Deck 16: Consumer Choice

Question 1

Refer to the accompanying figure to answer the questions.

-The marginal utility experienced from consuming the third taco is:

A) 10 utils.
B) 6 utils.
C) 27 utils.
D) 8 utils.
E) 23 utils.

Answer 1

8 utils.

Question 2

Refer to the accompanying figure to answer the questions.

-Total utility is negative:

A) at all levels of consumption.
B) from this consumer's sixth taco on.
C) never.
D) for this consumer's fifth and sixth taco only.
E) when marginal utility is positive.

Answer 2

never.

Question 3

When marginal utility is negative, total utility:

A) increases.
B) decreases.
C) can increase or decrease.
D) stays the same.
E) is equal to zero.

Answer 3

B

Question 4

Refer to the accompanying figure to answer the questions.

-The marginal utility experienced from consuming the seventh taco is:

A) 32 utils.
B) ?9 utils.
C) 27 utils.
D) ?12 utils.
E) ?3 utils.

Question 5

When making personal buying decisions, two important issues to consider are the:

A) satisfaction you receive from the choices that you make and the satisfaction others receive from your choices.
B) satisfaction others receive from your choices and the constraints of a limited budget.
C) shape of your indifference curve and the satisfaction you receive from the choices that you make.
D) satisfaction you receive from the choices that you make and the constraints of a limited budget.
E) satisfaction you receive from the choices that you make and the future value of the purchases that you make.

Question 6

Refer to the accompanying figure to answer the questions.

-The marginal utility experienced from consuming the sixth taco is:

A) 35 utils.
B) 0 utils.
C) 27 utils.
D) ?12 utils.
E) ?3 utils.

Question 7

When marginal utility is positive, total utility:

A) increases.
B) decreases.
C) can increase or decrease.
D) stays the same.
E) equals zero.

Question 8

A big concern with trying to measure utility is that:

A) individuals cannot place utility values on different goods and services.
B) it is difficult to measure marginal utility.
C) there is no distinction between utility for goods and utility for services.
D) to measure utility, you need monetary values of the goods and services.
E) each individual has a unique personal scale for her or his utility measures.

Question 9

Which of the following statements is true about utility?

A) Economists measure utility with a unit they refer to as an utte.
B) Utility is easy to compare across individuals.
C) All products produce the same utility.
D) Everyone receives the same level of satisfaction from the same good or service.
E) Some products produce more utility than others.

Question 10

Marginal utility:

A) occurs when total utility declines as consumption increases.
B) is the additional satisfaction derived from consuming one more unit of a good or service.
C) is the combination of goods and services that maximizes utility for a given income.
D) occurs when a consumer buys more of a good as a result of a relative price change.
E) occurs when there is a change in purchasing power as a result of a change in the price of a good.

Question 11

Which of the following statements is true about utility?

A) Economists measure utility with a unit they refer to as a util.
B) Utility is easy to measure across individuals.
C) All products produce the same level of utility.
D) Everyone receives the same level of satisfaction from the same good or service.
E) Economists measure utility with a unit they refer to as an utte.

Question 12

Economists expect the firm to maximize __________, the laborer to accept the best __________, and the consumer to find the combination of goods that gives the most __________.

A) utility; profits; offers
B) utility; offer; profit
C) profit; offer; utility
D) profits; utility; offer
E) offers; profits; utility

Question 13

Refer to the accompanying figure to answer the questions.

-Marginal utility is negative:

A) at all levels of consumption.
B) from this consumer's sixth taco on.
C) never.
D) for this consumer's fifth and sixth taco only.
E) when marginal utility is positive.

Question 14

American consumers make thousands of purchasing decisions each year. These decisions:

A) involve several trade-offs.
B) are always consistent with economic theory.
C) do not depend on the consumers' budget.
D) are called utils.
E) always maximize utility.

Question 15

Which of the following statements is true about utility?

A) Economists measure utility with a unit they refer to as an utte.
B) Everyone receives different levels of satisfaction from the same good or service.
C) All products produce the same level of utility.
D) Everyone receives the same level of satisfaction from the same good or service.
E) Utility is easy to measure across individuals.

