)7

Question 30

The table given below depicts the total utility derived from the consumption of a good.Table 7.1

The total utility of a consumer diminishes whenever:

A)he or she buys an additional unit of a good.
B)his or her marginal utility decreases.
C)his or her total utility increases at a decreasing rate.
D)the last unit consumed of a particular good is distasteful or provides dissatisfaction.
E)other consumers are also purchasing the product.

Question 31

The table given below records the total utility derived from the consumption of avocados.Table 7.2

According to Table 7.2, the marginal utility of the third avocado is _____ utils.

A)12
B)8
C)48
D)18
E)4

Question 32

The table given below depicts the total utility derived from the consumption of a good.Table 7.1

Which of the following statements about marginal utility is correct?

A)When marginal utility is negative, an increase in the quantity will increase total utility.
B)When marginal utility is decreasing, an increase in quantity will decrease total utility.
C)When marginal utility is positive, an increase in quantity will decrease total utility.
D)When marginal utility is zero, an increase in quantity will leave total utility unchanged.
E)When total utility is increasing, marginal utility will be negative.

Question 33

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

Refer to Table 7.3. Marginal utility diminishes for good A from the _____ unit.

A)6^th
B)4^th
C)3^rd
D)2^nd
E)1^st

Question 34

The table given below depicts the total utility derived from the consumption of a good.Table 7.1

If one were to plot the data from Table 7.1 (with utility on the vertical axis and quantity of the good on the horizontal axis):

A)the total utility curve would begin to decline after the second unit of the good.
B)the marginal utility curve would begin to decline after the third unit of the good.
C)the marginal utility curve would intersect the horizontal axis at the third unit of the good.
D)the marginal utility curve would intersect the horizontal axis at the second unit of the good.
E)the total utility curve would rise from the first unit to the fifth unit.

Question 35

The table given below depicts the total utility derived from the consumption of a good.Table 7.1

According to Table 7.1, marginal utility _____.

A)increases from the first unit to the third unit and then declines
B)decreases from the third unit to the fifth unit only
C)increases from the first unit to the third unit and decreases from the third unit to the fifth unit
D)decreases from the first unit to the fifth unit
E)increases from the fourth unit

Question 36

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

According to the law of diminishing utility, _____.

A)the same tax rate should be applied to every dollar
B)the rich people should have a lower tax rate as compared to poor people
C)the rich people should have a higher tax rate as compared to poor people
D)the total burden on the society from a tax will be less if proportional taxation is used
E)the poorer people should not be taxed at all

Question 37

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

Refer to Table 7.3. The marginal utility of the fourth unit of B is _____ utils.

A)5
B)4
C)3
D)-2
E)1

Question 38

The table given below records the total utility derived from the consumption of avocados.Table 7.2

Refer to Table 7.2. The law of diminishing marginal utility holds _____.

A)for any number of avocados
B)up to five avocados
C)only for one or two avocados
D)only after five avocados are consumed
E)for the first three avocados

Question 39

The table given below depicts the total utility derived from the consumption of a good.Table 7.1

Marginal utility diminishes more quickly:

A)the less durable the good is.
B)the greater the number of consumers consuming the good.
C)the shorter the time period between two successive consumptions.
D)the greater the number of firms producing the good.
E)the cheaper the good is.

Question 40

The table given below records the total utility derived from the consumption of avocados.Table 7.2

According to Table 7.2, marginal utility is negative _____.

A)for any number of avocados
B)up to five avocados
C)only for one or two avocados
D)only after five avocados are consumed
E)only after the first avocado is consumed

Question 41

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

Suppose the prices of goods X, Y, and Z are $4, $1, and $5, respectively, and the last unit purchased of good X has a marginal utility MU_x = 16 utils. At the point of equilibrium, the marginal utility of the last unit purchased of goods Y and Z will be:

A)MU_y = 16 utils and MU_z = 16 utils, respectively.
B)MU_y = 8 utils and MU_z = 2 utils, respectively.
C)MU_y = 4 utils and MU_z = 20 utils, respectively.
D)MU_y = 2 utils and MU_z = 4 utils, respectively.
E)MU_y = 12 utils and MU_z = 20 utils, respectively.

