Question 1

-Given the above figure, if Joey was a rational consumer he would NOT eat more than ________ piece(s)  of pizza.

Accepted Answer

A)   1
B)   5
C)   4
D)   6E) B) and D)
F) All of the above

Question 2

The consumer optimum for consuming two goods is achieved when

Accepted Answer

A)   the total utility from each good is equal.
B)   the price of each good is equal.
C)   the price multiplied by the marginal utility is equal for the two goods.
D)   the marginal utility per last dollar spent is equal for the two goods.E) B) and D)
F) B) and C)

Question 3

Explain how utility analysis can be used to derive a downward sloping demand curve.

Accepted Answer

Given the law of diminishing marginal ut...

Question 4

Suppose Isaac's marginal utility from attending his 5th White Sox game was 40 and the marginal utility from attending his 1st U2 concert was 200. Assume that the price of a Sox ticket is $20 and the price of a U2 ticket is $120. Which of the following would be true?

Accepted Answer

A)   Isaac would attend more U2 concerts and less Sox games.
B)   Isaac would attend more Sox games and less U2 concerts.
C)   Isaac would not alter his behavior.
D)   Isaac would attend less of both Sox games and U2 concerts.E) None of the above
F) All of the above

Question 5

Suppose that an individual consumes only two goods. What will happen to the individual if her last dollar spent on one good yields more marginal utility than that from another good?

Accepted Answer

The individual will consume more of the ...

Question 6

If marginal utility is zero,

Accepted Answer

A)   total utility increases at a decreasing rate.
B)   total utility increases at an increasing rate.
C)   total utility is at a maximum.
D)   people will not consume the good even if the price is zero.E) None of the above
F) A) and B)

Question 7

A rational individual will never consume a unit of a good if its

Accepted Answer

A)   marginal utility is diminishing.
B)   marginal utility is less than average utility.
C)   marginal utility is increasing.
D)   marginal utility is negative.E) All of the above
F) A) and D)

Question 8

The slope of the budget line is

Accepted Answer

A)   zero since prices of the goods and income are assumed to be constant.
B)   negative since to purchase more of one good means that some of the other good must be given up.
C)   negative because of the marginal rate of substitution.
D)   positive since prices and income are positive.E) A) and B)
F) A) and C)

Question 9

If the last $5 spent on movies added 30 utils to your total satisfaction and the last $8 spent on books add 64 utils,

Accepted Answer

A)   you can increase your satisfaction by buying more books and seeing fewer movies.
B)   your total satisfaction is 94 utils.
C)   you can increase your satisfaction by buying fewer books and seeing more movies.
D)   you can increase your satisfaction by buying only books.E) A) and D)
F) C) and D)

Question 10

John is currently spending all of his income. For the last unit of Good A consumed John gets 20 utils and for the last unit of Good B consumed he gets 10 utils. The price of Good A is $4. The price of Good B is $1. If John wants to maximize his utility he should

Accepted Answer

A)   continue to purchase the same amount of Good A and Good B.
B)   increase the consumption of Good A and decrease the consumption of Good B.
C)   decrease the consumption of Good A and increase the consumption of Good B.
D)   decrease the consumption of Good A and decrease the consumption of Good BE) A) and D)
F) B) and C)

Question 11

Utility analysis is the analysis of

Accepted Answer

A)   the formation of tastes and preferences.
B)   the differences of tastes and preferences across individuals.
C)   the consumption decisions of people based on utility maximization.
D)   how consumers determine the utility they receive from consumption.E) B) and C)
F) All of the above

Question 12

-Refer to the above figure. Which point(s)  represents the lowest level of utility?

Accepted Answer

A)   Points A & C
B)   Point B
C)   Point C only
D)   Point DE) B) and C)
F) All of the above

Question 13

If a consumer is at an optimum, consuming X and Y, and the price of X increases, then to get to a new equilibrium the consumer must

Accepted Answer

A)   purchase less X.
B)   purchase less Y.
C)   purchase more X.
D)   purchase more of both X and Y.E) A) and D)
F) B) and C)

Question 14

A rational consumer will NEVER purchase a product when its

Accepted Answer

A)   marginal utility is negative.
B)   total utility is increasing at a decreasing rate.
C)   marginal utility is decreasing.
D)   total utility is decreasing at an increasing rate.E) B) and D)
F) None of the above

Question 15

The principle of diminishing marginal utility suggests that

Accepted Answer

A)   total utility falls with additional consumption.
B)   total utility is usually negative.
C)   the consumer will never tire of additional units of a good.
D)   the rate at which utility increases diminishes as more of a good is consumed.E) None of the above
F) A) and C)

Question 16

When DVDs and hamburgers were the same price, Mavis consumed 3 hamburgers and 5 DVDs, and Mavis received 10 utils from the last hamburger and 15 utils from the last DVD consumed. What should be Mavis' consumption strategy?

