Deck 8: Utility and Demand

Question 1

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

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.

Answer 1

increases at a decreasing rate.

Question 2

Total utility is always

A)greater than marginal utility.
B)less than marginal utility.
C)decreasing when marginal utility is decreasing.
D)decreasing when marginal utility is increasing.
E)increasing when marginal utility is positive.

Answer 2

increasing when marginal utility is positive.

Question 3

The budget line

A)shows the limits to a household's consumption choices.
B)shows the household's total utility.
C)is downward sloping because it illustrates decreasing marginal utility.
D)shows how a household's consumption choices change as income changes.
E)shifts outward as total utility increases.

Answer 3

shows the limits to a household's consumption choices.

Question 4

Diminishing marginal utility means that

A)Ralph will enjoy his second hamburger less than the first one.
B)the utility from one hamburger is greater than the utility from two hamburgers.
C)the price of two hamburgers is less than twice the price of one.
D)the utility from eating two hamburgers will be more than twice the utility from eating the first one.
E)hamburgers seem smaller as you eat more of them.

Question 5

The fact that your fourth slice of pizza does not generate as much satisfaction as your third slice is an example of

A)consumer surplus.
B)diminishing total utility.
C)diminishing marginal utility.
D)the paradox of value.
E)the law of demand.

Question 6

The first can of Coke gives 15 units of utility to Witney,while the second can of Coke increases her total utility to 23.What is the marginal utility of the second can of Coke?

A)24 units
B)8 units
C)38 units
D)11.5 units
E)7.5 units

Question 7

Use the table below to answer the following question.
Table 8.1.2
Table 8.1.2 gives total utilities for Jim and Sally.Which one of the following statements is true?

A)Jim has increasing marginal utility.
B)For Sally,the marginal utility of the third unit consumed is 6.
C)If Jim consumes 2 units,his total utility is 34 units.
D)Jim and Sally receive the same marginal utility from the third unit consumed.
E)If Sally consumes 2 units,her total utility is 10 units.

Question 8

Utility is

A)the value of a good.
B)the additional satisfaction received from consuming another unit of a good.
C)the benefit or satisfaction from consuming goods and services.
D)the practical usefulness of a good.
E)equal to the price of a good.

Question 9

The change in total utility that results from a one-unit increase in the quantity of a good consumed is

A)additional utility.
B)marginal utility.
C)average utility.
D)marginal utility per dollar.
E)fractional utility.

Question 10

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?

A)10
B)22
C)34
D)2
E)zero

Question 11

A budget line is drawn with the

A)quantity of one good on the vertical axis and the quantity of the second good on the horizontal axis.
B)price of one good on the vertical axis and the price of the second good on the horizontal axis.
C)quantity of one good on the vertical axis and its price on the horizontal axis.
D)quantity of one good on the horizontal axis and its price on the vertical axis.
E)quantity of one good on the horizontal axis and its total utility on the vertical axis.

Question 12

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 from

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

Question 13

Total utility equals

A)the sum of the marginal utilities of each unit consumed.
B)the area below the demand curve but above the market price.
C)the slope of the marginal utility curve.
D)the marginal utility of the last unit divided by price.
E)the marginal utility of the last unit consumed multiplied by the total number of units consumed.

Question 14

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

A)0.
B)13.
C)17.
D)50.
E)3.

Question 15

What is marginal 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 16

When total utility is increasing,marginal utility

A)is negative.
B)must be between zero and one.
C)is either increasing or decreasing.
D)is either positive or negative.
E)is also increasing.

Question 17

Marginal utility equals

A)total utility divided by price.
B)total utility divided by the total number of units consumed.
C)the slope of the total utility curve.
D)the inverse of total utility.
E)the area below the demand curve but above market price.

Question 18

As more of a good is consumed,its

A)marginal utility increases.
B)marginal utility decreases.
C)marginal utility remains unchanged.
D)total utility decreases.
E)total utility increases at an increasing rate.