Question 42

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

A ten-year-old boy spent his allowance on a soccer ball and a baseball glove. He said he could not be happier buying anything else. The price of the ball was $5, while the price of the glove was $10. If the marginal utility he received from the ball was 15 utils, then:

A)the marginal utility he received from expenditure on the glove was 3 utils.
B)the marginal utility he received from expenditure on the glove was 30 utils.
C)the total utility per dollar he received from expenditure on the glove was 3 utils.
D)the total utility per dollar he received from expenditure on the glove was 10 utils.
E)the marginal utility he received from the expenditure of the glove was 10 utils

Question 43

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

As long as the marginal utilities per dollar obtained from the last unit of all products consumed are the same, _____.

A)the consumer is in equilibrium and will not reallocate income
B)the consumer is not in equilibrium and will reallocate income
C)the consumer is most likely operating a budget deficit
D)the consumer is not maximizing utility
E)the government will recognize this as an intolerable disequilibrium and will most likely intervene by imposing a tax and reallocate the consumer's income

Question 44

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

The equimarginal principle illustrates:

A)that consumers are essentially robots.
B)that people behave irrationally.
C)that people behave in rather consistent ways in order to maximize happiness.
D)that people behave in rather inconsistent ways.
E)that people will spend all their incomes.

Question 45

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

An "all you can eat" restaurant illustrates the economic principle:

A)of consumers' inability to maximize their total utility.
B)that economic theory clearly breaks down under certain circumstances.
C)that marginal utility is always positive.
D)that consumers will stop eating when marginal utility is zero.
E)that consumers will stop eating when total utility is zero.

Question 46

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

Jen spent her weekly allowance of $110 on clothes and cosmetics. Assume that she had allocated $100 to shoes and $10 to lipsticks and is in equilibrium. What can you conclude from her purchase decisions?

A)She likes shoes ten times as much as she likes lipsticks
B)Jen liked the last pair of shoes ten times as much as the last tube of lipstick
C)Jen purchased hundred pairs of shoes for each tube of lipstick
D)She likes lipsticks ten times as much as she likes shoes
E)She purchased one pair of shoes for each tube of lipstick

Question 47

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

Because incomes are limited, purchasing one thing means not being able to purchase other things. This indicates that:

A)marginal utility diminishes.
B)marginal utility is constant.
C)people will allocate their income among goods so as to achieve the most satisfaction.
D)people will allocate their income among goods so that the marginal utilities of all goods is equal.
E)people will allocate their income among goods so that the marginal utilities of all goods is zero.

Question 48

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

In economic theory, the idea of the equimarginal principle, or consumer equilibrium, means:

A)consumers appear to be similar in their buying habits, which explains why prices are almost always in equilibrium.
B)to maximize utility, consumers allocate all of their incomes among goods so as to equate the total utility of all units of goods purchased.
C)to maximize utility, consumers must allocate their scarce incomes among only the cheapest products available.
D)to maximize utility, consumers must allocate their scarce incomes among goods so as to equate the marginal utilities per dollar of expenditure on the last unit of each good purchased.
E)the marginal utilities among luxury goods are always equal among certain high-income earners.

Question 49

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

In order to maximize utility, consumers _____.

A)continue to make purchases until the marginal utility of each good is zero
B)compare the marginal utilities of the last dollar spent on each good
C)equate the total utilities of each good consumed
D)continue to purchase a good until total utility is equal to zero
E)will continue purchasing till diminishing marginal utility is not achieved

Question 50

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

It is often observed that, over the same period of time and for the same good, marginal utility declines rapidly for some consumers and very little for others. This observation illustrates:

A)that economic theory is of little value in explaining consumer behavior.
B)that consumers are not identical.
C)tastes and preferences should not be included in any discussion of consumer choice.
D)tastes and preferences among consumers are quite similar.
E)that if consumers weren't identical, economic theory would not be able to provide insight into consumer behavior.