Question 16

Dave gets 20 utils from consuming guacamole and 15 utils from consuming salsa; Buster gets 30 utils from the same guacamole and 15 utils from salsa. Given this information, a researcher can conclude that:

A) Buster gets more satisfaction from both guacamole and salsa.
B) Dave and Buster get the same level of satisfaction from salsa.
C) Dave and Buster prefer to consume a combination of guacamole and salsa.
D) Dave and Buster both prefer guacamole to salsa.
E) Dave will get more satisfaction from consuming one more unit of salsa than Buster will.

Question 17

Kim and James are on a road trip across the country. They both say that they get 25 utils from peanut butter sandwiches and 25 utils from trail mix. Knowing this, we can conclude that Kim:

A) gets the same satisfaction from peanut butter sandwiches that James does.
B) gets more satisfaction from trail mix than James does.
C) gets more satisfaction from trail mix than from peanut butter sandwiches.
D) and James are both indifferent to peanut butter sandwiches and to trail mix.
E) and James will consume the same amount of peanut butter sandwiches and trail mix on the road trip.

Question 18

A measure of the relative levels of satisfaction that consumers enjoy from the consumption of goods and services is called:

A) consumer optimum.
B) the real-income effect.
C) utility.
D) the substitution effect.
E) the diamond-water paradox.

Question 19

Utility theory seeks to measure:

A) supply.
B) costs.
C) ability.
D) profits.
E) satisfaction.

Question 20

The additional satisfaction derived from consuming one more unit of a good or service is called:

A) diminishing marginal utility.
B) the real-income effect.
C) marginal utility.
D) the substitution effect.
E) the consumer optimum.

Question 21

Diminishing marginal utility:

A) occurs when the additional utility for each good declines as consumption increases.
B) is the additional satisfaction derived from consuming one more unit of a good or service.
C) is the combination of goods and services that maximizes utility for a given income.
D) occurs when a consumer buys more of a good as a result of a relative price change.
E) occurs when there is a change in purchasing power as a result of a change in the price of a good.

Question 22

When marginal utility declines as consumption increases, the consumer is experiencing:

A) diminishing marginal utility.
B) the real-income effect.
C) marginal utility.
D) the substitution effect.
E) the consumer optimum.

Question 23

Refer to the accompanying figure to answer the questions.

-Marginal utility is negative:

A) at all levels of consumption.
B) from the consumer's seventh cupcake on.
C) never.
D) for the consumer's fifth and sixth cupcake only.
E) when marginal utility is positive.

Question 24

Maximizing utility:

A) requires that consumers get the most satisfaction out of every dollar they spend.
B) is very easy for consumers to achieve.
C) always requires that consumers spend more money than they have.
D) requires that the marginal utility of each good consumed is equal, no matter the price of each good consumed.
E) requires that the price of each good is equal.

Question 25

Refer to the accompanying figure. This consumer experiences diminishing marginal utility:

A) across all levels of consumption.
B) until he consumes his fifth cupcake.
C) until he consumes his seventh cupcake.
D) from his seventh cupcake on.
E) for his fifth and sixth cupcake only.

Question 26

Refer to the accompanying figure to answer the questions.

-Total utility after the second cupcake is:

A) 30 utils.
B) 25 utils.
C) 55 utils.
D) 5 utils.
E) 50 utils.

Question 27

Refer to the accompanying table to answer the questions. $\begin{array}{cc}&\text { Total Utility (Utils }\\\text { Sodas Consumed }&\text { per Soda) }\\0 & 0 \\1 & 35 \\2 & 60 \\3 & 80 \\4 & 90 \\5 & 90 \\6 & 75 \\7 & 50 \\8 & 20\end{array}$

-Marginal utility is negative:

A) at all levels of consumption.
B) from the sixth soda on.
C) never.
D) for the fifth and sixth soda only.
E) when marginal utility is positive.

Question 28

A company in Irvine, California, is interested in buying season tickets to the local baseball team. Tickets for scheduled games are sold individually for $12 each, but season tickets are only $4 each. The reason why the local baseball team has to charge less for season tickets can be explained by:

A) the real-income effect.
B) the consumer optimum.
C) marginal utility.
D) the substitution effect.
E) diminishing marginal utility.

Question 29

In July 2012, it cost $125 to purchase a ticket to visit the parks at Disneyland for one day. A five-day pass to the same parks cost only $290. Disneyland charges less for the additional days because of:

A) the real-income effect.
B) diminishing marginal utility.
C) marginal utility.
D) the substitution effect.
E) the consumer optimum.