Question 19

The budget line shows the boundary between those combinations of goods and services that

A)have positive marginal utility and those that have negative marginal utility.
B)are available and those that are unavailable.
C)are desirable and those that are undesirable.
D)are affordable and those that are unaffordable.
E)are normal goods and those that are inferior goods.

Question 20

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

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

Question 21

Use the table below to answer the following questions.
Table 8.2.3
Refer to Table 8.2.3.If income is $13,then utility is maximized when consumption is

A)6 units of X and 1 unit of Y.
B)5 units of X and 3 units of Y.
C)4 units of X and 5 units of Y.
D)3 units of X and 7 units of Y.
E)2 units of X and 9 units of Y.

Question 22

According to the marginal utility theory,consumers

A)maximize utility and minimize marginal utility.
B)maximize utility and equalize marginal utility per dollar across all goods.
C)save part of their income for future consumption.
D)maximize utility by spending the most on the least expensive good.
E)maximize utility by spending the least on the least expensive good.

Question 23

To determine consumer equilibrium we need to know only

A)prices and income.
B)total utility and income.
C)marginal utility and income.
D)prices,income,and marginal utility.
E)prices and marginal utility.

Question 24

The total utility from owning three skirts is equal to

A)total income divided by the price of one skirt.
B)total income divided by the amount spent to buy the three skirts.
C)the sum of the marginal utility from the first skirt plus the marginal utility from the second skirt plus the marginal utility from the third skirt.
D)three times the marginal utility from the first skirt.
E)the total amount spent to buy the three skirts.

Question 25

Marginal utility theory assumes that when Kelly decreases the number of hockey games that she attends each week from 3 to 2,her

A)total utility increases.
B)income increases.
C)marginal utility increases.
D)total utility is maximized.
E)marginal utility is maximized.

Question 26

Let MU_A and MU_B stand for the marginal utility of goods A and B,respectively.Let P_A and P_B stand for the price of goods A and B,respectively.Which statement must hold for consumer equilibrium?

A)MU_A = MU_B
B)MU_A = MU_B and P_A = P_B
C)MU_A/MU_B = P_B/P_A
D)MU_A/MU_B = P_A/P_B
E)MU_AP_A = MU_BP_B

Question 27

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

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 28

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

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 29

Use the table below to answer the following questions.
Table 8.2.2
Refer to Table 8.2.2.What is the total utility if 3 bags of popcorn and 2 bottles of pop are consumed?

A)150
B)310
C)490
D)660
E)100

Question 30

Use the table below to answer the following questions.
Table 8.2.2
Refer to Table 8.2.2.Henry is maximizing his utility by consuming 3 bags of popcorn and 3 bottles of pop.What is the ratio of the price of popcorn to the price of pop?

A)1/2
B)1
C)3/4
D)4/3
E)6/5

Question 31

In consumer equilibrium,

A)total utility is maximized given the consumer's income and the prices of goods.
B)marginal utility is maximized given the consumer's income and the prices of goods.
C)marginal utility per dollar is maximized given the consumer's income and the prices of goods.
D)the marginal utility from each good is equal.
E)marginal utility per dollar is zero.

Question 32

If a consumer spends all his income and his marginal utility per dollar is equal for all goods,then

A)marginal utility is maximized.
B)total utility is maximized.
C)he cannot be better off even with more income.
D)the proportion of income spent on each good must be equal.
E)the number of units bought of each good must be equal.

Question 33

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.If the price of sailing is $10 per hour and the price of skiing is $20 per hour,Sam will choose to spend

A)all his time sailing.
B)all his time skiing.
C)more time sailing than skiing.
D)more time skiing than sailing.
E)the same amount of time sailing and skiing.

Question 34

Advise Sarah how to maximize her utility if MU_A = 8,MU_B = 20,P_A = 4 and P_B = 5.

A)Consume equal amounts of both goods.
B)Consume more of good A and less of good B.
C)Consume more of good B and less of good A.
D)Lower the price of good B.
E)Raise the price of good A.