Question 51

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

Derek has $1 to spend at the grocery store. An apple, an orange, and a banana cost $0.50 each. If Derek's MU_A/P_A (ratio of marginal utility to price) of an apple is 45, MU_O/P_O of an orange is 38, and MU_B/P_B of a banana is 52, he will purchase a(n) _____ first and a(n) _____ second.

A)apple; orange
B)orange; apple
C)banana; orange
D)banana; apple
E)orange; banana

Question 52

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

Consumers should allocate their income so that the marginal utility associated with the:

A)first dollar spent is equal for all goods.
B)last dollar spent is equal for all goods.
C)last dollar spent is lower for high-priced items than for low-priced items.
D)first dollar spent is greater for high-priced items than for low-priced items.
E)first dollar spent is less for high-priced items than for low-priced items.

Question 53

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

According to utility theory, a consumer is in equilibrium when:

A)total income is spent.
B)marginal utility per dollar spent for a good is maximized.
C)total utility per unit of a good is maximized.
D)total utility per dollar spent is equal for all goods.
E)marginal utility per dollar spent is equal for all goods.

Question 54

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

Suppose that there are five bottles of lemonade, each of which gives a consumer the same level of utility. According to the law of diminishing marginal utility, how can the consumer receive the highest utility?

A)Consume all five bottles in the next hour
B)Consume all five bottles today
C)Consume all five bottles in one day next week
D)Consume two bottles today and three tomorrow
E)Consume one bottle each day for the next five days

Question 55

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

Mr. Max is about to purchase 4 units of good A and 6 units of good B. The price of both A and B is $2. Mr. Max has only $20 to spend. If the marginal utility of the fourth unit of A is 12 and the marginal utility of the sixth unit of B is 12, then:

A)he should not buy anything.
B)he should buy more of A and less of B.
C)he should buy less of A and more of B.
D)he should buy A and B in the quantities indicated.
E)he should buy more of A and little more than that of B.

Question 56

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

Jason is trying to decide whether to buy a bagel or a muffin for breakfast. The bagel costs $0.50 and has a marginal utility of 5. The muffin costs $1 and has a marginal utility of 20. Which should he buy and why?

A)The muffin, because it has a higher marginal utility
B)The muffin, because it has a lower marginal utility
C)The bagel, because it costs less
D)The bagel, because it has a higher marginal utility per dollar
E)The muffin, because it has a higher marginal utility per dollar

Question 57

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

Mr. Rational has $27 that he plans to spend purchasing 5 units of good X (priced at $3 per unit) and 6 units of good Y (priced at $2 per unit). The marginal utility of the fifth unit of X is 30, and the marginal utility of the sixth unit of Y is 30. If Mr. Rational is a utility maximizer, he should:

A)not buy anything.
B)buy more of X and less of Y.
C)buy less of X and more of Y.
D)buy X and Y in the quantities indicated.
E)buy less of X and even lesser than that of Y.

Question 58

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

To decide which of the two goods is a better buy, a consumer should compare the products' _____.

A)marginal utilities
B)total utilities
C)marginal utilities per dollar
D)total utilities per dollar
E)disutility

Question 59

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

If a dinner guest was serious when she said that she could never get enough of your cooking, you would conclude that the marginal utility of your cooking for her was _____.

A)negative
B)zero
C)increasing at an increasing rate
D)positive
E)more than total utility

Question 60

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

Suppose a friend gives you two pieces of gum, and you decide to have one piece now and save the other for tomorrow. You do this because:

A)the total utility you get from the two pieces of gum will be higher tomorrow.
B)the marginal utility you get from the second piece will be higher tomorrow.
C)the marginal utility you get from the second piece will be higher today.
D)the marginal utility you get from the first piece will be less today.
E)the total utility you get from the two pieces will be less tomorrow.

