Question 1

As Sean's consumption of rice goes up, his

Accepted Answer

A)  average utility from consuming rice increases. 
B)  total utility from consuming rice increases. 
C)  marginal utility from consuming rice increases. 
D)  elasticity of utility from consuming rice increases. 
A)  average utility from consuming rice increases. 
B)  total utility from consuming rice increases. 
C)  marginal utility from consuming rice increases. 
D)  elasticity of utility from consuming rice increases.

Question 2

What is the utility-maximizing rule?

Accepted Answer

The utility-maximizing rule states that

Question 3

As Goldilocks consumes more gummy bears, her total utility ________ and her marginal utility from gummy bears ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 4

Lucky buys hats for $20 but Lucky will not sell one of her hats for less than $35. Lucky is ________.

Accepted Answer

A)  displaying the endowment effect 
B)  making decisions using her prefrontal cortex 
C)  exhibiting bounded self-interest 
D)  showing unbounded will power 
A)  displaying the endowment effect 
B)  making decisions using her prefrontal cortex 
C)  exhibiting bounded self-interest 
D)  showing unbounded will power

Question 5

Explain why total utility is maximized when the marginal utility per dollar on all goods is equal.

Accepted Answer

It is easiest to prove that total utilit

Question 6

Betty consumes only milkshakes and sandwiches and maximizes her total utility. Suppose that the prices of a milkshakes and sandwiches both double and at the same time Betty's income doubles. Betty buys ________ sandwiches and her marginal utility from sandwiches ________.

Accepted Answer

A)  more; increases 
B)  fewer; decreases 
C)  more; decreases 
D)  the same number of; remains the same 
A)  more; increases 
B)  fewer; decreases 
C)  more; decreases 
D)  the same number of; remains the same

Question 7

Robinson spends all his income on mangos and bananas. Mangos cost $3 per pound and bananas cost $1 per pound. The marginal utility is 30 for the last pound of mangos purchased and 8 for the last pound of bananas. To maximize his utility, Robinson should buy

Accepted Answer

A)  more mangos and fewer bananas. 
B)  more bananas and fewer mangos. 
C)  the present combination of goods. 
D)  only bananas. 
A)  more mangos and fewer bananas. 
B)  more bananas and fewer mangos. 
C)  the present combination of goods. 
D)  only bananas.

Question 8

Marginal utility theory predicts that when the price of one good rises, the demand for another good is a substitute increases. This change occurs because of

Accepted Answer

A)  an increase in the marginal utility per dollar from the substitute good. 
B)  an increase in the marginal utility of the substitute good. 
C)  a decrease in the marginal utility per dollar from the good whose price has risen. 
D)  a decrease in the marginal utility of the good whose price has risen. 
A)  an increase in the marginal utility per dollar from the substitute good. 
B)  an increase in the marginal utility of the substitute good. 
C)  a decrease in the marginal utility per dollar from the good whose price has risen. 
D)  a decrease in the marginal utility of the good whose price has risen.

Question 9

-The table above gives Jane's total utility from magazines and CDs. The price of a magazine is $4 and the price of a CD is $10. If Jane's total budget for magazines and CDs is $70.00 per week, what is her total utility at her utility maximizing consumer equilibrium?

Accepted Answer

A)  2480 units 
B)  1870 units 
C)  210 units 
D)  30 units 
A)  2480 units 
B)  1870 units 
C)  210 units 
D)  30 units

Question 10

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. Jean maximizes utility and buys only sodas and slices of pizza. If the price of a soda increases to $3 each, Jean's marginal utility per soda

Accepted Answer

A)  will increase and she'll buy more soda. 
B)  will decrease and she'll buy fewer sodas. 
C)  will decrease and she'll buy more pizza. 
D)  Both B and C are correct. 
A)  will increase and she'll buy more soda. 
B)  will decrease and she'll buy fewer sodas. 
C)  will decrease and she'll buy more pizza. 
D)  Both B and C are correct.

Question 11

The total utility from three skirts is

Accepted Answer

A)  three times the marginal utility of the third skirt. 
B)  three times the price of a skirt. 
C)  three skirts divided by total income. 
D)  the sum of the marginal utility of the first skirt plus the marginal utility of the second skirt plus the marginal utility of the third skirt. 
A)  three times the marginal utility of the third skirt. 
B)  three times the price of a skirt. 
C)  three skirts divided by total income. 
D)  the sum of the marginal utility of the first skirt plus the marginal utility of the second skirt plus the marginal utility of the third skirt.