Question 35

Harold can consume either pens or milkshakes.The price of a pen is $1,and the price of a milkshake is $1.Harold knows that when his income is spent,his marginal utility from pens will be 10 and his marginal utility from milkshakes will be 8.Harold is better off

A)by consuming more pens and fewer milkshakes.
B)by consuming more pens and more milkshakes.
C)by consuming fewer pens and fewer milkshakes.
D)by consuming fewer pens and more milkshakes.
E)only if he makes more income.

Question 36

Sarah can consume either pizzas or hamburgers.The price of a hamburger is $1 and the price of a pizza is $5.Let MU_h be the marginal utility of hamburgers and MU_p be the marginal utility of pizzas.In consumer equilibrium,what must the ratio MU_h/MU_p equal?

A)1/5
B)5/1
C)1/1
D)1/6
E)4

Question 37

Sam buys gasoline and coffee each week.To draw his budget line for gasoline and coffee,Sam needs to know

A)if his income is expected to rise in the future.
B)if the price of gasoline is expected to rise in the future.
C)if the price of coffee is expected to fall in the future.
D)the goods that he considers to be substitutes for gasoline and for coffee.
E)how much income he has to spend and the prices of one litre of gasoline and one cup of coffee.

Question 38

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

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.

Question 39

Let MU_A and MU_B stand for the marginal utility of goods A and B,respectively.Let P_A and P_B stand for the price of goods A and B,respectively.Assume that for a given consumer MU_A and MU_B are equal to each other,and P_A is greater than P_B.In this case,the consumer is better off if he consumes

A)more of good A and less of good B.
B)less of good A and more of good B.
C)equal amount of goods A and B.
D)good B only.
E)neither good A nor good B.

Question 40

Samir consumes apples and bananas and is in consumer equilibrium.The marginal utility from his last apple is 10 and the marginal utility from his last banana is 5.If the price of an apple is $0.50,then what is the price of a banana?

A)$0.05
B)$0.10
C)$0.25
D)$0.50
E)$1.00

Question 41

The relative price of beer to bacon is 2:1.If Bob's current consumption is at a level where MU_beer/MU_bacon is 1:2,then to maximize total utility Bob must

A)consume more beer and less bacon.
B)not change his current consumption of beer and bacon.
C)consume less beer and more bacon.
D)raise the price of beer.
E)consume twice as much beer and half as much bacon.

Question 42

Martha and Sarah have the same preferences,face the same prices,and have the same income.Sarah's utility is measured in units while Martha's is measured in units squared.Select the best response.

A)Martha and Sarah will choose to consume the same set of goods.
B)Martha's and Sarah's marginal utility per dollar will be equal.
C)Martha's and Sarah's marginal utilities will be equal.
D)Martha and Sarah will have equal total utility.
E)Martha and Sarah will not choose to consume the same set of goods.

Question 43

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

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 44

Danny has $12 to spend on two goods: pies and pop.The price of a pie is $4,and the price of a can of pop is $2.To maximize his utility,Danny buys

A)2 pies and 2 cans of pop.
B)3 pies and no pop.
C)the combination that gives him the same marginal utility per dollar on pies as on pop.
D)6 cans of pop and no pie.
E)the combination that gives him the same total utility from pies as from pop.

Question 45

Sergio is maximizing utility in his consumption of beer and bubble gum.If the price of beer is greater than the price of bubble gum,then we know

A)Sergio buys more beer than bubble gum.
B)Sergio buys more bubble gum than beer.
C)the marginal utility from the last purchased beer is greater than the marginal utility from the last purchased bubble gum.
D)the marginal utility from the last purchased bubble gum is greater than the marginal utility from the last purchased beer.
E)the marginal utilities from the last purchased beer and bubble gum are equal.

Question 46

In consumer equilibrium,a consumer equates the

A)total utility from each good.
B)marginal utility from each good.
C)total utility per dollar on each good.
D)marginal utility per dollar on each good.
E)total income spent on each good with total utility from each good.