Question 61

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

If MU_x / P_x = MU_Y / P_Y, then _____.

A)the consumer should purchase the same quantity of X and Y
B)the consumer should purchase less of X
C)the consumer is maximizing utility
D)the consumer should purchase more of Y
E)the consumer is minimizing utility

Question 62

The table below shows the total utility associated with various units of goods X and Y.Table 7.5

The demand curve for a product slopes downward and to the right because:

A)total utility decreases as more of the product is consumed.
B)total utility derived from both, the product and its substitutes is the same.
C)marginal utility of the product diminishes as more of the product is consumed.
D)there are no substitutes for the product.
E)when the price falls, the income effect causes consumers to buy less of the product.

Question 63

The table below shows the total utility associated with various units of goods X and Y.Table 7.5

Which of the following statements concerning income and substitution effects is not true?

A)Income and substitution effects cause the demand curve to slope downward.
B)When the price of a good falls, real purchasing power increases and consumers can purchase more of all goods.
C)The substitution effect describes the situation in which more of the good whose price has fallen is purchased, and less of all other goods is purchased.
D)A price decrease of one good cannot cause the income effect.
E)Income and substitution effects are related to diminishing marginal utility and consumer equilibrium.

Question 64

The table below shows the total utility associated with various units of goods X and Y.Table 7.5

The _____ effect indicates that an individual's income can buy more of all goods when the price of one good declines, everything else held constant.

A)scale
B)endowment
C)substitution
D)price
E)income

Question 65

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

Assume MU_X = 30 utils, MU_Y = 15 utils, P_X = $2, and P_Y = $0.50. This consumer:

A)should buy less of X and less of Y.
B)is in equilibrium.
C)should buy more of X and less of Y.
D)should buy less of X and more of Y.
E)should buy more of X and more of Y.

Question 66

The table below shows the total utility associated with various units of goods X and Y.Table 7.5

The demand curve for a product can be derived from consumer equilibrium by:

A)altering the prices of all other products.
B)altering consumer incomes.
C)shifting consumer preferences.
D)altering the price of the good itself.
E)knowing the demand curves for all other products.

Question 67

The table given below reports the total utility derived by an individual from the consumption of different units of goods A, B, and C.Table 7.4

A consumer is in equilibrium when:

A)his or her marginal utility derived from each good is maximized.
B)each dollar spent on each item provides more and more satisfaction.
C)each dollar spent on each item provides less and less satisfaction.
D)the last dollar spent on each item provides the same additional satisfaction as that dollar would if spent on any other item.
E)his or her average utility for each item is the same.

Question 68

The table below shows the total utility associated with various units of goods X and Y.Table 7.5

Suppose the price of beef declines by $0.50 per pound at the supermarket. Consumers of beef immediately increase their purchases of beef. This illustrates:

A)the fact that beef is an inferior good.
B)the cross-elasticity effect of a price decrease.
C)the substitution effect of a price decrease.
D)the fact that beef is an economic bad.
E)the income effect of a rise in price.

Question 69

The table below shows the total utility associated with various units of goods X and Y.Table 7.5

The income and substitution effects of a price change occur because:

A)consumer incomes are not constant.
B)consumer substitution rates are not constant.
C)income and substitution effects never occur simultaneously.
D)of diminishing marginal utility and the equimarginal principle.
E)of increasing marginal utility and the equimarginal principle.

Question 70

The table given below reports the total utility derived by an individual from the consumption of different units of goods A, B, and C.Table 7.4

Refer to Table 7.4. With an income of $10, the consumer would maximize utility by purchasing _____.

