Question 1

-The above table shows Homer's utility from boxes of doughnuts. If Homer decreases his consumption of doughnuts from 4 boxes to 3 boxes, his

Accepted Answer

A)  total utility and marginal utility will both decrease. 
B)  total utility will decrease, but his marginal utility will increase. 
C)  total utility will increase, but his marginal utility will decrease. 
D)  total utility and marginal utility will both increase. 
A)  total utility and marginal utility will both decrease. 
B)  total utility will decrease, but his marginal utility will increase. 
C)  total utility will increase, but his marginal utility will decrease. 
D)  total utility and marginal utility will both increase.

Question 2

A consumer allocates his budget according to rules of utility maximization. What are the rules of utility maximization and how do they explain the paradox of value, which is that diamonds are expensive but useless, while water is inexpensive but essential?

Accepted Answer

The rules of utility maximization are to

Question 3

-From the information in the above table, what is the marginal utility of the third quart of ice cream?

Accepted Answer

A)  80 
B)  70 
C)  60 
D)  230 
A)  80 
B)  70 
C)  60 
D)  230

Question 4

Marginal utility theory assumes that when Sally consume less of a good that she was previously consuming more than one unit of, her ________.

Accepted Answer

A)  total utility increases 
B)  marginal utility increases 
C)  income increases 
D)  total utility is maximized 
A)  total utility increases 
B)  marginal utility increases 
C)  income increases 
D)  total utility is maximized

Question 5

As more of a good is consumed, its marginal utility ________ and its total utility ________.

Accepted Answer

A)  rises; rises 
B)  rises; falls 
C)  falls; rises 
D)  falls; falls 
A)  rises; rises 
B)  rises; falls 
C)  falls; rises 
D)  falls; falls

Question 6

Pizza CDs  
-Bobby spends $100 per month on pizza and CDs. His utility from these goods is shown in the table above. The price of a pizza is $10 and the price of a CD is $20. Bobby currently buys 2 pizzas and 6 CDs. To maximize his utility in the next period, he should

Accepted Answer

A)  buy more pizza and fewer CDs. 
B)  buy more CDs and fewer pizza. 
C)  buy more of both goods. 
D)  stay with the current combination of goods. 
A)  buy more pizza and fewer CDs. 
B)  buy more CDs and fewer pizza. 
C)  buy more of both goods. 
D)  stay with the current combination of goods.

Question 7

Milkshakes Sodas  
-The table above shows Tom's total utility from milkshakes and sodas. What is the marginal utility of the eighth soda?

Accepted Answer

A)  32 units 
B)  20 units 
C)  10 units 
D)  8 units 
A)  32 units 
B)  20 units 
C)  10 units 
D)  8 units

Question 8

Does the fact that diamonds, which we do not need to survive, are more expensive than water, which is a necessity, constitute a violation of utility maximization?

Accepted Answer

No, the fact that diamonds are less usef

Question 9

Tom's consumption possibilities is defined by

Accepted Answer

A)  his income and the prices of the goods that he consumes. 
B)  his preferences for consumption of the goods that he consumes. 
C)  the prices of the goods that he consumes only. 
D)  his income only. 
A)  his income and the prices of the goods that he consumes. 
B)  his preferences for consumption of the goods that he consumes. 
C)  the prices of the goods that he consumes only. 
D)  his income only.

Question 10

-Lisa spends all her income on pizzas and DVDs. The above table shows Lisa's marginal utility for pizza and marginal utility for DVDs. Suppose the price of a pizza is $10 and the price of a DVD is $10 and Lisa initially has $40 to spend on the two goods. Lisa gets a raise at work and so she now has $60 to spend on DVDs and pizza. With her increase in income, her consumption of DVDs ________ and hence DVDs are ________ good for Lisa.

Accepted Answer

A)  rises; a normal 
B)  rises; an inferior 
C)  falls; a normal 
D)  falls; an inferior 
A)  rises; a normal 
B)  rises; an inferior 
C)  falls; a normal 
D)  falls; an inferior

Question 11

As long as the marginal utility per dollar from pizza is greater than the marginal utility per dollar from soda, then to maximize utility a consumer will buy

Accepted Answer

A)  more soda to equalize the marginal utility per dollar between soda and pizza. 
B)  less pizza and less soda. 
C)  more pizza and less soda. 
D)  equal amounts of pizza and soda. 
A)  more soda to equalize the marginal utility per dollar between soda and pizza. 
B)  less pizza and less soda. 
C)  more pizza and less soda. 
D)  equal amounts of pizza and soda.

