Question 1

The water and diamonds paradox of value

Accepted Answer

A)  is that water is essential for life and yet is cheap, whereas diamonds are totally nonessential and yet are expensive. 
B)  points out that we generally have a low total utility of water and a high total utility of diamonds. 
C)  is resolved by the principle that market price is determined by total utility, not marginal utility. 
D)  none of the above 
A)  is that water is essential for life and yet is cheap, whereas diamonds are totally nonessential and yet are expensive. 
B)  points out that we generally have a low total utility of water and a high total utility of diamonds. 
C)  is resolved by the principle that market price is determined by total utility, not marginal utility. 
D)  none of the above

Question 2

The Denver Broncos is a football team in the NFL, the Colorado Crush was an arena football team, and the Highlands Ranch Falcons is a local High School team. Broncos tickets cost about $415, Crush tickets cost between $30 and $85 and Falcons tickets are $6. What does marginal utility theory predict about the marginal utility per dollar from each of these football games?

Accepted Answer

A)  The marginal utility per dollar will be greatest for the Broncos. 
B)  The marginal utility per dollar will be equal for all games. 
C)  The marginal utility per dollar will be greatest for the Crush. 
D)  The marginal utility per dollar will be greatest for the Falcons. 
A)  The marginal utility per dollar will be greatest for the Broncos. 
B)  The marginal utility per dollar will be equal for all games. 
C)  The marginal utility per dollar will be greatest for the Crush. 
D)  The marginal utility per dollar will be greatest for the Falcons.

Question 3

-The above table shows Homer's utility from boxes of doughnuts. As Homer's consumption of doughnuts increases, his

Accepted Answer

A)  marginal utility is positive and increasing. 
B)  marginal utility is positive but decreasing. 
C)  marginal utility is negative but increasing. 
D)  marginal utility is negative and decreasing. 
A)  marginal utility is positive and increasing. 
B)  marginal utility is positive but decreasing. 
C)  marginal utility is negative but increasing. 
D)  marginal utility is negative and decreasing.

Question 4

As you consume additional hamburgers, the relationship between total and marginal utility is that

Accepted Answer

A)  both total and marginal utility increase continuously. 
B)  both total and marginal utility decrease continuously. 
C)  total utility increases, but marginal utility decreases. 
D)  total utility decreases, but marginal utility increases. 
A)  both total and marginal utility increase continuously. 
B)  both total and marginal utility decrease continuously. 
C)  total utility increases, but marginal utility decreases. 
D)  total utility decreases, but marginal utility increases.

Question 5

With a given income and prices of goods, Marcus will be in a consumer equilibrium if ________.

Accepted Answer

A)  his marginal utility from all goods is the same 
B)  he purchases the same amounts of all goods 
C)  he maximizes his total utility 
D)  his marginal utility from all goods is at its maximum 
A)  his marginal utility from all goods is the same 
B)  he purchases the same amounts of all goods 
C)  he maximizes his total utility 
D)  his marginal utility from all goods is at its maximum

Question 6

Explain the paradox of value.

Accepted Answer

The paradox of value questions why water

Question 7

If Tom's total utility from watching one more minute of television increases but the increase for each additional minute is smaller than the previous minute, he has diminishing marginal utility.

Accepted Answer

A) True 
 B)False

Question 8

The principle of diminishing marginal utility says that

Accepted Answer

A)  marginal utility is negative as the quantity of the good consumed increases. 
B)  total utility decreases as the quantity of the good consumed increases. 
C)  total utility increases by smaller and smaller amounts as the quantity of the good consumed increases. 
D)  total utility increases by larger and larger amounts as the quantity of the good consumed increases. 
A)  marginal utility is negative as the quantity of the good consumed increases. 
B)  total utility decreases as the quantity of the good consumed increases. 
C)  total utility increases by smaller and smaller amounts as the quantity of the good consumed increases. 
D)  total utility increases by larger and larger amounts as the quantity of the good consumed increases.

Question 9

-The table above gives the utility from pens and pencils. The marginal utility derived from the third pen is

Accepted Answer

A)  200. 
B)  155. 
C)  445. 
D)  45. 
A)  200. 
B)  155. 
C)  445. 
D)  45.

