Question 1

Marginal utility is the change in:

Accepted Answer

A)  total utility when an extra unit of output is produced. 
B)  marginal utility when an extra unit of output is consumed. 
C)  total utility when an extra unit of output is consumed. 
D)  average utility when an extra unit of output is consumed. 
A)  total utility when an extra unit of output is produced. 
B)  marginal utility when an extra unit of output is consumed. 
C)  total utility when an extra unit of output is consumed. 
D)  average utility when an extra unit of output is consumed.

Question 2

Exhibit 6-6 Marginal utility for data for clothes and amusement
 
Refer to Exhibit 6-6. Clothes and amusements are priced at $10 each. The marginal utility per dollar for the first unit of amusement is:

Accepted Answer

A)  0.5. 
B)  1.5. 
C)  2.0. 
D)  5.0. 
A)  0.5. 
B)  1.5. 
C)  2.0. 
D)  5.0.

Question 3

Exhibit 6-7 Marginal utility for sandwiches and sodas
 
Refer to Exhibit 6-7. If the price of a sandwich is $1 and the price of a soda is $1, Marian should spend her first dollar on a ____ and her second dollar on a ____.

Accepted Answer

A)  sandwich; soda 
B)  sandwich; sandwich 
C)  soda; sandwich 
D)  soda; soda 
A)  sandwich; soda 
B)  sandwich; sandwich 
C)  soda; sandwich 
D)  soda; soda

Question 4

According to the law of diminishing marginal utility, the marginal utility curve is

Accepted Answer

A)  vertical 
B)  flat. 
C)  upward sloping. 
D)  downward sloping. 
A)  vertical 
B)  flat. 
C)  upward sloping. 
D)  downward sloping.

Question 5

The income effect refers to a change in:

Accepted Answer

A)  income because of changes in the CPI. 
B)  the quantity demanded of a good because of a change in the buyer's real income. 
C)  the quantity demanded of a good because of a change in the buyer's money income. 
D)  price of a good because of a change in the buyer's real income. 
A)  income because of changes in the CPI. 
B)  the quantity demanded of a good because of a change in the buyer's real income. 
C)  the quantity demanded of a good because of a change in the buyer's money income. 
D)  price of a good because of a change in the buyer's real income.

Question 6

Marginal utility is defined as:

Accepted Answer

A)  the extra satisfaction the consumer receives from an extra $1 of income. 
B)  the total level of satisfaction a consumer receives upon the consumption of a certain number of goods. 
C)  the number of hours a consumer would be willing to work to receive a certain product. 
D)  the extra satisfaction a person derives from consuming an additional unit of a good. 
A)  the extra satisfaction the consumer receives from an extra $1 of income. 
B)  the total level of satisfaction a consumer receives upon the consumption of a certain number of goods. 
C)  the number of hours a consumer would be willing to work to receive a certain product. 
D)  the extra satisfaction a person derives from consuming an additional unit of a good.

Question 7

When Pepsi becomes more expensive relative to other beverages, people will purchase less Pepsi. This observation is known as the:

Accepted Answer

A)  diamond-water paradox. 
B)  law of diminishing marginal utility. 
C)  substitution effect. 
D)  income effect. 
A)  diamond-water paradox. 
B)  law of diminishing marginal utility. 
C)  substitution effect. 
D)  income effect.

Question 8

Assume a consumer purchases a combination of goods X and Y such that MUx / Px = 20 units of utility per dollar and MUy / Py = 10 units of utility per dollar. To maximize utility, the consumers should buy:

Accepted Answer

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

Question 9

Michael spends $10 a month on Pez dispensers and Superman action figures. His marginal-utility-to-price ratio for the Pez dispensers is 40, while his marginal-utility-to-price ratio for Superman action figures is 47. Explain why Michael is not maximizing his utility and how can he change his behavior to increase his utility?

Accepted Answer

To maximize utility, one must consume th

Question 10

Assume the total utilities corresponding to the first four units of a product consumed are 8, 12, 14, and 15, respectively. The marginal utility of the second unit consumed is:

Accepted Answer

A)  0. 
B)  4. 
C)  12. 
D)  20. 
A)  0. 
B)  4. 
C)  12. 
D)  20.