Question 30

When given the marginal utility of the first five units of a product, you can calculate the total utility by:

A) finding the difference between the fourth and fifth units.
B) finding the difference between the first and fifth units.
C) looking at the marginal utility of the fifth unit.
D) adding the fourth and fifth units.
E) adding the marginal utilities of the first five units.

Question 31

Refer to the accompanying table to answer the questions. $\begin{array}{cc}&\text { Total Utility (Utils }\\\text { Sodas Consumed }&\text { per Soda) }\\0 & 0 \\1 & 35 \\2 & 60 \\3 & 80 \\4 & 90 \\5 & 90 \\6 & 75 \\7 & 50 \\8 & 20\end{array}$

-The marginal utility of the fifth unit is:

A) 15 utils.
B) 75 utils.
C) 90 utils.
D) 20 utils.
E) 0 utils.

Question 32

Cellphone companies rely on the ___________ of conversation to make unlimited night and weekend minutes on cellphone plans profitable.

A) real-income effect
B) consumer optimum
C) marginal utility
D) diminishing marginal utility
E) substitution effect

Question 33

The consumer optimum:

A) occurs when utility declines as consumption increases.
B) is the additional satisfaction derived from consuming one more unit of a good or service.
C) is the combination of goods and services that maximizes utility for a given income.
D) occurs when a consumer buys more of a good as a result of a relative price change.
E) occurs when there is a change in purchasing power as a result of a change in the price of a good.

Question 34

Refer to the accompanying table. This consumer experiences diminishing marginal utility: $\begin{array}{cc}&\text { Total Utility (Utils }\\\text { Sodas Consumed }&\text { per Soda) }\\0 & 0 \\1 & 35 \\2 & 60 \\3 & 80 \\4 & 90 \\5 & 90 \\6 & 75 \\7 & 50 \\8 & 20\end{array}$

A) over all levels of consumption.
B) up until she consumes her fifth soda.
C) up until she consumes her sixth soda.
D) from her sixth soda on.
E) for her fifth and sixth soda only.

Question 35

Refer to the accompanying table to answer the questions. $\begin{array}{cc}&\text { Total Utility (Utils }\\\text { Sodas Consumed }&\text { per Soda) }\\0 & 0 \\1 & 35 \\2 & 60 \\3 & 80 \\4 & 90 \\5 & 90 \\6 & 75 \\7 & 50 \\8 & 20\end{array}$

-The marginal utility of the third unit is:

A) 60 utils.
B) 80 utils.
C) 90 utils.
D) 20 utils.
E) 10 utils.

Question 36

Refer to the accompanying table to answer the questions. $\begin{array}{cc}&\text { Total Utility (Utils }\\\text { Sodas Consumed }&\text { per Soda) }\\0 & 0 \\1 & 35 \\2 & 60 \\3 & 80 \\4 & 90 \\5 & 90 \\6 & 75 \\7 & 50 \\8 & 20\end{array}$

-The marginal utility of the eighth unit is:

A) 30 utils.
B) 30 utils
C) 50 utils.
D) 20 utils.
E) 0 utils.

Question 37

Refer to the accompanying figure. This consumer experiences diminishing marginal utility:

A) over all levels of consumption.
B) up until she consumes her fifth taco.
C) up until she consumes her sixth taco.
D) from her sixth taco on.
E) for her fifth and sixth taco only.

Question 38

Refer to the accompanying figure to answer the questions.

-Total utility is maximized at the:

A) first cupcake.
B) eighth cupcake.
C) ninth cupcake.
D) seventh cupcake.
E) sixth cupcake.

Question 39

Individuals who haven't studied economics may not understand how all-you-can-eat buffets manage to make money. This can be explained by the concept of __________, which makes each trip to the buffet line less satisfactory than the previous one.

A) real-income effect
B) marginal utility
C) diminishing marginal utility
D) the substitution effect
E) the consumer optimum

Question 40

The combination of goods and services that maximizes utility for a given income is called:

A) diminishing marginal utility.
B) the real-income effect.
C) marginal utility.
D) the substitution effect.
E) the consumer optimum.