Question 47

Use the table below to answer the following question.
Table 8.2.4

Refer to Table 8.2.4.Suppose the price of X is $1 and the price of Y is $1.How much of each should you purchase to maximize utility from a total expenditure of $11?

A)3 units of X and 8 units of Y
B)4 units of X and 7 units of Y
C)5 units of X and 6 units of Y
D)6 units of X and 5 units of Y
E)7 units of X and 4 units of Y

Question 48

For a consumer to maximize utility from a given income,

A)the marginal utility from each good must be maximized.
B)the total utility from each good must be maximized.
C)the marginal utilities of all goods and services consumed must be equal.
D)the marginal utility per dollar from all goods and services consumed must be equal.
E)the amount of each good consumed per dollar must be equal.

Question 49

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?

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

Question 50

When Kathryn is at her consumer equilibrium,she is

A)consuming the combination of goods that is at the midpoint of her budget line.
B)consuming a combination of goods that is located inside her budget line.
C)consuming a combination of goods that is located outside her budget line.
D)consuming a combination of goods such that the marginal utility from good X divided by the marginal utility from good Y equals the price of good X divided by the price of good Y.
E)on the midpoint of her demand curve.

Question 51

If Soula is maximizing her utility and consuming two goods that have the same marginal utility,she

A)buys only one.
B)buys equal quantities of both.
C)is paying the same price for each good.
D)receives the same total utility from each good.
E)is not spending all of her income.

Question 52

Max has $35 a day to spend,and he can spend as much time as he likes on his leisure pursuits.Windsurfing equipment rents for $10 an hour,and snorkeling equipment rents for $5 an hour.If Max equalizes the marginal utility per hour from windsurfing and from snorkeling,he

A)maximizes his total utility.
B)can increase his total utility by spending less time windsurfing and more time snorkeling.
C)can increase his total utility only if the price of windsurfing equipment rentals decreases.
D)can increase his total utility by spending more time windsurfing and less time snorkeling.
E)maximizes his marginal utility per dollar.

Question 53

John and Sally have identical preferences except Sally's utility units are exactly 10 times that of John's.Both have the same income and face the same prices.Choose the best response.

A)John consumes 10 times the amount that Sally consumes.
B)John receives 1/10 the satisfaction that Sally receives.
C)Both will consume the same amount of all goods.
D)John and Sally will have equal total utility.
E)John and Sally will have equal marginal utility.

Question 54

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

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 55

If Ms.Petersen is maximizing her utility in the consumption of goods A and B,which one of the following statements must be true?

A)MU_A = MU_B
B)MU_A/P_A = MU_B/P_B
C)MU_A/PB = MU_B/P_A
D)TU_A = TU_B
E)TU_A/P_A = TU_B/P_B

Question 56

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 ________.

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

Question 57

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

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 58

A consumer maximizes his utility by purchasing 2 units of good X at $5 per unit and 3 units of good Y at $7 per unit.What is the ratio of the marginal utility from X to the marginal utility from Y?

A)5/7
B)7/5
C)2/3
D)3/2
E)10/21

Question 59

Geneva is not at her consumer equilibrium for movies and music downloads.Why?

A)Her average utility from movies does not equal her average utility from music downloads.
B)Her total utility from movies does not equal her total utility from music downloads.
C)Her marginal utility from the last movie she attended does not equal her marginal utility from the last music download she downloaded.
D)Her average utility from movies does not equal her total utility from music downloads.
E)Her marginal utility per dollar from the last movie she attended does not equal her marginal utility per dollar from her last music download.

Question 60

Suppose you are consuming hot dogs and Cokes and believe you are receiving maximum total utility from the meal for your entire budget of $12.The price of a hot dog is $2 and the price of a Coke is $2.Which one of the following can you conclude?

A)The total utility from hot dogs is maximized.
B)The marginal utilities from hot dogs and Cokes divided by the quantity of each good must be equal.
C)The total utilities from hot dogs and Cokes must be equal.
D)You are purchasing three hot dogs and three Cokes.
E)The marginal utilities from hot dogs and Cokes must be equal.