Accepted Answer

A)   consume more DVDs and fewer burgers
B)   consume more burgers and fewer DVDs
C)   consume more of both items
D)   consume less of both itemsE) A) and B)
F) A) and C)

Question 17

If two units of a good provide 7 utils and the marginal utility of the third unit of the good is 2 utils, what is the total utility from consuming three units of the good?

Accepted Answer

A)   3 utils
B)   7 utils
C)   9 utils
D)   10 utilsE) B) and C)
F) B) and D)

Question 18

When the marginal utility per dollar of good x exceeds the marginal utility per dollar of good y,

Accepted Answer

A)   the consumer should consume more of good x.
B)   the consumer is consuming too much of good x.
C)   good y must have a negative marginal utility.
D)   the consumer is in an optimal situation if the price of good x exceeds the price of good y.E) All of the above
F) A) and C)

Question 19

When the price of a normal good decreases, people increase their consumption of the good. The reason is

Accepted Answer

A)   the law of diminishing marginal utility.
B)   the substitution and income effects.
C)   the substitution effect only.
D)   the income effect only.E) A) and B)
F) B) and D)

Question 20

The amount of pleasure or satisfaction derived from consumption of a good is called

Accepted Answer

A)   elasticity.
B)   utility.
C)   consumer surplus.
D)   demand.E) C) and D)
F) A) and B)

Exam 20: Consumer Choice

If a consumer is at an optimum, consuming X and Y, and the price of X increases, then to get to a new equilibrium the consumer must

Correct AnswerverifiedShow Answer

John is currently spending all of his income. For the last unit of Good A consumed John gets 20 utils and for the last unit of Good B consumed he gets 10 utils. The price of Good A is $4. The price of Good B is $1. If John wants to maximize his utility he should

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A rational individual will never consume a unit of a good if its

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Suppose that an individual consumes only two goods. What will happen to the individual if her last dollar spent on one good yields more marginal utility than that from another good?

Correct AnswerverifiedThe individual will consume more of the ...View AnswerShow Answer

The slope of the budget line is

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The consumer optimum for consuming two goods is achieved when

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-Refer to the above figure. Which point(s) represents the lowest level of utility?

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Utility analysis is the analysis of

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If the last $5 spent on movies added 30 utils to your total satisfaction and the last $8 spent on books add 64 utils,

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If marginal utility is zero,

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A rational consumer will NEVER purchase a product when its

Correct AnswerverifiedShow Answer

Suppose Isaac's marginal utility from attending his 5th White Sox game was 40 and the marginal utility from attending his 1st U2 concert was 200. Assume that the price of a Sox ticket is $20 and the price of a U2 ticket is $120. Which of the following would be true?

Correct AnswerverifiedShow Answer

The amount of pleasure or satisfaction derived from consumption of a good is called

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-Given the above figure, if Joey was a rational consumer he would NOT eat more than ________ piece(s) of pizza.

Correct AnswerverifiedShow Answer

When the marginal utility per dollar of good x exceeds the marginal utility per dollar of good y,

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When the price of a normal good decreases, people increase their consumption of the good. The reason is

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If two units of a good provide 7 utils and the marginal utility of the third unit of the good is 2 utils, what is the total utility from consuming three units of the good?

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When DVDs and hamburgers were the same price, Mavis consumed 3 hamburgers and 5 DVDs, and Mavis received 10 utils from the last hamburger and 15 utils from the last DVD consumed. What should be Mavis' consumption strategy?

Correct AnswerverifiedShow Answer

Explain how utility analysis can be used to derive a downward sloping demand curve.

Correct AnswerverifiedGiven the law of diminishing marginal ut...View AnswerShow Answer

The principle of diminishing marginal utility suggests that

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The individual will consume more of the ...
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Given the law of diminishing marginal ut...
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