Question 41

Refer to the accompanying table to answer the questions. $\begin{array}{cccc}\text { Stranberries } \\\text { Consunned } & \text { Total Utility } & \begin{array}{l}\text { Apples } \\\text { Consumed }\end{array} & \text { Total Utility } \\0&0 & 0 & 0 \\1&7 & 1 & 14 \\2&13 & 2 & 26 \\3&18 & 3 & 36 \\4&22 & 4 & 44 \\5&25 & 5 & 50 \\6&27 & 6 & 54 \\7&28 & 7 & 56\end{array}$

-If the purchase of 2 strawberries and 5 apples maximizes your utility per dollar, the price of strawberries must be __________ if the price of apples is $3.00.

A) $1.00
B) $2.00
C) $1.50
D) $2.50
E) $3.00

Question 42

Refer to the accompanying table to answer the questions. $\begin{array}{cccc}\text { Stranberries } \\\text { Consunned } & \text { Total Utility } & \begin{array}{l}\text { Apples } \\\text { Consumed }\end{array} & \text { Total Utility } \\0&0 & 0 & 0 \\1&7 & 1 & 14 \\2&13 & 2 & 26 \\3&18 & 3 & 36 \\4&22 & 4 & 44 \\5&25 & 5 & 50 \\6&27 & 6 & 54 \\7&28 & 7 & 56\end{array}$

-Assume that strawberries cost $1 and apples cost $2. If a consumer has $8, the bundle of goods that would maximize her utility per dollar and remain within her budget would be:

A) 0 strawberries and 4 apples.
B) 6 strawberries and 5 apples.
C) 6 strawberries and 1 apple.
D) 4 strawberries and 2 apples.
E) 2 strawberries and 3 apples.

Question 43

Refer to the accompanying table to answer the questions. $\begin{array}{cccc}\text { Stranberries } \\\text { Consunned } & \text { Total Utility } & \begin{array}{l}\text { Apples } \\\text { Consumed }\end{array} & \text { Total Utility } \\0&0 & 0 & 0 \\1&7 & 1 & 14 \\2&13 & 2 & 26 \\3&18 & 3 & 36 \\4&22 & 4 & 44 \\5&25 & 5 & 50 \\6&27 & 6 & 54 \\7&28 & 7 & 56\end{array}$

-Assume that strawberries cost $1 and apples cost $2. If a consumer has $16, the bundle of goods that would maximize his utility per dollar and remain within his budget would be:

A) 2 strawberries and 7 apples.
B) 6 strawberries and 5 apples.
C) 4 strawberries and 6 apples.
D) 4 strawberries and 2 apples.
E) 7 strawberries and 7 apples.

Question 44

The combination of Good X and Good Y that will maximize your utility will have which of the following properties?

A) $\frac { M U _ { x } } { P _ { x } } = \frac { M U _ { y } } { P _ { y } }$
B) $\frac { M U _ { x } } { P _ { y } } = \frac { M U _ { y } } { P _ { x } }$
C) $\frac { M U _ { y } } { P _ { x } } = \frac { M U _ { x } } { P _ { y } }$
D) $\frac { M U _ { x } } { P _ { x } } < \frac { M U _ { y } } { P _ { y } }$
E) $\frac { M U _ { x } } { P _ { x } } > \frac { M U _ { y } } { P _ { y } }$

Question 45

Which of the following statements is always true when determining the consumer optimum?

A) Maximizing utility does not take budget restraints into consideration.
B) Maximizing utility is easy if you are considering only two goods.
C) Maximizing utility requires the marginal utility per dollar to be equal for each good consumed.
D) Maximizing utility requires the total utility per dollar to be equal for each good consumed.
E) Maximizing utility requires the marginal utility to be equal for each good.

Question 46

Assume that you can afford to buy as many candy bars and ice cream cones as you want. You would continue to consume both candy bars and ice cream until the:

A) marginal utility of each decreases.
B) marginal utility of each becomes negative.
C) total utility of each becomes negative.
D) marginal utility of candy bars and ice cream bars is equal.
E) total utility of candy bars and ice cream bars is equal.

