Question 1

-Refer to the above table. The marginal utility of the 6th movie for Michelle is

Accepted Answer

A)  25 units of utility. 
B)  30 units of utility. 
C)  35 units of utility. 
D)  40 units of utility. 
A)  25 units of utility. 
B)  30 units of utility. 
C)  35 units of utility. 
D)  40 units of utility.

Question 2

-Refer to the above figure. Given the indifference map and budget constraint represented above, what are all possible points at which that the individual can consume?

Accepted Answer

A)  Points A and C only 
B)  Point B only 
C)  Point D only 
D)  Points A, B and C only 
A)  Points A and C only 
B)  Point B only 
C)  Point D only 
D)  Points A, B and C only

Question 3

-Using the above table, what is the total utility of the third piece of pizza?

Accepted Answer

A)  75 utils 
B)  0 utils 
C)  25 utils 
D)  -25 utils 
A)  75 utils 
B)  0 utils 
C)  25 utils 
D)  -25 utils

Question 4

-Refer to the above table. The table gives the various combinations of Good A and Good B along Jane's indifference curve. The marginal rate of substitution when Jane goes from combination B to combination C is

Accepted Answer

A)  4:1. 
B)  3:1. 
C)  2:1. 
D)  0. 
A)  4:1. 
B)  3:1. 
C)  2:1. 
D)  0.

Question 5

-Given the above figure, marginal utility becomes negative when Joey consumes the ________ piece of pizza.

Accepted Answer

A)  1st 
B)  3rd 
C)  4th 
D)  5th 
A)  1st 
B)  3rd 
C)  4th 
D)  5th

Question 6

-Refer to the above table. Suppose the price of a movie is $5 and the income of the consumer is $29. What are the quantities demanded of hamburger at prices of $2 and $1 respectively?

Accepted Answer

A)  0; 1 
B)  2; 4 
C)  1; 2 
D)  3; 5 
A)  0; 1 
B)  2; 4 
C)  1; 2 
D)  3; 5

Question 7

If the price of a slice of pizza falls from $2 to $1, a pizza-loving consumer will

Accepted Answer

A)  see her purchasing power fall. 
B)  see her purchasing power rise. 
C)  substitute more Chinese food for pizza. 
D)  spend more on soft drinks and less on pizza. 
A)  see her purchasing power fall. 
B)  see her purchasing power rise. 
C)  substitute more Chinese food for pizza. 
D)  spend more on soft drinks and less on pizza.

Question 8

Assuming that the marginal utility of the first four pieces of candy was 30, 28, 24, and 18 respectively, how much total utility was derived from eating the first three pieces of candy?

Accepted Answer

A)  58 
B)  82 
C)  54 
D)  100 
A)  58 
B)  82 
C)  54 
D)  100

Question 9

For good A and good B, the consumer maximizes personal satisfaction when

Accepted Answer

A)  MUA/PA = PB/MUB. 
B)  PA/MUA = PB/MUB. 
C)  MUA/PA = MUB/PB. 
D)  MUA/MUB = PA/PB. 
A)  MUA/PA = PB/MUB. 
B)  PA/MUA = PB/MUB. 
C)  MUA/PA = MUB/PB. 
D)  MUA/MUB = PA/PB.

Question 10

The marginal rate of substitution is

Accepted Answer

A)  the change in the quantity of one good that just offsets a one unit change in the consumption of another such that the total satisfaction remains constant. 
B)  the additional satisfaction from consuming an additional unit of a good or service. 
C)  positively related to the level of income. 
D)  the set of goods and services that are available to the consumer given his income. 
A)  the change in the quantity of one good that just offsets a one unit change in the consumption of another such that the total satisfaction remains constant. 
B)  the additional satisfaction from consuming an additional unit of a good or service. 
C)  positively related to the level of income. 
D)  the set of goods and services that are available to the consumer given his income.

Question 11

When total utility is falling,

Accepted Answer

A)  marginal utility is at a maximum. 
B)  marginal utility is at zero. 
C)  marginal utility is negative. 
D)  marginal utility has decreased, but is now increasing. 
A)  marginal utility is at a maximum. 
B)  marginal utility is at zero. 
C)  marginal utility is negative. 
D)  marginal utility has decreased, but is now increasing.

Question 12

What is consumer optimum according to utility theory?

Accepted Answer

Consumer optimum is the set of goods and

Question 13

-Refer to the above table. The marginal utility of the 7th movie for Michelle is

Accepted Answer

A)  15 units of utility. 
B)  20 units of utility. 
C)  35 units of utility. 
D)  435 units of utility. 
A)  15 units of utility. 
B)  20 units of utility. 
C)  35 units of utility. 
D)  435 units of utility.