Question 12

Robinson spends all his income on mangos and bananas. Mangos cost $3 per pound. Robinson's marginal utility is 30 for the last pound of mangos purchased and 10 for the last pound of bananas. If Robinson maximizes his utility from consuming these goods, the price of bananas is

Accepted Answer

A)  $0.50 per pound. 
B)  $1 per pound. 
C)  $2 per pound. 
D)  $3 per pound. 
A)  $0.50 per pound. 
B)  $1 per pound. 
C)  $2 per pound. 
D)  $3 per pound.

Question 13

The water and diamonds paradox of value results from

Accepted Answer

A)  the concept of deadweight loss. 
B)  the "law of demand." 
C)  diminishing marginal utility. 
D)  the elasticity of demand. 
A)  the concept of deadweight loss. 
B)  the "law of demand." 
C)  diminishing marginal utility. 
D)  the elasticity of demand.

Question 14

The only goods you consume are pizza and soda. Both are normal goods. For you, pizza and soda are substitutes. Which of the following leads you to buy more of both goods?

Accepted Answer

A)  The price of a pizza falls. 
B)  The price of a soda falls. 
C)  Your income increases. 
D)  Both answers A and B are correct. 
A)  The price of a pizza falls. 
B)  The price of a soda falls. 
C)  Your income increases. 
D)  Both answers A and B are correct.

Question 15

If a consumer is consuming a combination of goods and services on his budget line, has the consumer allocated his or her entire budget?

Accepted Answer

Yes, the consumer has allocate

Question 16

If the price of a good falls, before the amount consumed changes the marginal utility per dollar from that good

Accepted Answer

A)  decreases. 
B)  increases. 
C)  might either increase or decrease depending on whether the good is a substitute or a complement. 
D)  More information is needed to determine the answer. 
A)  decreases. 
B)  increases. 
C)  might either increase or decrease depending on whether the good is a substitute or a complement. 
D)  More information is needed to determine the answer.

Question 17

Steve is in a consumer equilibrium. Then, the price of steak increases from $6 a pound to $8 a pound. Steve decreases the number of pounds of steaks he buys each week ________.

Accepted Answer

A)  and decreases his total utility 
B)  only if his income also decreases 
C)  so that the marginal utility per dollar spent on steaks is the same as it was when the price was $6 a pound 
D)  so that both his total utility and his marginal utility from steak fall 
A)  and decreases his total utility 
B)  only if his income also decreases 
C)  so that the marginal utility per dollar spent on steaks is the same as it was when the price was $6 a pound 
D)  so that both his total utility and his marginal utility from steak fall

Question 18

As Sally increases her consumption of a good, she experiences diminishing marginal utility if her total utility

Accepted Answer

A)  increases at a constant rate. 
B)  increases at a decreasing rate. 
C)  increases at an increasing rate. 
D)  decreases. 
A)  increases at a constant rate. 
B)  increases at a decreasing rate. 
C)  increases at an increasing rate. 
D)  decreases.

Question 19

How are total and marginal utility related?

Accepted Answer

Marginal utility is

Question 20

A consumer has maximized his or her utility by consuming

Accepted Answer

A)  at the midpoint of the budget constraint line. 
B)  at the midpoint of the demand curve. 
C)  so that the total utility of all goods consumed is the same. 
D)  so that the ratio of marginal utility to price is the same for all goods consumed. 
A)  at the midpoint of the budget constraint line. 
B)  at the midpoint of the demand curve. 
C)  so that the total utility of all goods consumed is the same. 
D)  so that the ratio of marginal utility to price is the same for all goods consumed.

-The above table shows Homer's utility from boxes of doughnuts. If Homer decreases his consumption of doughnuts from 4 boxes to 3 boxes, his

A consumer allocates his budget according to rules of utility maximization. What are the rules of utility maximization and how do they explain the paradox of value, which is that diamonds are expensive but useless, while water is inexpensive but essential?

