Question 1

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

Accepted Answer

A) The marginal utility of the last doughnut was positive. 
B) The marginal utility of doughnuts is still increasing. 
C) The total utility from eating doughnuts is negative. 
D) The marginal utility of the last doughnut was negative. 
E) The marginal utility of the next doughnut will be positive. 
A) The marginal utility of the last doughnut was positive. 
B) The marginal utility of doughnuts is still increasing. 
C) The total utility from eating doughnuts is negative. 
D) The marginal utility of the last doughnut was negative. 
E) The marginal utility of the next doughnut will be positive.

Question 2

The marginal utility of a second copy of today's New York Times is

Accepted Answer

A) infinite 
B) practically zero 
C) positive and greater than the marginal utility of the first copy 
D) equal to the marginal utility of the first copy 
E) 50 cents 
A) infinite 
B) practically zero 
C) positive and greater than the marginal utility of the first copy 
D) equal to the marginal utility of the first copy 
E) 50 cents

Question 3

As a consumer allocates income between good A and good B, total utility is maximized when

Accepted Answer

A) the marginal utility of A = the marginal utility of B 
B) the marginal utility of A = the marginal utility of B = 0 
C) the price of A = price of B 
D) marginal utility of A/price of A = marginal utility of B/price of B = 0 
E) marginal utility of A/price of A = marginal utility of B/price of B 
A) the marginal utility of A = the marginal utility of B 
B) the marginal utility of A = the marginal utility of B = 0 
C) the price of A = price of B 
D) marginal utility of A/price of A = marginal utility of B/price of B = 0 
E) marginal utility of A/price of A = marginal utility of B/price of B

Question 4

Fernando allocates his lunch money between pizza and Coke.A Coke has a price of $1 and a slice of pizza has a price of $1.50.The marginal utility of the last slice of pizza Fernando ate today was 30, and the marginal utility of his last Coke was 25.Fernando spent all of his lunch money.From this information we can conclude that

Accepted Answer

A) Fernando allocated his money in a way that maximized his total utility 
B) Fernando's total utility would have been greater if he had purchased more Coke and less pizza 
C) Fernando's total utility would have been greater if he had purchased more pizza and less Coke 
D) Fernando could have increased his total utility by purchasing more Coke but the same quantity of pizza 
E) Fernando could have increased his total utility by purchasing more pizza but the same quantity of Coke 
A) Fernando allocated his money in a way that maximized his total utility 
B) Fernando's total utility would have been greater if he had purchased more Coke and less pizza 
C) Fernando's total utility would have been greater if he had purchased more pizza and less Coke 
D) Fernando could have increased his total utility by purchasing more Coke but the same quantity of pizza 
E) Fernando could have increased his total utility by purchasing more pizza but the same quantity of Coke

Question 5

Joe the Economist tells his wife, Jane, that he wants to spend a weekend fishing with his friends.She replies, "You don't love me anymore." Just before she hits Joe with a croquet mallet, Joe explains to her that she has confused the concepts of

Accepted Answer

A) marginal utility and price 
B) income and price 
C) marginal utility and total utility 
D) love and death 
E) consumer surplus and utility 
A) marginal utility and price 
B) income and price 
C) marginal utility and total utility 
D) love and death 
E) consumer surplus and utility

Question 6

Which of the following economic explanations describes "cabin fever"?

Accepted Answer

A) The marginal utility of winter is greater than zero. 
B) Each additional cold day brings more disutility. 
C) The law of increasing marginal utility as applied to cabins. 
D) Spending winter in a cabin is a normal good. 
E) Each additional cold day brings more utility. 
A) The marginal utility of winter is greater than zero. 
B) Each additional cold day brings more disutility. 
C) The law of increasing marginal utility as applied to cabins. 
D) Spending winter in a cabin is a normal good. 
E) Each additional cold day brings more utility.