Question 14

Utility analysis helps economists understand

Accepted Answer

A)  how people make decisions about what they buy and how much. 
B)  how to eliminate opportunity costs. 
C)  how to eliminate scarcity. 
D)  none of the above. 
A)  how people make decisions about what they buy and how much. 
B)  how to eliminate opportunity costs. 
C)  how to eliminate scarcity. 
D)  none of the above.

Question 15

Marginal utility can be thought of as

Accepted Answer

A)  the incremental change in a person's total satisfaction level from the buying of a good. 
B)  the total change in satisfaction from buying a good. 
C)  the additional cost of that next good purchased. 
D)  the opportunity cost of buying the next good. 
A)  the incremental change in a person's total satisfaction level from the buying of a good. 
B)  the total change in satisfaction from buying a good. 
C)  the additional cost of that next good purchased. 
D)  the opportunity cost of buying the next good.

Question 16

For most goods, the real-income effect of a price change is

Accepted Answer

A)  small because the good accounts for a small part of the consumer's budget. 
B)  small because the decision to buy a good depends only on the income of a consumer. 
C)  large because the price of the good is in terms of the currency and the income of the person is also in terms of the currency. 
D)  zero because the real-income effect only applies to durable goods. 
A)  small because the good accounts for a small part of the consumer's budget. 
B)  small because the decision to buy a good depends only on the income of a consumer. 
C)  large because the price of the good is in terms of the currency and the income of the person is also in terms of the currency. 
D)  zero because the real-income effect only applies to durable goods.

Question 17

Total satisfaction is maximized when

Accepted Answer

A)  marginal utility is positive. 
B)  marginal utility is negative. 
C)  marginal utility is zero. 
D)  marginal utility is equal to total utility. 
A)  marginal utility is positive. 
B)  marginal utility is negative. 
C)  marginal utility is zero. 
D)  marginal utility is equal to total utility.

Question 18

The change in people's purchasing power that occurs when the price of one good that they purchase changes is the

Accepted Answer

A)  law of diminishing marginal utility. 
B)  real-income effect. 
C)  substitution effect. 
D)  price income effect. 
A)  law of diminishing marginal utility. 
B)  real-income effect. 
C)  substitution effect. 
D)  price income effect.

Question 19

Suppose Lois usually buys two cups of coffee for two dollars each and one scone for two dollars each. If the price of scones falls to one dollar each and she now buys two cups of coffee and two scones, this illustrates the

Accepted Answer

A)  substitution effect. 
B)  marginal rate of substitution. 
C)  total utility effect. 
D)  real-income effect. 
A)  substitution effect. 
B)  marginal rate of substitution. 
C)  total utility effect. 
D)  real-income effect.

Question 20

The price of a large pepperoni pizza used to be $14, but this week the price rose to $18. With a budget of just $30, you can't afford as many pizzas at the higher price. This change in consumer behavior reflects the

Accepted Answer

A)  real income effect. 
B)  substitution effect. 
C)  nominal income effect. 
D)  concept of diminishing marginal utility. 
A)  real income effect. 
B)  substitution effect. 
C)  nominal income effect. 
D)  concept of diminishing marginal utility.

Exam 20: Consumer Choice

-Refer to the above table. The marginal utility of the 6th movie for Michelle is

-Refer to the above figure. Given the indifference map and budget constraint represented above, what are all possible points at which that the individual can consume?

-Using the above table, what is the total utility of the third piece of pizza?

-Refer to the above table. The table gives the various combinations of Good A and Good B along Jane's indifference curve. The marginal rate of substitution when Jane goes from combination B to combination C is

-Given the above figure, marginal utility becomes negative when Joey consumes the ________ piece of pizza.

-Refer to the above table. Suppose the price of a movie is $5 and the income of the consumer is $29. What are the quantities demanded of hamburger at prices of $2 and $1 respectively?

If the price of a slice of pizza falls from $2 to $1, a pizza-loving consumer will

Assuming that the marginal utility of the first four pieces of candy was 30, 28, 24, and 18 respectively, how much total utility was derived from eating the first three pieces of candy?

For good A and good B, the consumer maximizes personal satisfaction when

The marginal rate of substitution is

When total utility is falling,

What is consumer optimum according to utility theory?

-Refer to the above table. The marginal utility of the 7th movie for Michelle is

Utility analysis helps economists understand

Marginal utility can be thought of as

For most goods, the real-income effect of a price change is

Total satisfaction is maximized when

The change in people's purchasing power that occurs when the price of one good that they purchase changes is the

Suppose Lois usually buys two cups of coffee for two dollars each and one scone for two dollars each. If the price of scones falls to one dollar each and she now buys two cups of coffee and two scones, this illustrates the

The price of a large pepperoni pizza used to be $14, but this week the price rose to $18. With a budget of just $30, you can't afford as many pizzas at the higher price. This change in consumer behavior reflects the

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