-From the information in the above table, what is the marginal utility of the third quart of ice cream?

Marginal utility theory assumes that when Sally consume less of a good that she was previously consuming more than one unit of, her ________.

As more of a good is consumed, its marginal utility and its total utility .

Pizza CDs -Bobby spends $100 per month on pizza and CDs. His utility from these goods is shown in the table above. The price of a pizza is $10 and the price of a CD is $20. Bobby currently buys 2 pizzas and 6 CDs. To maximize his utility in the next period, he should

Milkshakes Sodas -The table above shows Tom's total utility from milkshakes and sodas. What is the marginal utility of the eighth soda?

Does the fact that diamonds, which we do not need to survive, are more expensive than water, which is a necessity, constitute a violation of utility maximization?

Tom's consumption possibilities is defined by

As long as the marginal utility per dollar from pizza is greater than the marginal utility per dollar from soda, then to maximize utility a consumer will buy

Robinson spends all his income on mangos and bananas. Mangos cost $3 per pound. Robinson's marginal utility is 30 for the last pound of mangos purchased and 10 for the last pound of bananas. If Robinson maximizes his utility from consuming these goods, the price of bananas is

The water and diamonds paradox of value results from

The only goods you consume are pizza and soda. Both are normal goods. For you, pizza and soda are substitutes. Which of the following leads you to buy more of both goods?

If a consumer is consuming a combination of goods and services on his budget line, has the consumer allocated his or her entire budget?

If the price of a good falls, before the amount consumed changes the marginal utility per dollar from that good

Steve is in a consumer equilibrium. Then, the price of steak increases from $6 a pound to $8 a pound. Steve decreases the number of pounds of steaks he buys each week ________.

As Sally increases her consumption of a good, she experiences diminishing marginal utility if her total utility

How are total and marginal utility related?

A consumer has maximized his or her utility by consuming

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 above table shows Homer's utility from boxes of doughnuts. If Homer decreases his consumption of doughnuts from 4 boxes to 3 boxes, his

A consumer allocates his budget according to rules of utility maximization. What are the rules of utility maximization and how do they explain the paradox of value, which is that diamonds are expensive but useless, while water is inexpensive but essential?

-From the information in the above table, what is the marginal utility of the third quart of ice cream?

Marginal utility theory assumes that when Sally consume less of a good that she was previously consuming more than one unit of, her ________.

As more of a good is consumed, its marginal utility ________ and its total utility ________.

Pizza CDs -Bobby spends $100 per month on pizza and CDs. His utility from these goods is shown in the table above. The price of a pizza is $10 and the price of a CD is $20. Bobby currently buys 2 pizzas and 6 CDs. To maximize his utility in the next period, he should

Milkshakes Sodas -The table above shows Tom's total utility from milkshakes and sodas. What is the marginal utility of the eighth soda?

Does the fact that diamonds, which we do not need to survive, are more expensive than water, which is a necessity, constitute a violation of utility maximization?

Tom's consumption possibilities is defined by

As long as the marginal utility per dollar from pizza is greater than the marginal utility per dollar from soda, then to maximize utility a consumer will buy

Robinson spends all his income on mangos and bananas. Mangos cost $3 per pound. Robinson's marginal utility is 30 for the last pound of mangos purchased and 10 for the last pound of bananas. If Robinson maximizes his utility from consuming these goods, the price of bananas is

The water and diamonds paradox of value results from

The only goods you consume are pizza and soda. Both are normal goods. For you, pizza and soda are substitutes. Which of the following leads you to buy more of both goods?

If a consumer is consuming a combination of goods and services on his budget line, has the consumer allocated his or her entire budget?

If the price of a good falls, before the amount consumed changes the marginal utility per dollar from that good

Steve is in a consumer equilibrium. Then, the price of steak increases from $6 a pound to $8 a pound. Steve decreases the number of pounds of steaks he buys each week ________.

As Sally increases her consumption of a good, she experiences diminishing marginal utility if her total utility

How are total and marginal utility related?

A consumer has maximized his or her utility by consuming

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 more of a good is consumed, its marginal utility and its total utility .