Question 61

Consider Devon's total utility from snorkeling and windsurfing in Table 8.3.1.Suppose Devon's total income is $35.If the price of windsurfing rises to $20 per hour,what is Devon's cross elasticity of demand of snorkeling with respect to the price of windsurfing?

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

Question 62

If Katie purchases two slices of pizza and six breadsticks to maximize her total utility,then

A)a slice of pizza costs three times as much as a breadstick.
B)her marginal utility from the second slice of pizza divided by the price of a slice of pizza is equal to her marginal utility from the sixth breadstick divided by the price of a breadstick.
C)a breadstick costs three times as much as a slice of pizza.
D)she spends more on pizza than she spends on breadsticks.
E)her marginal utility from the second slice of pizza equals her marginal utility from the sixth breadstick.

Question 63

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

A)MU_X/P_X > MU_Y/P_Y,and then Ron increases his consumption of X.
B)MU_X/P_X > MU_Y/P_Y,and then Ron decreases his consumption of X.
C)MU_X/P_X < MU_Y/P_Y,and then Ron increases his consumption of X.
D)MU_X/P_X < MU_Y/P_Y,and then Ron decreases his consumption of X.
E)none of the above.

Question 64

The marginal utility per dollar from pizza is greater than the marginal utility per dollar from pop.To maximize utility,a consumer buys

A)less pizza and more pop.
B)equal quantities of pizza and pop.
C)more pizza and less pop.
D)more pizza and more pop.
E)less pizza and less pop.

Question 65

As a consumer's income decreases,marginal utility theory predicts that

A)the price of normal goods falls.
B)the demand for normal goods decreases.
C)the demand for all goods decreases.
D)the demand for normal goods increases.
E)total utility increases.

Question 66

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 8.3.1
Consider Devon's utility from snorkeling and windsurfing in Table 8.3.1.Devon has $55 to spend.What are Devon's choices for time spent on the two activities?

A)1 hour of windsurfing and 9 hours of snorkeling
B)2 hours of windsurfing and 7 hours of snorkeling
C)3 hours of windsurfing and 5 hours of snorkeling
D)4 hours of windsurfing and 3 hours of snorkeling
E)5 hours of windsurfing and 1 hour of snorkeling

Question 67

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

A)MU_X/P_X > MU_Y/P_Y,and then Ron increases his consumption of Y.
B)MU_X/P_X > MU_Y/P_Y,and then Ron decreases his consumption of Y.
C)MU_X/P_X < MU_Y/P_Y,and then Ron increases his consumption of Y.
D)MU_X/P_X < MU_Y/P_Y,and then Ron decreases his consumption of Y.
E)MU_X/P_X > MU_Y/P_Y,and then Ron increases his consumption of X and Y.

Question 68

If the price of a good increases,everything else remaining the same,then the consumer's total utility

A)decreases.
B)increases.
C)decreases if the good has no substitutes and remains the same if the good has at least one substitute.
D)increases if the good has no substitutes and remains the same if the good has at least one substitute.
E)remains the same.

Question 69

Harold can consume apples and oranges.He likes them equally well and currently is in consumer equilibrium.Then the price of oranges rises,while his income remains the same.What will happen to his consumption?

A)Consumption of oranges increases;consumption of apples decreases.
B)Consumption of oranges increases;consumption of apples increases.
C)Consumption of oranges decreases;consumption of apples decreases.
D)Consumption of oranges decreases;consumption of apples increases.
E)Consumption of oranges decreases;consumption of apples could either increase or decrease.

Question 70

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 8.3.1
Devon enjoys windsurfing and snorkeling.His total utility from each activity is summarized in Table 8.3.1.Devon has $35 to spend.How long will Devon choose to windsurf and to snorkel?

A)1 hour windsurfing and 5 hours snorkeling
B)2 hours windsurfing and 3 hours snorkeling
C)3 hours windsurfing and 1 hour snorkeling
D)4 hours windsurfing and no hours snorkeling
E)2 hour windsurfing and 4 hours snorkeling

Question 71

Consider Devon's total utility from snorkeling and windsurfing in Table 8.3.1.Suppose Devon's total income is $35.If the price of windsurfing rises to $20 per hour,how long does Devon choose to windsurf and to snorkel?