Question 47

Refer to the accompanying table to answer the questions. $\begin{array}{cccc}\text { Cluss } & \text { Marginal } & \text { Soda } & \text { Marginal } \\\text { Consumed } & \text { Utility } & \text { Consumed } & \text { Utility } \\0&-&0&-\\1 & 18 & 1 & 12 \\2 & 15 & 2 & 10 \\3 & 12 & 3 & 8 \\4 & 9 & 4 & 6 \\5 & 6 & 5 & 4 \\6 & 3 & 6 & 2 \\7 & 0 & 7 & 0\end{array}$

-Assume that chips cost $1 and soda costs $2. Which of the following combinations of chips and soda satisfies the rule $\frac { M U _ { x } } { P _ { x } } = \frac { M U _ { y } } { P _ { y } }$ ?

A) 2 chips and 4 sodas
B) 6 chips and 5 sodas
C) 5 chips and 4 sodas
D) 5 chips and 1 soda
E) 6 chips and 7 sodas

Question 48

Refer to the accompanying table to answer the questions. $\begin{array}{cccc}\text { Cluss } & \text { Marginal } & \text { Soda } & \text { Marginal } \\\text { Consumed } & \text { Utility } & \text { Consumed } & \text { Utility } \\0&-&0&-\\1 & 18 & 1 & 12 \\2 & 15 & 2 & 10 \\3 & 12 & 3 & 8 \\4 & 9 & 4 & 6 \\5 & 6 & 5 & 4 \\6 & 3 & 6 & 2 \\7 & 0 & 7 & 0\end{array}$

-Assume that chips cost $1 and soda costs $2. If the consumer has $7, the combination of goods that would maximize her utility per dollar leads to a utility equal to __________ utils.

A) 72
B) 90
C) 54
D) 66
E) 46

Question 49

Eating a steak gives Jim satisfaction equal to 55 utils, whereas eating hamburger gives him a satisfaction of 25 utils. Jim should:

A) always choose to eat steak over hamburger.
B) always choose to eat hamburger over steak.
C) eat steak only if it is cheaper than hamburger.
D) eat hamburger only if he has recently eaten steak.
E) eat hamburger only if it is cheaper than steak.

Question 50

Kevin is trying to figure out what combination of bags of peanuts and bags of popcorn he should buy with his $13 budget. The price of peanuts is currently $3 per bag and the price of popcorn is currently $2 per bag. Kevin is currently deciding whether to purchase one more bag of peanuts or one more bag of popcorn. He should choose the:

A) peanuts every time.
B) popcorn every time.
C) peanuts if the marginal utility of peanuts is greater than popcorn.
D) popcorn if the marginal utility of popcorn is greater than peanuts.
E) peanuts if the last bag he consumed was popcorn, and vice versa.

Question 51

Timothy is trying to figure out what combination of bags of peanuts and bags of popcorn he should buy with his $13 budget. The price of peanuts is currently $5 per bag and the price of popcorn is currently $2 per bag. If Timothy's marginal utility from consuming his third bag of peanuts is 15 utils and his marginal utility from consuming his second bag of popcorn is 6 utils, Timothy should:

A) consume more bags of popcorn.
B) consume more bags of peanuts.
C) not change his consumption.
D) consume fewer bags of peanuts.
E) consume fewer bags of popcorn.

Question 52

Kati-Lyn has to choose between eating Chinese food and Indian food. Both Chinese food and Indian food cost the same. Which of the following equations, where MU is marginal utility and U is total utility, will lead to the optimal level of consumption?

A) MU_Chinese < MU_Indian
B) MU_Chinese > MU_Indian
C) MU_Chinese = MU_Indian
D) U_Chinese = U_Indian
E) U_Chinese > U_Indian

Question 53

Refer to the accompanying table to answer the questions. $\begin{array}{cccc}\text { Stranberries } \\\text { Consunned } & \text { Total Utility } & \begin{array}{l}\text { Apples } \\\text { Consumed }\end{array} & \text { Total Utility } \\0&0 & 0 & 0 \\1&7 & 1 & 14 \\2&13 & 2 & 26 \\3&18 & 3 & 36 \\4&22 & 4 & 44 \\5&25 & 5 & 50 \\6&27 & 6 & 54 \\7&28 & 7 & 56\end{array}$

-Assume that strawberries cost $1 and apples cost $2. If the consumer has $8, the bundle of goods that would maximize his utility per dollar leads to a utility equal to __________ utils.