A)7 units of good A, 7 units of good B, and 7 units of good C
B)2 units of good A, 6 units of good B, and 7 units of good C
C)3 units of good A, 5 units of good B, and 6 units of good C
D)3 units of good A, 6 units of good B, and 4 units of good C
E)6 units of good A, 0 units of good B, and 7 units of good C

Question 71

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

Assume that a consumer purchases a combination of products X and Y and MU_x / P_x = 75 utils per dollar and MU_y / P_y = 50 utils per dollar. To maximize utility without spending more dollars, the consumer should buy:

A)more of both X and Y.
B)less of Y only if the price of Y increases.
C)more of Y and less of X.
D)more of X and less of Y.
E)less of both X and Y.

Question 72

The table given below reports the total utility derived by an individual from the consumption of different units of goods A, B, and C.Table 7.4

Refer to Table 7.4. If the consumer's income increases from $10 to $20 but the prices of each of the goods doubles, the consumer would maximize utility by purchasing _____.

A)7 units of good A, 7 units of good B, and 7 units of good C
B)3 units of good A, 5 units of good B, and 6 units of good C
C)2 units of good A, 6 units of good B, and 7 units of good C
D)3 units of good A, 6 units of good B, and 4 units of good C
E)6 units of good A, 0 units of good B, and 7 units of good C

Question 73

The table below shows the total utility associated with various units of goods X and Y.Table 7.5

Following a decrease in the price of a good, an individual will purchase more of the now less expensive good and less of other more expensive goods. This is known as the _____ effect.

A)income
B)endowment
C)substitution
D)price
E)scale

Question 74

The table below shows the total utility associated with various units of goods X and Y.Table 7.5

Refer to Table 7.5. Given that the price of good X is $2 per unit, the price of good Y is $5 per unit, and that the consumer spends a total of $14 on both goods, what is the total utility associated with the utility-maximizing combination?

A)84
B)154
C)172
D)Indeterminate
E)215

Question 75

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

If MU_X / P_X < MU_Y / P_Y then this consumer:

A)will buy less of X and more of Y.
B)will buy more of X and more of Y.
C)is in equilibrium.
D)will buy more of X and less of Y.
E)will buy less of X and less of Y.

Question 76

The table below shows the total utility associated with various units of goods X and Y.Table 7.5

The demand curve slopes downward because of:

A)diminishing marginal utility and consumer equilibrium.
B)the fact that consumers cannot decide how much they want to pay for goods and services.
C)the fact that suppliers cannot decide how much to charge for the goods and services they supply.
D)the fact that consumer tastes and preferences change rapidly.
E)the fact that consumers are fickle, which makes pricing a good or service very difficult.

Question 77

The table below shows the total utility associated with various units of goods X and Y.Table 7.5

When the price of a good changes, the substitution effect occurs because:

A)the consumers' real income measured in terms of that good changes.
B)the relative price of that good changes compared to other goods in the consumption bundle.
C)the total utility of that good decreases.
D)the marginal utility of that good decreases.
E)consumers have an incentive to substitute irrational behavior for rational behavior.

Question 78

The table below shows the total utility associated with various units of goods X and Y.Table 7.5

Refer to Table 7.5. Given that the price of good X is $2 per unit, the price of good Y is $5 per unit, and that the consumer spends a total of $14 on both goods, what is the total utility associated with the utility-maximizing combination?

A)84
B)154
C)172
D)Indeterminate
E)215

Question 79

The below table shows the average utility (in utils) obtained from the consumption of goods A and B.Table 7.3

As the price of a good increases:

A)that good will yield less satisfaction per dollar than before.
B)consumers will have more real income to spend on other goods.
C)the quantity demanded of that good will also increase.
D)the utility-maximizing quantity of that good willl not change.
E)consumers will buy the good and substitute away from other goods.

Question 80

The table given below reports the total utility derived by an individual from the consumption of different units of goods A, B, and C.Table 7.4

Refer to Table 7.4. What is the highest possible total utility a consumer can attain given an income of $10?

A)554
B)705
C)706
D)717
E)899