Question 10

A measure of all the satisfaction you receive from all the coffee that you consume is your

Accepted Answer

A)  marginal utility of coffee. 
B)  marginal utility per dollar spent on coffee. 
C)  total utility from coffee. 
D)  marginal utility per dollar spent on coffee when you are in your consumer equilibrium. 
A)  marginal utility of coffee. 
B)  marginal utility per dollar spent on coffee. 
C)  total utility from coffee. 
D)  marginal utility per dollar spent on coffee when you are in your consumer equilibrium.

Question 11

Marginal utility measures the

Accepted Answer

A)  total utility from consumption. 
B)  additional utility from an additional unit of consumption. 
C)  average utility from an additional unit of consumption. 
D)  additional cost of an additional unit of consumption. 
A)  total utility from consumption. 
B)  additional utility from an additional unit of consumption. 
C)  average utility from an additional unit of consumption. 
D)  additional cost of an additional unit of consumption.

Question 12

Magazines Chocolate bars  
-Sonya's budget for magazines and chocolate bars is $50. Her marginal utility from these goods is shown in the table above. If the price of a magazine is $5 and the price of a chocolate bar is $2.50, which of the following combinations maximizes Sonya's utility?

Accepted Answer

A)  1 magazine and 18 chocolate bars 
B)  2 magazines and 20 chocolate bars 
C)  3 magazines and 14 chocolate bars 
D)  5 magazines and 10 chocolate bars 
A)  1 magazine and 18 chocolate bars 
B)  2 magazines and 20 chocolate bars 
C)  3 magazines and 14 chocolate bars 
D)  5 magazines and 10 chocolate bars

Question 13

George spends all his income on sandwiches and juice. George's utility is maximized when he is consuming sandwiches and juice so that the

Accepted Answer

A)  marginal utility from sandwiches equals the marginal utility from juice. 
B)  total utility from sandwiches equals the total utility from juice. 
C)  marginal utility per dollar spent on sandwiches equals the marginal utility per dollar spent on juice. 
D)  marginal utility from sandwiches is at a maximum. 
A)  marginal utility from sandwiches equals the marginal utility from juice. 
B)  total utility from sandwiches equals the total utility from juice. 
C)  marginal utility per dollar spent on sandwiches equals the marginal utility per dollar spent on juice. 
D)  marginal utility from sandwiches is at a maximum.

Question 14

Michael consumes only steak and lobster. Suppose that the price of steak rises. After Michael is back at equilibrium, compared to the situation when steak was cheaper, the marginal utility from the last steak will

Accepted Answer

A)  have increased. 
B)  not have changed. 
C)  have decreased. 
D)  not be comparable with the marginal utility before the price hike. 
A)  have increased. 
B)  not have changed. 
C)  have decreased. 
D)  not be comparable with the marginal utility before the price hike.

Question 15

Gene plays another hour of computer games rather than study for the hour even though he knows that the next day, when he takes his test, he will regret his decision. Gene is showing ________.

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

-Sarah spends $100 a year on magazines and ice cream. The table above shows her utility from each good. If the price of a magazine is $5 and the price of ice cream is $5 per gallon, how does Sarah spend the $100?

Accepted Answer

Sarah buys 6 magazines and 14

Question 17

-Total utility is the benefit received from consuming an extra unit of a good.

Accepted Answer

A) True 
 B)False

Question 18

-The above table shows Tammy's total utility from videos and CDs. If Tammy has $110 to spend on videos and CDs and if the price of a video is $10 and the price of a CD is $20, then Tammy maximizes her utility by purchasing

Accepted Answer

A)  3 CDs and 5 videos. 
B)  5 CDs and 1 video. 
C)  4 CDs and 3 videos. 
D)  none of the above. 
A)  3 CDs and 5 videos. 
B)  5 CDs and 1 video. 
C)  4 CDs and 3 videos. 
D)  none of the above.

Question 19

-The table above gives Andy's utility from popcorn. Andy's total utility from four boxes of popcorn is

Accepted Answer

A)  66. 
B)  70. 
C)  78. 
D)  82. 
A)  66. 
B)  70. 
C)  78. 
D)  82.