Question 7

Utility is

Accepted Answer

A) the sense of pleasure or satisfaction derived from consuming goods and services 
B) the cost of acquiring goods and services 
C) the profit consumers earn from consuming goods and services 
D) the monetary value to consumers of goods and services 
E) the desire to consume goods and services 
A) the sense of pleasure or satisfaction derived from consuming goods and services 
B) the cost of acquiring goods and services 
C) the profit consumers earn from consuming goods and services 
D) the monetary value to consumers of goods and services 
E) the desire to consume goods and services

Question 8

Exhibit 6-21   Refer to Exhibit 6-21.When this market is in equilibrium, the consumer surplus is the area of:

Accepted Answer

A) A 
B) A + B 
C) B 
D) C 
E) D 
A) A 
B) A + B 
C) B 
D) C 
E) D

Question 9

Opportunity cost is measurable only when prices are known

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 6-1   Consider Exhibit 6-1 which shows the total utility derived from various numbers of glasses of milk consumed in a day.The marginal utility of the first glass of milk is

Accepted Answer

A) 0 units of utility 
B) 5 units of utility 
C) 8 units of utility 
D) 12 units of utility 
E) 14 units of utility 
A) 0 units of utility 
B) 5 units of utility 
C) 8 units of utility 
D) 12 units of utility 
E) 14 units of utility

Question 11

Assume that you allocate your income to calzones and juice and that you have not yet spent your entire budget.If the marginal utility of a fourth calzone is 100 and the marginal utility of a third glass of juice is 50, you would

Accepted Answer

A) eat a fourth calzone because it has higher marginal utility 
B) drink a third glass of juice 
C) drink a third glass of juice if its price is lower than the price of calzones 
D) drink a third glass of juice if its price is less than half the price of the calzone 
E) drink a third glass of juice because it has lower marginal utility 
A) eat a fourth calzone because it has higher marginal utility 
B) drink a third glass of juice 
C) drink a third glass of juice if its price is lower than the price of calzones 
D) drink a third glass of juice if its price is less than half the price of the calzone 
E) drink a third glass of juice because it has lower marginal utility

Question 12

Exhibit 6-5   In Exhibit 6-5, the total utility of consuming three scones is

Accepted Answer

A) 34 
B) 6 
C) 22 
D) 12 
E) 24 
A) 34 
B) 6 
C) 22 
D) 12 
E) 24

Question 13

Exhibit 6-1   Consider Exhibit 6-1 which shows the total utility derived from various numbers of glasses of milk consumed in a day.The marginal utility of the fourth glass of milk is

Accepted Answer

A) 0 units of utility 
B) 5 units of utility 
C) 8 units of utility 
D) 12 units of utility 
E) 14 units of utility 
A) 0 units of utility 
B) 5 units of utility 
C) 8 units of utility 
D) 12 units of utility 
E) 14 units of utility

Question 14

Carvel advertises a football-shaped ice cream cake for $7; you can buy a second one for only $4.What do they know about consumer preferences?

Accepted Answer

A) Consumers would never buy a second ice cream cake. 
B) Two cakes are worth less to the consumer than one. 
C) Marginal utility of ice cream cakes diminishes. 
D) Consumers only value the first cake at $4. 
E) Consumers value all cakes they eat at $4. 
A) Consumers would never buy a second ice cream cake. 
B) Two cakes are worth less to the consumer than one. 
C) Marginal utility of ice cream cakes diminishes. 
D) Consumers only value the first cake at $4. 
E) Consumers value all cakes they eat at $4.

Question 15

Exhibit 6-11   At point a in Exhibit 6-11, consumer surplus is

Accepted Answer

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

Question 16

Exhibit 6-8     Consider Exhibit 6-8.Which of the following best describes what it reveals about total and marginal utility for baseball game tickets?

Accepted Answer

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

Question 17

Exhibit 6-7   Consider Exhibit 6-7.Which of the following is true?