A) 49
B) 84
C) 77
D) 66
E) 46

Question 54

To maximize your satisfaction when deciding between two goods:

A) you must consume at the point where the marginal utility of each good is equal, no matter the price of each good.
B) you do not need to consider opportunity costs.
C) you must spend more money than you have.
D) you must get the most satisfaction out of every dollar you spend.
E) the price of each good considered must be equal.

Question 55

Refer to the accompanying table to answer the questions. $\begin{array}{cccc}\text { Cluss } & \text { Marginal } & \text { Soda } & \text { Marginal } \\\text { Consumed } & \text { Utility } & \text { Consumed } & \text { Utility } \\0&-&0&-\\1 & 18 & 1 & 12 \\2 & 15 & 2 & 10 \\3 & 12 & 3 & 8 \\4 & 9 & 4 & 6 \\5 & 6 & 5 & 4 \\6 & 3 & 6 & 2 \\7 & 0 & 7 & 0\end{array}$

-Assume that chips cost $1 and soda costs $2. If the consumer has $14, the combination of goods that would maximize his utility per dollar and remain within his budget would be:

A) 2 chips and 7 sodas.
B) 6 chips and 4 sodas.
C) 4 chips and 6 sodas.
D) 4 chips and 2 sodas.
E) 7 chips and 7 sodas.

Question 56

Refer to the accompanying table to answer the questions. $\begin{array}{cccc}\text { Cluss } & \text { Marginal } & \text { Soda } & \text { Marginal } \\\text { Consumed } & \text { Utility } & \text { Consumed } & \text { Utility } \\0&-&0&-\\1 & 18 & 1 & 12 \\2 & 15 & 2 & 10 \\3 & 12 & 3 & 8 \\4 & 9 & 4 & 6 \\5 & 6 & 5 & 4 \\6 & 3 & 6 & 2 \\7 & 0 & 7 & 0\end{array}$

-Assume that chips cost $1 and soda costs $2. If the consumer has $7, the combination of goods that would maximize her utility per dollar and remain within her budget would be:

A) 0 chips and 4 sodas.
B) 6 chips and 5 sodas.
C) 5 chips and 1 soda.
D) 4 chips and 2 sodas.
E) 2 chips and 3 sodas.

Question 57

Refer to the accompanying table to answer the questions. $\begin{array}{cccc}\text { Stranberries } \\\text { Consunned } & \text { Total Utility } & \begin{array}{l}\text { Apples } \\\text { Consumed }\end{array} & \text { Total Utility } \\0&0 & 0 & 0 \\1&7 & 1 & 14 \\2&13 & 2 & 26 \\3&18 & 3 & 36 \\4&22 & 4 & 44 \\5&25 & 5 & 50 \\6&27 & 6 & 54 \\7&28 & 7 & 56\end{array}$

-Assume that strawberries cost $1 and apples cost $2. Which of the following combinations of strawberries and apples satisfies the following rule? $$\frac { M U _ { x } } { P _ { x } } = \frac { M U _ { y } } { P _ { y } }$$

A) 2 strawberries and 4 apples
B) 6 strawberries and 5 apples
C) 5 strawberries and 5 apples
D) 3 strawberries and 2 apples
E) 6 strawberries and 7 apples

Question 58

Refer to the accompanying table to answer the questions. $\begin{array}{cccc}\text { Cluss } & \text { Marginal } & \text { Soda } & \text { Marginal } \\\text { Consumed } & \text { Utility } & \text { Consumed } & \text { Utility } \\0&-&0&-\\1 & 18 & 1 & 12 \\2 & 15 & 2 & 10 \\3 & 12 & 3 & 8 \\4 & 9 & 4 & 6 \\5 & 6 & 5 & 4 \\6 & 3 & 6 & 2 \\7 & 0 & 7 & 0\end{array}$

-Assume that chips cost $1 and soda costs $2. If the consumer has $14, the combination of goods that would maximize his utility per dollar leads to a utility equal to ___________ utils.

A) 72
B) 84
C) 77
D) 9
E) 99

Question 59

The old saying "getting the biggest bang for your buck" means that:

A) consumers never experience diminishing marginal utility.
B) consumers maximize their utility.
C) consumers spend every dollar in their budget.
D) the real-income effect is equal to the substitution effect.
E) consumers stop consuming when the marginal utilities of each good are equal regardless of the prices of each good.