Question 12

When Kathryn spends her entire budget and equates marginal utility per dollar across all goods, then Kathryn's total utility is maximized.

Accepted Answer

A) True 
 B)False

Question 13

According to the principle of diminishing marginal utility, as the quantity of a good or service consumed increases, total utility

Accepted Answer

A)  increases. 
B)  decreases. 
C)  is unchanging. 
D)  is zero. 
A)  increases. 
B)  decreases. 
C)  is unchanging. 
D)  is zero.

Question 14

Eclairs Cream puffs  
-The table gives the total utility Jamal derives from the consumption of eclairs and cream puffs. Jamal has $12 to spend on these two confectionery goods. The price of an eclair is $3 and the price of a cream puff is $1.50.
a) Jamal's budget is $12. In order for Jamal to maximize his utility, how many eclairs and cream puffs should he buy?
b) Suppose the price of an eclair increase to $6. Jamal's income does not change and neither does the price of a cream puff. What combination of eclairs and cream puffs will Jamal buy now?
c) Using your answers to parts (a) and (b), derive two points on Jamal's demand curve for eclairs.

Accepted Answer

a) Jamal's utility maximizing combinatio

Question 15

A behavioral economist will explain Tom's donation to charity by saying that Tom is displaying ________.

Accepted Answer

A)  the endowment effect 
B)  bounded rationality 
C)  bounded self-interest 
D)  bounded will power 
A)  the endowment effect 
B)  bounded rationality 
C)  bounded self-interest 
D)  bounded will power

Question 16

Andy spends $30 a week on movies and magazines. The price of a movie is $8, the price of a magazine is $2, and Andy sees 3 movies a week and buys 3 magazines. The price of a magazine increases to $4 and Andy's brother gives him $6 a week so that he can still see 3 movies a week and buy 3 magazines. In this situation, Andy will see ________ movies a week and buy ________ magazines.

Accepted Answer

A)  fewer than 3; fewer than 3 
B)  3; 3 
C)  fewer than 3; more than 3 
D)  more than 3; fewer than 3 
A)  fewer than 3; fewer than 3 
B)  3; 3 
C)  fewer than 3; more than 3 
D)  more than 3; fewer than 3

Question 17

Economists using marginal utility theory assume that consumers' objectives are to

Accepted Answer

A)  maximize their total utility. 
B)  maximize their marginal utility. 
C)  maximize their income. 
D)  none of the above. 
A)  maximize their total utility. 
B)  maximize their marginal utility. 
C)  maximize their income. 
D)  none of the above.

Question 18

What are the two conditions that are met if a consumer is maximizing utility?

Accepted Answer

There are two conditions: (1)

Question 19

Ricardo buys cola and popcorn. Cola sells for $0.50 a can and popcorn sells for $1 per bag. He is in consumer equilibrium. The price of a cola jumps to $1 per can. In his new consumer equilibrium, Ricardo's

Accepted Answer

A)  marginal utility of cola will be equal to his marginal utility of popcorn. 
B)  marginal utility per dollar spent will be 2. 
C)  total utility will be higher. 
D)  marginal utility of cola will decrease. 
A)  marginal utility of cola will be equal to his marginal utility of popcorn. 
B)  marginal utility per dollar spent will be 2. 
C)  total utility will be higher. 
D)  marginal utility of cola will decrease.

Question 20

Which statement is TRUE about Mr. McConaughey's marginal utility from spending time with family and friends and breaking a sweat?

Accepted Answer

A)  The marginal utility Mr. McConaughey gets from the first hour of spending time with his family is less than the marginal utility from the first hour of breaking a sweat. 
B)  The marginal utility Mr. McConaughey gets from the third hour of spending time with his family is less than the marginal utility from the fourth hour of breaking a sweat. 
C)  The marginal utility Mr. McConaughey gets from the fourth hour of spending time with his family is greater than the marginal utility from the fourth hour of breaking a sweat. 
D)  The marginal utility Mr. McConaughey gets from the second hour of spending time with his family is greater than the marginal utility from the first hour of breaking a sweat. 
A)  The marginal utility Mr. McConaughey gets from the first hour of spending time with his family is less than the marginal utility from the first hour of breaking a sweat. 
B)  The marginal utility Mr. McConaughey gets from the third hour of spending time with his family is less than the marginal utility from the fourth hour of breaking a sweat. 
C)  The marginal utility Mr. McConaughey gets from the fourth hour of spending time with his family is greater than the marginal utility from the fourth hour of breaking a sweat. 
D)  The marginal utility Mr. McConaughey gets from the second hour of spending time with his family is greater than the marginal utility from the first hour of breaking a sweat.