Question 11

If the first four units of a good consumed have marginal utilities of 8, 4, 2, and 1, respectively, this trend is an indication of the:

Accepted Answer

A)  law of consumer equilibrium. 
B)  law of diminishing marginal utility. 
C)  law of diminishing consumer surplus. 
D)  law of supply. 
A)  law of consumer equilibrium. 
B)  law of diminishing marginal utility. 
C)  law of diminishing consumer surplus. 
D)  law of supply.

Question 12

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

Accepted Answer

A)  zero. 
B)  positive. 
C)  negative. 
D)  one. 
A)  zero. 
B)  positive. 
C)  negative. 
D)  one.

Question 13

Utility is defined as the:

Accepted Answer

A)  sense of pleasure or satisfaction derived from consuming goods and services. 
B)  cost of acquiring goods and services. 
C)  profits consumers earn from consuming goods and services. 
D)  monetary value to consumers of goods and services. 
A)  sense of pleasure or satisfaction derived from consuming goods and services. 
B)  cost of acquiring goods and services. 
C)  profits consumers earn from consuming goods and services. 
D)  monetary value to consumers of goods and services.

Question 14

Bonnie gets her hair cut at her usual salon and is very happy with the results. Later that afternoon, she goes to the mall and sees that a hair salon is giving away free haircuts only on that day. If Bonnie does not take advantage of the giveaway, it is because the:

Accepted Answer

A)  marginal utility of the next haircut would be zero or negative. 
B)  marginal utility of the next haircut would increase. 
C)  marginal utility of the next haircut would be zero or positive. 
D)  total utility of both haircuts would be zero or negative. 
A)  marginal utility of the next haircut would be zero or negative. 
B)  marginal utility of the next haircut would increase. 
C)  marginal utility of the next haircut would be zero or positive. 
D)  total utility of both haircuts would be zero or negative.

Question 15

Consider a consumer who spends all income on only two goods: pizza and soda. An extra slice of pizza would give the consumer 60 extra utils, while an extra can of soda would give the consumer 20 extra utils. Pizza costs $3 per slice, and soda costs $1 per can. In this situation, the consumer:

Accepted Answer

A)  is buying too much pizza and not enough soda. 
B)  should purchase more pizza and less soda. 
C)  has maximized his or her total utility. 
D)  needs to equate the marginal utilities for pizza and soda. 
A)  is buying too much pizza and not enough soda. 
B)  should purchase more pizza and less soda. 
C)  has maximized his or her total utility. 
D)  needs to equate the marginal utilities for pizza and soda.

Question 16

Assume the price of Nikes decreases. As a result, consumers increase the quantity of Nikes purchased each year and purchase fewer Reeboks. This is an example of the:

Accepted Answer

A)  substitution effect. 
B)  income effect. 
C)  utility effect. 
D)  consumption effect. 
A)  substitution effect. 
B)  income effect. 
C)  utility effect. 
D)  consumption effect.

Question 17

Which of the following most directly reflects the law of diminishing marginal utility?

Accepted Answer

A)  After watching two football games, Terry decides to watch a third game. 
B)  A sports fan enjoys watching Monday night football rather than going to the theater. 
C)  After watching three episodes of her favorite show, Kim decides to go bowling rather than watch a fourth episode. 
D)  A musician receives the biggest ovation of the evening after playing the final number of a recital. 
A)  After watching two football games, Terry decides to watch a third game. 
B)  A sports fan enjoys watching Monday night football rather than going to the theater. 
C)  After watching three episodes of her favorite show, Kim decides to go bowling rather than watch a fourth episode. 
D)  A musician receives the biggest ovation of the evening after playing the final number of a recital.

Question 18

If Jane's marginal benefit as a consumer in the jeans market is larger than the price of a pair of jeans:

Accepted Answer

A)  Jane will not purchase any more jeans. 
B)  Jane can benefit by purchasing more jeans. 
C)  the opportunity cost of a pair of jeans is lower than the price. 
D)  Jane will decrease her total utility by purchasing more jeans. 
A)  Jane will not purchase any more jeans. 
B)  Jane can benefit by purchasing more jeans. 
C)  the opportunity cost of a pair of jeans is lower than the price. 
D)  Jane will decrease her total utility by purchasing more jeans.