Accepted Answer

A) A fourth can of Pepsi increases total utility by 12, to 126. 
B) A fourth can of Pepsi increases total utility by 18, to 114. 
C) A fourth can of Pepsi increases total utility by 114. 
D) All four cans of Pepsi together yield a total utility of 18. 
E) All four cans of Pepsi together yield a total utility of 322. 
A) A fourth can of Pepsi increases total utility by 12, to 126. 
B) A fourth can of Pepsi increases total utility by 18, to 114. 
C) A fourth can of Pepsi increases total utility by 114. 
D) All four cans of Pepsi together yield a total utility of 18. 
E) All four cans of Pepsi together yield a total utility of 322.

Question 18

Exhibit 6-20   Refer to Exhibit 6-20.If D, D' and D'' represents the demand curves for the only three consumers in a market, then the market quantity demanded at a price of $15 will be:

Accepted Answer

A) 150 
B) 120 
C) 90 
D) 60 
E) 30 
A) 150 
B) 120 
C) 90 
D) 60 
E) 30

Question 19

As long as scarcity exists,

Accepted Answer

A) product prices play no role in utility maximization 
B) income plays no role in utility maximization 
C) income and product prices must both be considered in utility maximization 
D) consumers maximize utility by consuming all products until their marginal utility is zero 
E) product prices will be zero 
A) product prices play no role in utility maximization 
B) income plays no role in utility maximization 
C) income and product prices must both be considered in utility maximization 
D) consumers maximize utility by consuming all products until their marginal utility is zero 
E) product prices will be zero

Question 20

Exhibit 6-2   Consider Exhibit 6-2 which shows the marginal utility of consuming milk.The total utility from 2 glasses of milk is

Accepted Answer

A) 0 units of utility 
B) 30 units of utility 
C) 35 units of utility 
D) 65 units of utility 
E) impossible to determine 
A) 0 units of utility 
B) 30 units of utility 
C) 35 units of utility 
D) 65 units of utility 
E) impossible to determine

Exam 6: Consumer Choice and Demand

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

The marginal utility of a second copy of today's New York Times is

As a consumer allocates income between good A and good B, total utility is maximized when

Joe the Economist tells his wife, Jane, that he wants to spend a weekend fishing with his friends.She replies, "You don't love me anymore." Just before she hits Joe with a croquet mallet, Joe explains to her that she has confused the concepts of

Which of the following economic explanations describes "cabin fever"?

Utility is

Exhibit 6-21 Refer to Exhibit 6-21.When this market is in equilibrium, the consumer surplus is the area of:

Opportunity cost is measurable only when prices are known

Exhibit 6-1 Consider Exhibit 6-1 which shows the total utility derived from various numbers of glasses of milk consumed in a day.The marginal utility of the first glass of milk is

Assume that you allocate your income to calzones and juice and that you have not yet spent your entire budget.If the marginal utility of a fourth calzone is 100 and the marginal utility of a third glass of juice is 50, you would

Exhibit 6-5 In Exhibit 6-5, the total utility of consuming three scones is

Exhibit 6-1 Consider Exhibit 6-1 which shows the total utility derived from various numbers of glasses of milk consumed in a day.The marginal utility of the fourth glass of milk is

Carvel advertises a football-shaped ice cream cake for $7; you can buy a second one for only $4.What do they know about consumer preferences?

Exhibit 6-11 At point a in Exhibit 6-11, consumer surplus is

Exhibit 6-8 Consider Exhibit 6-8.Which of the following best describes what it reveals about total and marginal utility for baseball game tickets?

Exhibit 6-7 Consider Exhibit 6-7.Which of the following is true?

Exhibit 6-20 Refer to Exhibit 6-20.If D, D' and D'' represents the demand curves for the only three consumers in a market, then the market quantity demanded at a price of $15 will be:

As long as scarcity exists,

Exhibit 6-2 Consider Exhibit 6-2 which shows the marginal utility of consuming milk.The total utility from 2 glasses of milk is

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

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