As Sean's consumption of rice goes up, his

What is the utility-maximizing rule?

As Goldilocks consumes more gummy bears, her total utility and her marginal utility from gummy bears .

Lucky buys hats for $20 but Lucky will not sell one of her hats for less than $35. Lucky is ________.

Explain why total utility is maximized when the marginal utility per dollar on all goods is equal.

Betty consumes only milkshakes and sandwiches and maximizes her total utility. Suppose that the prices of a milkshakes and sandwiches both double and at the same time Betty's income doubles. Betty buys sandwiches and her marginal utility from sandwiches .

Robinson spends all his income on mangos and bananas. Mangos cost $3 per pound and bananas cost $1 per pound. The marginal utility is 30 for the last pound of mangos purchased and 8 for the last pound of bananas. To maximize his utility, Robinson should buy

Marginal utility theory predicts that when the price of one good rises, the demand for another good is a substitute increases. This change occurs because of

-The table above gives Jane's total utility from magazines and CDs. The price of a magazine is $4 and the price of a CD is $10. If Jane's total budget for magazines and CDs is $70.00 per week, what is her total utility at her utility maximizing consumer equilibrium?

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. Jean maximizes utility and buys only sodas and slices of pizza. If the price of a soda increases to $3 each, Jean's marginal utility per soda

The total utility from three skirts is

When Kathryn spends her entire budget and equates marginal utility per dollar across all goods, then Kathryn's total utility is maximized.

According to the principle of diminishing marginal utility, as the quantity of a good or service consumed increases, total utility

A behavioral economist will explain Tom's donation to charity by saying that Tom is displaying ________.

Economists using marginal utility theory assume that consumers' objectives are to

What are the two conditions that are met if a consumer is maximizing utility?

Ricardo buys cola and popcorn. Cola sells for $0.50 a can and popcorn sells for $1 per bag. He is in consumer equilibrium. The price of a cola jumps to $1 per can. In his new consumer equilibrium, Ricardo's

Which statement is TRUE about Mr. McConaughey's marginal utility from spending time with family and friends and breaking a sweat?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 8: Utility and Demand

As Sean's consumption of rice goes up, his

What is the utility-maximizing rule?

As Goldilocks consumes more gummy bears, her total utility ________ and her marginal utility from gummy bears ________.

Lucky buys hats for $20 but Lucky will not sell one of her hats for less than $35. Lucky is ________.

Explain why total utility is maximized when the marginal utility per dollar on all goods is equal.

Betty consumes only milkshakes and sandwiches and maximizes her total utility. Suppose that the prices of a milkshakes and sandwiches both double and at the same time Betty's income doubles. Betty buys ________ sandwiches and her marginal utility from sandwiches ________.

Robinson spends all his income on mangos and bananas. Mangos cost $3 per pound and bananas cost $1 per pound. The marginal utility is 30 for the last pound of mangos purchased and 8 for the last pound of bananas. To maximize his utility, Robinson should buy

Marginal utility theory predicts that when the price of one good rises, the demand for another good is a substitute increases. This change occurs because of

-The table above gives Jane's total utility from magazines and CDs. The price of a magazine is $4 and the price of a CD is $10. If Jane's total budget for magazines and CDs is $70.00 per week, what is her total utility at her utility maximizing consumer equilibrium?

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. Jean maximizes utility and buys only sodas and slices of pizza. If the price of a soda increases to $3 each, Jean's marginal utility per soda

The total utility from three skirts is

When Kathryn spends her entire budget and equates marginal utility per dollar across all goods, then Kathryn's total utility is maximized.

According to the principle of diminishing marginal utility, as the quantity of a good or service consumed increases, total utility

A behavioral economist will explain Tom's donation to charity by saying that Tom is displaying ________.

Economists using marginal utility theory assume that consumers' objectives are to

What are the two conditions that are met if a consumer is maximizing utility?

Ricardo buys cola and popcorn. Cola sells for $0.50 a can and popcorn sells for $1 per bag. He is in consumer equilibrium. The price of a cola jumps to $1 per can. In his new consumer equilibrium, Ricardo's

Which statement is TRUE about Mr. McConaughey's marginal utility from spending time with family and friends and breaking a sweat?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

As Goldilocks consumes more gummy bears, her total utility and her marginal utility from gummy bears .

Betty consumes only milkshakes and sandwiches and maximizes her total utility. Suppose that the prices of a milkshakes and sandwiches both double and at the same time Betty's income doubles. Betty buys sandwiches and her marginal utility from sandwiches .