A)1 hour of windsurfing and 3 hours of snorkeling
B)2 hour of windsurfing and 7 hours of snorkeling
C)3 hours of windsurfing and 5 hours of snorkeling
D)4 hours of windsurfing and 3 hours of snorkeling
E)5 hours of windsurfing and 1 hour of snorkeling

Question 72

Chuck and Barry have identical total utility schedules but Chuck has a much higher income.If each is maximizing his total utility,then

A)they will have equal total utilities.
B)Chuck will have lower total utility than Barry.
C)Chuck will have lower marginal utility than Barry for each normal good consumed.
D)Chuck will have higher marginal utility than Barry for each normal good consumed.
E)they will have equal marginal utilities for each normal good consumed.

Question 73

Bikes and roller blades are substitutes.Marginal utility theory predicts that when the price of a bike rises,the quantity of bikes demanded

A)decreases and the demand curve for roller blades shifts rightward.
B)decreases and the demand curve for roller blades shifts leftward.
C)decreases and a movement occurs down along the demand curve for roller blades.
D)increases and the demand curve for roller blades shifts rightward.
E)increases and the demand curve for roller blades shifts leftward.

Question 74

Billy likes candy and popcorn.Candy sells for $0.50 a bag and popcorn sells for $1 per bag.Currently he is in consumer equilibrium.Then the price of candy rises to $1 a bag.Which statement is true in the new consumer equilibrium?

A)The marginal utility from popcorn will increase.
B)Marginal utility per dollar on candy will be equal to 2.
C)Total utility will increase.
D)The marginal utility from candy will decrease.
E)The marginal utility from candy will be equal to the marginal utility from popcorn.

Question 75

Cindy has $70 a month to spend,and she can spend as much time as she likes playing golf and tennis.The price of an hour of golf is $10,and the price of an hour of tennis is $5.If Cindy equalizes the marginal utility per hour from golf and from tennis,she

A)can increase her total utility by spending less time golfing and more time playing tennis.
B)can increase her total utility by spending more time golfing and less time playing tennis.
C)maximizes her total utility.
D)can increase her total utility only if the price of golf decreases.
E)cannot increase her total utility.

Question 76

With a given income and prices of goods,Marcus is in consumer equilibrium when

A)he purchases the same amounts of all goods.
B)his marginal utility from all goods is maximized.
C)his marginal utility from all goods is equal.
D)he maximizes total utility.
E)his total utility per dollar is equal for all goods.

Question 77

Consider Devon's total utility from snorkeling and windsurfing in Table 8.3.1.Suppose that Devon's total income rises from $35 to $55,ceteris paribus.Given that Devon changes his choice of windsurfing and snorkeling,what is his income elasticity for windsurfing?

A)zero
B)28.6
C)44.4
D)0.64
E)1.55

Question 78

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

A)MU_X/P_X > MU_Y/P_Y,and then Ron increases his consumption of X.
B)MU_X/P_X > MU_Y/P_Y,and then Ron decreases his consumption of X.
C)MU_X/P_X < MU_Y/P_Y,and then Ron increases his consumption of X.
D)MU_X/P_X < MU_Y/P_Y,and then Ron decreases his consumption of X.
E)MU_X/P_X > MU_Y/P_Y,and then Ron increases his consumption of X and Y.

Question 79

Consider Devon's total utility from snorkeling and windsurfing in Table 8.3.1.Suppose Devon's total income is $35.If the price of windsurfing rises to $20 per hour,what is Devon's price elasticity of demand for windsurfing?

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

Question 80

Beverly is currently in consumer equilibrium.An increase in her income

A)increases her total utility.
B)decreases her total utility.
C)increases her marginal utility from all goods.
D)decreases her marginal utility from all goods.
E)increases her consumption of all goods.