Question 19

A util represents a unit of measurement for the:

Accepted Answer

A)  dollars a consumer spends on a good. 
B)  profit a firm makes from producing a good. 
C)  way a consumer will respond to a change in price. 
D)  happiness a person obtains from consuming a good. 
A)  dollars a consumer spends on a good. 
B)  profit a firm makes from producing a good. 
C)  way a consumer will respond to a change in price. 
D)  happiness a person obtains from consuming a good.

Question 20

A consumer buys only food and clothing. If the quantity of food bought increases while that of clothing remains the same, the marginal utility of food will:

Accepted Answer

A)  fall, but not as fast as the marginal utility of clothing falls. 
B)  rise, but not as fast as the marginal utility of clothing rises. 
C)  rise relative to the marginal utility of clothing. 
D)  fall relative to the marginal utility of clothing. 
A)  fall, but not as fast as the marginal utility of clothing falls. 
B)  rise, but not as fast as the marginal utility of clothing rises. 
C)  rise relative to the marginal utility of clothing. 
D)  fall relative to the marginal utility of clothing.

Exam 6: Consumer Choice Theory

Marginal utility is the change in:

Exhibit 6-6 Marginal utility for data for clothes and amusement Refer to Exhibit 6-6. Clothes and amusements are priced at $10 each. The marginal utility per dollar for the first unit of amusement is:

Exhibit 6-7 Marginal utility for sandwiches and sodas Refer to Exhibit 6-7. If the price of a sandwich is $1 and the price of a soda is $1, Marian should spend her first dollar on a ____ and her second dollar on a ____.

According to the law of diminishing marginal utility, the marginal utility curve is

The income effect refers to a change in:

Marginal utility is defined as:

When Pepsi becomes more expensive relative to other beverages, people will purchase less Pepsi. This observation is known as the:

Assume a consumer purchases a combination of goods X and Y such that MUx / Px = 20 units of utility per dollar and MUy / Py = 10 units of utility per dollar. To maximize utility, the consumers should buy:

Assume the total utilities corresponding to the first four units of a product consumed are 8, 12, 14, and 15, respectively. The marginal utility of the second unit consumed is:

If the first four units of a good consumed have marginal utilities of 8, 4, 2, and 1, respectively, this trend is an indication of the:

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

Utility is defined as the:

Bonnie gets her hair cut at her usual salon and is very happy with the results. Later that afternoon, she goes to the mall and sees that a hair salon is giving away free haircuts only on that day. If Bonnie does not take advantage of the giveaway, it is because the:

Consider a consumer who spends all income on only two goods: pizza and soda. An extra slice of pizza would give the consumer 60 extra utils, while an extra can of soda would give the consumer 20 extra utils. Pizza costs $3 per slice, and soda costs $1 per can. In this situation, the consumer:

Assume the price of Nikes decreases. As a result, consumers increase the quantity of Nikes purchased each year and purchase fewer Reeboks. This is an example of the:

Which of the following most directly reflects the law of diminishing marginal utility?

If Jane's marginal benefit as a consumer in the jeans market is larger than the price of a pair of jeans:

A util represents a unit of measurement for the:

A consumer buys only food and clothing. If the quantity of food bought increases while that of clothing remains the same, the marginal utility of food will:

Introducing the Economic Way of Thinking

Production Possibilities Opportunity Cost and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution Poverty and Discrimination

Antitrust and Regulation

Environmental Economics

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits Surpluses and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less Developed Countries

Understanding Direct and Inverse Relationships between Variables

Filters

Exhibit 6-7 Marginal utility for sandwiches and sodas Refer to Exhibit 6-7. If the price of a sandwich is $1 and the price of a soda is $1, Marian should spend her first dollar on a and her second dollar on a .

Assume a consumer purchases a combination of goods X and Y such that MU_x / P_x = 20 units of utility per dollar and MU_y / P_y = 10 units of utility per dollar. To maximize utility, the consumers should buy: