Question 1

If a consumer purchases more of a product,then most likely the marginal utility of _____.

Accepted Answer

A) that product decreases 
B) that product remains the same 
C) other products decreases 
D) other products increases 
E) that product increases 
A) that product decreases 
B) that product remains the same 
C) other products decreases 
D) other products increases 
E) that product increases

Question 2

Which of the following will most likely happen when a person's income increases,other things equal?

Accepted Answer

A) The budget line will shift outward 
B) The budget line will become steeper 
C) The budget line will become flatter 
D) The indifference curves will shift outward 
E) The indifference curves will shift downward 
A) The budget line will shift outward 
B) The budget line will become steeper 
C) The budget line will become flatter 
D) The indifference curves will shift outward 
E) The indifference curves will shift downward

Question 3

Marginal utility is negative when total utility is increasing.

Accepted Answer

A) True 
 B)False

Question 4

The below figure shows the various combinations of the goods X and Y that yield different levels of utility. Figure 6.3  
- In Figure 6.3,if the price of one unit of good X and good Y is $30 and $20,respectively,the consumer's income is _____.

Accepted Answer

A) $50 
B) $150 
C) $400 
D) $600 
E) $900 
A) $50 
B) $150 
C) $400 
D) $600 
E) $900

Question 5

According to the law of diminishing utility,_____.

Accepted Answer

A) the same tax rate should be applied to every dollar 
B) the rich people should have a lower tax rate 
C) the rich people should have a higher tax rate 
D) the total burden on the society from a tax will be less if proportional taxation is used 
E) the poorer people should have a lower tax rate 
A) the same tax rate should be applied to every dollar 
B) the rich people should have a lower tax rate 
C) the rich people should have a higher tax rate 
D) the total burden on the society from a tax will be less if proportional taxation is used 
E) the poorer people should have a lower tax rate

Question 6

The table given below reports the total utility derived by an individual from the consumption of different units of goods A,B,andC. Table 6.4
  
-Refer to Table 6.4.If the consumer's income increases from $10 to $20 but the prices of each of the goods doubles,the consumer would maximize utility by purchasing _____.

Accepted Answer

A) 7 units of good A,7 units of good B,and 7 units of good C 
B) 3 units of good A,5 units of good B,and 6 units of good C 
C) 2 units of good A,6 units of good B,and 7 units of good C 
D) 3 units of good A,6 units of good B,and 4 units of good C 
E) 6 units of good A,0 units of good B,and 7 units of good C 
A) 7 units of good A,7 units of good B,and 7 units of good C 
B) 3 units of good A,5 units of good B,and 6 units of good C 
C) 2 units of good A,6 units of good B,and 7 units of good C 
D) 3 units of good A,6 units of good B,and 4 units of good C 
E) 6 units of good A,0 units of good B,and 7 units of good C

Question 7

A ten-year-old boy spent his allowance on a soccer ball and a baseball glove.He said he could not be happier buying anything else.The price of the ball was $5,while the price of the glove was $10.If the marginal utility he received from the ball was 15 utils,then:

Accepted Answer

A) the marginal utility he received from expenditure on the glove was 3 utils. 
B) the marginal utility he received from expenditure on the glove was 30 utils. 
C) the total utility per dollar he received from expenditure on the glove was 3 utils. 
D) the total utility per dollar he received from expenditure on the glove was 10 utils. 
E) the marginal utility he received from the expenditure of the glove was 10 utils 
A) the marginal utility he received from expenditure on the glove was 3 utils. 
B) the marginal utility he received from expenditure on the glove was 30 utils. 
C) the total utility per dollar he received from expenditure on the glove was 3 utils. 
D) the total utility per dollar he received from expenditure on the glove was 10 utils. 
E) the marginal utility he received from the expenditure of the glove was 10 utils

Question 8

The total utility of the consumer diminishes whenever:

Accepted Answer

A) he or she buys an additional unit of a good. 
B) his or her marginal utility decreases. 
C) his or her total utility increases at a decreasing rate. 
D) the last unit consumed of a particular good is distasteful or provides dissatisfaction. 
E) other consumers are also purchasing the product. 
A) he or she buys an additional unit of a good. 
B) his or her marginal utility decreases. 
C) his or her total utility increases at a decreasing rate. 
D) the last unit consumed of a particular good is distasteful or provides dissatisfaction. 
E) other consumers are also purchasing the product.

Question 9

With an increase in income,the consumer will maximize utility on a new indifference curve that represents a higher level of utility.

Accepted Answer

A) True 
 B)False

Question 10

The table given below depicts the total utility derived from the consumption of a good. Table 6.1
 
-If one were to plot the data from Table 6.1 (with utility on the vertical axis and quantity of the good on the horizontal axis):

Accepted Answer

A) the total utility curve would begin to decline after the second unit of the good. 
B) the marginal utility curve would begin to decline after the third unit of the good. 
C) the marginal utility curve would intersect the horizontal axis at the third unit of the good. 
D) the marginal utility curve would intersect the horizontal axis at the second unit of the good. 
E) the total utility curve would rise from the first unit to the fifth unit. 
A) the total utility curve would begin to decline after the second unit of the good. 
B) the marginal utility curve would begin to decline after the third unit of the good. 
C) the marginal utility curve would intersect the horizontal axis at the third unit of the good. 
D) the marginal utility curve would intersect the horizontal axis at the second unit of the good. 
E) the total utility curve would rise from the first unit to the fifth unit.

Question 11

Mr.Rational has $27 that he plans to spend purchasing 5 units of good X (priced at $3 per unit) and 6 units of good Y (priced at $2 per unit).The marginal utility of the fifth unit of X is 30,and the marginal utility of the sixth unit of Y is 30.If Mr.Rational is a utility maximizer,he should:

Accepted Answer

A) not buy anything. 
B) buy more of X and less of Y. 
C) buy less of X and more of Y. 
D) buy X and Y in the quantities indicated. 
E) but less of X and even lesser than that of Y. 
A) not buy anything. 
B) buy more of X and less of Y. 
C) buy less of X and more of Y. 
D) buy X and Y in the quantities indicated. 
E) but less of X and even lesser than that of Y.

Question 12

Marginal utility diminishes more quickly:

Accepted Answer

A) the less durable the good is. 
B) the greater the number of consumers consuming the good. 
C) the shorter the time period between two successive consumptions. 
D) the greater the number of firms producing the good. 
E) the cheaper the good is. 
A) the less durable the good is. 
B) the greater the number of consumers consuming the good. 
C) the shorter the time period between two successive consumptions. 
D) the greater the number of firms producing the good. 
E) the cheaper the good is.

Question 13

A consumer is in equilibrium when:

Accepted Answer

A) his or her marginal utility derived from each good is maximized. 
B) each dollar spent on each item provides more and more satisfaction. 
C) each dollar spent on each item provides less and less satisfaction. 
D) the last dollar spent on each item provides the same additional satisfaction as that dollar would if spent on any other item. 
E) his or her average utility for each item is the same. 
A) his or her marginal utility derived from each good is maximized. 
B) each dollar spent on each item provides more and more satisfaction. 
C) each dollar spent on each item provides less and less satisfaction. 
D) the last dollar spent on each item provides the same additional satisfaction as that dollar would if spent on any other item. 
E) his or her average utility for each item is the same.

Question 14

An increase in income _____.

Accepted Answer

A) makes the budget line flatter 
B) makes the budget line steeper 
C) makes the consumer worse off 
D) makes the consumer achieve a higher level of utility 
E) makes the consumer more selfish 
A) makes the budget line flatter 
B) makes the budget line steeper 
C) makes the consumer worse off 
D) makes the consumer achieve a higher level of utility 
E) makes the consumer more selfish

Question 15

Derek has $1 to spend at the grocery store.An apple,an orange,and a banana cost $.50 each.If Derek's MUA/PA (ratio of marginal utility to price) of an apple is 45,MUO/PO of an orange is 38,and MUB/PB of a banana is 52,he will purchase a(n) _____ first and a(n) _____ second.

Accepted Answer

A) apple; orange 
B) orange; apple 
C) banana; orange 
D) banana; apple 
E) orange; banana 
A) apple; orange 
B) orange; apple 
C) banana; orange 
D) banana; apple 
E) orange; banana

Question 16

When marginal utility is negative,total utility is _____.