Question 60

Refer to the accompanying table to answer the questions. $\begin{array}{cccc}\text { Stranberries } \\\text { Consunned } & \text { Total Utility } & \begin{array}{l}\text { Apples } \\\text { Consumed }\end{array} & \text { Total Utility } \\0&0 & 0 & 0 \\1&7 & 1 & 14 \\2&13 & 2 & 26 \\3&18 & 3 & 36 \\4&22 & 4 & 44 \\5&25 & 5 & 50 \\6&27 & 6 & 54 \\7&28 & 7 & 56\end{array}$

-Assume that strawberries cost $1 and apples cost $2. If the consumer has $16, the bundle of goods that would maximize her utility per dollar leads to a utility equal to __________ utils.

A) 48
B) 84
C) 77
D) 66
E) 46

Question 61

When a price changes there are two effects: the:

A) real-income effect and the consumer optimum effect.
B) substitution effect and the marginal utility effect.
C) real-income effect and the substitution effect.
D) marginal utility effect and the substitution effect.
E) consumer optimum effect and the substitution effect.

Question 62

For a consumer, which of the following statements about the real-income effect is true?

A) It matters only when prices change enough to cause a measurable effect on the purchasing power of a consumer's income.
B) It can be observed for any price change.
C) It occurs when a consumer buys more of a good as a result of a relative price change.
D) It matters only when prices change enough to cause a consumer to purchase more of the good whose price changed.
E) The purchasing power of your income increases when the price of a good increases.

Question 63

The real-income effect:

A) occurs when utility declines as consumption increases.
B) is the additional satisfaction derived from consuming one more unit of a good or service.
C) is the combination of goods and services that maximizes utility for a given income.
D) occurs when a consumer buys more of a good as a result of a relative price change.
E) occurs when there is a change in purchasing power as a result of a change in the price of a good.

Question 64

If a decrease in price results in only a small amount in savings, the enhanced purchasing power is effectively:

A) equal to the substitution effect.
B) large.
C) greater than the substitution effect.
D) negative.
E) zero.

Question 65

If the price of a good increases, the marginal utility per dollar spent __________ and consumers buy __________ of the good.

A) remains the same; more
B) remains the same; less
C) decreases; more
D) decreases; less
E) increases; more

Question 66

Joanna is deciding between consuming Good X and Good Y. At her current level of consumption, her marginal utility per dollar for Good X is greater than the marginal utility per dollar for Good Y. To achieve the consumer optimum, Joanna needs to:

A) consume more of Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X.
B) consume more of Good X until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X.
C) consume more of both Good X and Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X.
D) consume more of Good X or less of Good Y until the marginal utility per dollar for Good X and Good Y is equal.
E) continue at her current level of consumption.

Question 67

When a consumer buys more of a good as a result of a relative price change, economists call it:

A) diminishing marginal utility.
B) the substitution effect.
C) marginal utility.
D) the real-income effect.
E) the consumer optimum.

Question 68

When there is a change in purchasing power as a result of a change in the price of a good, economists call it:

A) the real-income effect.
B) the substitution effect.
C) marginal utility.
D) diminishing marginal utility.
E) the consumer optimum.

Question 69

Phillip is deciding between consuming Good X and Good Y. At his current level of consumption, his marginal utility per dollar for Good X is less than the marginal utility per dollar for Good Y. To achieve the consumer optimum, Phillip needs to:

A) consume more of Good Y until the marginal utility per dollar for Good X is greater than the marginal utility for Good Y.
B) consume less of Good X or more of Good Y until the marginal utility per dollar for Good X and Good Y is equal.
C) consume more of both Good X and Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X.
D) consume less of both Good X and Good Y until the marginal utility per dollar for Good Y is greater than the marginal utility for Good X.
E) continue at his current level of consumption.

Question 70

The substitution effect:

A) occurs when utility declines as consumption increases.
B) is the additional satisfaction derived from consuming one more unit of a good or service.
C) is the combination of goods and services that maximizes utility for a given income.
D) occurs when a consumer buys more of a good as a result of a relative price change.
E) occurs when there is a change in purchasing power as a result of a change in the price of a good.