Question 20

Explain the concept of consumer equilibrium.

Accepted Answer

A consumer equilibrium is a situation in

The water and diamonds paradox of value

-The above table shows Homer's utility from boxes of doughnuts. As Homer's consumption of doughnuts increases, his

As you consume additional hamburgers, the relationship between total and marginal utility is that

With a given income and prices of goods, Marcus will be in a consumer equilibrium if ________.

Explain the paradox of value.

If Tom's total utility from watching one more minute of television increases but the increase for each additional minute is smaller than the previous minute, he has diminishing marginal utility.

The principle of diminishing marginal utility says that

-The table above gives the utility from pens and pencils. The marginal utility derived from the third pen is

A measure of all the satisfaction you receive from all the coffee that you consume is your

Marginal utility measures the

Magazines Chocolate bars -Sonya's budget for magazines and chocolate bars is $50. Her marginal utility from these goods is shown in the table above. If the price of a magazine is $5 and the price of a chocolate bar is $2.50, which of the following combinations maximizes Sonya's utility?

George spends all his income on sandwiches and juice. George's utility is maximized when he is consuming sandwiches and juice so that the

Michael consumes only steak and lobster. Suppose that the price of steak rises. After Michael is back at equilibrium, compared to the situation when steak was cheaper, the marginal utility from the last steak will

Gene plays another hour of computer games rather than study for the hour even though he knows that the next day, when he takes his test, he will regret his decision. Gene is showing ________.

-Sarah spends $100 a year on magazines and ice cream. The table above shows her utility from each good. If the price of a magazine is $5 and the price of ice cream is $5 per gallon, how does Sarah spend the $100?

-Total utility is the benefit received from consuming an extra unit of a good.

-The above table shows Tammy's total utility from videos and CDs. If Tammy has $110 to spend on videos and CDs and if the price of a video is $10 and the price of a CD is $20, then Tammy maximizes her utility by purchasing

-The table above gives Andy's utility from popcorn. Andy's total utility from four boxes of popcorn is

Explain the concept of consumer equilibrium.

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

The water and diamonds paradox of value

-The above table shows Homer's utility from boxes of doughnuts. As Homer's consumption of doughnuts increases, his

As you consume additional hamburgers, the relationship between total and marginal utility is that

With a given income and prices of goods, Marcus will be in a consumer equilibrium if ________.

Explain the paradox of value.

If Tom's total utility from watching one more minute of television increases but the increase for each additional minute is smaller than the previous minute, he has diminishing marginal utility.

The principle of diminishing marginal utility says that

-The table above gives the utility from pens and pencils. The marginal utility derived from the third pen is

A measure of all the satisfaction you receive from all the coffee that you consume is your

Marginal utility measures the

Magazines Chocolate bars -Sonya's budget for magazines and chocolate bars is $50. Her marginal utility from these goods is shown in the table above. If the price of a magazine is $5 and the price of a chocolate bar is $2.50, which of the following combinations maximizes Sonya's utility?

George spends all his income on sandwiches and juice. George's utility is maximized when he is consuming sandwiches and juice so that the

Michael consumes only steak and lobster. Suppose that the price of steak rises. After Michael is back at equilibrium, compared to the situation when steak was cheaper, the marginal utility from the last steak will

Gene plays another hour of computer games rather than study for the hour even though he knows that the next day, when he takes his test, he will regret his decision. Gene is showing ________.

-Sarah spends $100 a year on magazines and ice cream. The table above shows her utility from each good. If the price of a magazine is $5 and the price of ice cream is $5 per gallon, how does Sarah spend the $100?

-Total utility is the benefit received from consuming an extra unit of a good.

-The above table shows Tammy's total utility from videos and CDs. If Tammy has $110 to spend on videos and CDs and if the price of a video is $10 and the price of a CD is $20, then Tammy maximizes her utility by purchasing

-The table above gives Andy's utility from popcorn. Andy's total utility from four boxes of popcorn is

Explain the concept of consumer equilibrium.

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