Accepted Answer

A) increasing 
B) at a minimum 
C) equal to zero 
D) decreasing 
E) at a maximum 
A) increasing 
B) at a minimum 
C) equal to zero 
D) decreasing 
E) at a maximum

Question 17

Consumers should allocate their income so that the marginal utility associated with the:

Accepted Answer

A) first dollar spent is equal for all goods. 
B) last dollar spent is equal for all goods. 
C) last dollar spent is lower for high-priced items than for lower- priced items. 
D) first dollar spent is greater for high-priced items than for lower-priced items. 
E) first dollar spent is less for high-priced items than for lower-priced items. 
A) first dollar spent is equal for all goods. 
B) last dollar spent is equal for all goods. 
C) last dollar spent is lower for high-priced items than for lower- priced items. 
D) first dollar spent is greater for high-priced items than for lower-priced items. 
E) first dollar spent is less for high-priced items than for lower-priced items.

Question 18

Suppose that apples and bananas both cost the same,but the marginal utility of bananas is twice as high as that for apples.The consumer should purchase more apples and fewer bananas in order to maximize utility.

Accepted Answer

A) True 
 B)False

Question 19

In order to maximize utility,consumers _____.

Accepted Answer

A) continue to make purchases until the marginal utility of each good is zero 
B) compare the marginal utilities of the last dollar spent on each good 
C) equate the total utilities of each good consumed 
D) continue to purchase a good until total utility is equal to zero 
E) will continue purchasing till diminishing marginal utility is not achieved 
A) continue to make purchases until the marginal utility of each good is zero 
B) compare the marginal utilities of the last dollar spent on each good 
C) equate the total utilities of each good consumed 
D) continue to purchase a good until total utility is equal to zero 
E) will continue purchasing till diminishing marginal utility is not achieved

Question 20

The below figure shows the various combinations of the goods X and Y that yield different levels of utility. Figure 6.3  
- Refer to Figure 6.3.The consumer prefers _____ to _____.

Accepted Answer

A) A; C 
B) B; A 
C) B; D 
D) D; E 
E) I1; I2 
A) A; C 
B) B; A 
C) B; D 
D) D; E 
E) I1; I2

Exam 6: Consumer Choice

If a consumer purchases more of a product,then most likely the marginal utility of _____.

Which of the following will most likely happen when a person's income increases,other things equal?

Marginal utility is negative when total utility is increasing.

The below figure shows the various combinations of the goods X and Y that yield different levels of utility. Figure 6.3 - In Figure 6.3,if the price of one unit of good X and good Y is $30 and $20,respectively,the consumer's income is _____.

According to the law of diminishing utility,_____.

A ten-year-old boy spent his allowance on a soccer ball and a baseball glove.He said he could not be happier buying anything else.The price of the ball was $5,while the price of the glove was $10.If the marginal utility he received from the ball was 15 utils,then:

The total utility of the consumer diminishes whenever:

With an increase in income,the consumer will maximize utility on a new indifference curve that represents a higher level of utility.

The table given below depicts the total utility derived from the consumption of a good. Table 6.1 -If one were to plot the data from Table 6.1 (with utility on the vertical axis and quantity of the good on the horizontal axis):

Mr.Rational has $27 that he plans to spend purchasing 5 units of good X (priced at $3 per unit) and 6 units of good Y (priced at $2 per unit).The marginal utility of the fifth unit of X is 30,and the marginal utility of the sixth unit of Y is 30.If Mr.Rational is a utility maximizer,he should:

Marginal utility diminishes more quickly:

A consumer is in equilibrium when:

An increase in income _____.

Derek has $1 to spend at the grocery store.An apple,an orange,and a banana cost $.50 each.If Derek's MUA/PA (ratio of marginal utility to price) of an apple is 45,MUO/PO of an orange is 38,and MUB/PB of a banana is 52,he will purchase a(n) _____ first and a(n) _____ second.

When marginal utility is negative,total utility is _____.

Consumers should allocate their income so that the marginal utility associated with the:

Suppose that apples and bananas both cost the same,but the marginal utility of bananas is twice as high as that for apples.The consumer should purchase more apples and fewer bananas in order to maximize utility.

In order to maximize utility,consumers _____.

The below figure shows the various combinations of the goods X and Y that yield different levels of utility. Figure 6.3 - Refer to Figure 6.3.The consumer prefers _____ to _____.

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Derek has $1 to spend at the grocery store.An apple,an orange,and a banana cost $.50 each.If Derek's MU_A/P_A (ratio of marginal utility to price) of an apple is 45,MU_O/P_O of an orange is 38,and MU_B/P_B of a banana is 52,he will purchase a(n) _ first and a(n) _ second.

The below figure shows the various combinations of the goods X and Y that yield different levels of utility. Figure 6.3 - Refer to Figure 6.3.The consumer prefers _ to _.