Question 71

Refer to the accompanying table to answer the questions. $\begin{array}{cccc}\text { Cluss } & \text { Marginal } & \text { Soda } & \text { Marginal } \\\text { Consumed } & \text { Utility } & \text { Consumed } & \text { Utility } \\0&-&0&-\\1 & 18 & 1 & 12 \\2 & 15 & 2 & 10 \\3 & 12 & 3 & 8 \\4 & 9 & 4 & 6 \\5 & 6 & 5 & 4 \\6 & 3 & 6 & 2 \\7 & 0 & 7 & 0\end{array}$

-For 2 chips and 5 sodas to be a combination of goods that maximizes your utility per dollar, the price of chips must be ____________ if the price of soda is $1.00.

A) $2.00
B) $3.00
C) $2.50
D) $3.50
E) $3.75

Question 72

Lower prices:

A) lower the marginal utility per dollar spent and cause consumers to buy less of a good.
B) increase the marginal utility per dollar spent and cause consumers to buy less of a good.
C) do not change the marginal utility per dollar.
D) lower the marginal utility per dollar spent and cause consumers to buy more of a good.
E) increase the marginal utility per dollar spent and cause consumers to buy more of a good.

Question 73

To reach the consumer optimum for two goods, the:

A) ratio of marginal utility to price for both goods must be equal.
B) marginal utility for both goods must be equal.
C) total utility for both goods must be equal.
D) ratio of total utility to price for both goods must be equal.
E) price of both goods must be equal.

Question 74

Refer to the accompanying table to answer the questions. $\begin{array}{cc}\text { soccer Games }&\text { Total Utility (Utils }\\\text { Attended }&\text { per Game) }\\0 & 0 \\1 & 150 \\2 & 275 \\3 & 375 \\4 & 450 \\5 & 500 \\6 & 525 \\7 & 500\\8&400\end{array}$

-If the price of attending a soccer game changes from $20 to $25, the marginal utility per dollar spent for the third game changes from:

A) 3.75 to 3.00.
B) 4.00 to 5.00.
C) 5.00 to 4.00.
D) 3.00 to 3.75.
E) 18.75 to 15.00.

Question 75

The substitution effect and the real-income effect are two effects that happen when:

A) marginal utility increases.
B) marginal utility decreases.
C) total utility decreases.
D) a price changes.
E) total utility increases.

Question 76

Refer to the accompanying table to answer the questions. $\begin{array}{cc}\text { soccer Games }&\text { Total Utility (Utils }\\\text { Attended }&\text { per Game) }\\0 & 0 \\1 & 150 \\2 & 275 \\3 & 375 \\4 & 450 \\5 & 500 \\6 & 525 \\7 & 500\\8&400\end{array}$

-If the price of attending a soccer game changes from $25 to $20, the marginal utility per dollar spent for the fifth game changes from:

A) 2.50 to 2.00.
B) 3.00 to 3.75
C) 3.75 to 3.00.
D) 2.00 to 2.50.
E) 20 to 25.

Question 77

Lower prices increase the marginal utility per dollar spent and cause consumers to buy more of a good. On the other hand, higher prices lower the marginal utility per dollar spent and cause consumers to buy less of a good. This is a way of restating ___________ in terms of marginal utility.

A) diminishing marginal utility
B) satisfaction
C) the law of demand
D) the law of supply
E) the real-income effect

Question 78

Higher prices:

A) lower the marginal utility per dollar spent and cause consumers to buy less of a good.
B) increase the marginal utility per dollar spent and cause consumers to buy less of a good.
C) do not change the marginal utility per dollar.
D) lower the marginal utility per dollar spent and cause consumers to buy more of a good.
E) increase the marginal utility per dollar spent and cause consumers to buy more of a good.

Question 79

If the price of a good decreases, the marginal utility per dollar spent ___________ and consumers buy __________ of the good.

A) remains the same; more
B) remains the same; less
C) decreases; more
D) increases; less
E) increases; more

Question 80

Which of the following statements about the real-income effect and the substitution effect is true?

A) The real-income effect always exists, but the substitution effect does not always exist.
B) The real-income effect and the substitution effect always exist.
C) The real-income effect does not always exist, but the substitution effect always exists.
D) The real-income effect and the substitution effect cannot occur at the same time.
E) The real-income effect and the substitution effect occur only with an increase in price.