Question 1

-Use the above figure. The consumer's choice changes from YA to YB. Which of the following statements about good Y is true?

Accepted Answer

A)  price has increased and the quantity demanded has risen.. 
B)  price has decreased and the quantity demanded has risen. 
C)  price has decreased and the quantity demanded has fallen. 
D)  price has increased and the quantity demanded has fallen. 
A)  price has increased and the quantity demanded has risen.. 
B)  price has decreased and the quantity demanded has risen. 
C)  price has decreased and the quantity demanded has fallen. 
D)  price has increased and the quantity demanded has fallen.

Question 2

The real-income effect of a price change is most significant when

Accepted Answer

A)  the substitution effect is insignificant. 
B)  the substitution effect is significant too. 
C)  the good under consideration constitutes a major portion of the consumer's budget. 
D)  the marginal utility per dollar spent on the last unit is high. 
A)  the substitution effect is insignificant. 
B)  the substitution effect is significant too. 
C)  the good under consideration constitutes a major portion of the consumer's budget. 
D)  the marginal utility per dollar spent on the last unit is high.

Question 3

What is the relationship between marginal utility and total utility? What happens to total utility as marginal utility declines?

Accepted Answer

Marginal utility is the change in total

Question 4

When Stephanie increases the consumption of pizza and decrease the consumption of soda, her marginal utility of

Accepted Answer

A)  pizza falls and the marginal utility of soda will increase. 
B)  both pizza and soda will decrease. 
C)  pizza increases and the marginal utility of soda will fall. 
D)  both pizza and soda will increase. 
A)  pizza falls and the marginal utility of soda will increase. 
B)  both pizza and soda will decrease. 
C)  pizza increases and the marginal utility of soda will fall. 
D)  both pizza and soda will increase.

Question 5

Consumers usually buy fewer units of a good than the quantity that would maximize total utility from consuming the good because

Accepted Answer

A)  they are not rational. 
B)  of the law of demand. 
C)  they have limited incomes. 
D)  marginal utility becomes zero after just a few units of the good. 
A)  they are not rational. 
B)  of the law of demand. 
C)  they have limited incomes. 
D)  marginal utility becomes zero after just a few units of the good.

Question 6

A well-known athlete loves cupcakes. He receives 200 utils for the first cupcake, an additional 160 for the second, an additional 120 for the third, another 80 for the fourth, and another 40 for the fifth. The marginal utility of the fourth cupcake is ________ and the total utility of consuming four cupcakes is ________.

Accepted Answer

A)  40; 80 
B)  80; 600 
C)  80; 560 
D)  40; 40 
A)  40; 80 
B)  80; 600 
C)  80; 560 
D)  40; 40

Question 7

Marginal utility is defined as

Accepted Answer

A)  the increase in utility divided by the total number of units consumed. 
B)  the total utility divided by the total number of units consumed. 
C)  the change in total utility divided by the change in number of units consumed. 
D)  the number of units consumed divided by the total utility. 
A)  the increase in utility divided by the total number of units consumed. 
B)  the total utility divided by the total number of units consumed. 
C)  the change in total utility divided by the change in number of units consumed. 
D)  the number of units consumed divided by the total utility.

Question 8

A consumer has been buying 4 magazines and 3 books a month for many months. The price of magazines then decreases, which directly causes the marginal utility per dollar spent on

Accepted Answer

A)  magazines to increase, thereby inducing the consumer to purchase fewer magazines and more books. 
B)  magazines to increase, thereby inducing the consumer to purchase more magazines and fewer books. 
C)  books to increase, thereby inducing the consumer to purchase fewer magazines and more books. 
D)  books to decrease, thereby inducing the consumer to purchase fewer magazines and more books. 
A)  magazines to increase, thereby inducing the consumer to purchase fewer magazines and more books. 
B)  magazines to increase, thereby inducing the consumer to purchase more magazines and fewer books. 
C)  books to increase, thereby inducing the consumer to purchase fewer magazines and more books. 
D)  books to decrease, thereby inducing the consumer to purchase fewer magazines and more books.

Question 9

When marginal utility is zero, total utility is

Accepted Answer

A)  increasing. 
B)  at its maximum. 
C)  at its minimum. 
D)  decreasing. 
A)  increasing. 
B)  at its maximum. 
C)  at its minimum. 
D)  decreasing.

Question 10

Bob's Marginal Utility for consuming beer and pizza with $8.00 in income
  
-According to the above table, how much total utility does Bob get from 3 pieces of pizza?

Accepted Answer

A)  30 utils 
B)  85 utils 
C)  115 utils 
D)  130 utils 
A)  30 utils 
B)  85 utils 
C)  115 utils 
D)  130 utils

Question 11

-In the above table, what is the marginal utility of the fourth slice of pizza consumed?

Accepted Answer

A)  10 
B)  30 
C)  120 
D)  130 
A)  10 
B)  30 
C)  120 
D)  130

Question 12

Bob's Marginal Utility for consuming beer and pizza with $8.00 in income
  
-In the above table, how much beer and pizza will Bob consume if the price of a piece of pizza is $2.00 and the price of a beer is $2.00?

Accepted Answer

A)  1 piece of pizza and 3 beers 
B)  2 pieces of pizza and 2 beers 
C)  2 pieces of pizza and 3 beers 
D)  3 pieces of pizza and 1 beer 
A)  1 piece of pizza and 3 beers 
B)  2 pieces of pizza and 2 beers 
C)  2 pieces of pizza and 3 beers 
D)  3 pieces of pizza and 1 beer

Question 13

If total utility is increasing, then marginal utility is

Accepted Answer

A)  negative. 
B)  positive. 
C)  zero. 
D)  decreasing. 
A)  negative. 
B)  positive. 
C)  zero. 
D)  decreasing.

Question 14

Marginal utility is measured as

Accepted Answer

A)  utility per unit of production. 
B)  extra output divided by extra utility. 
C)  output of a good or service divided by price. 
D)  extra utility from each additional good consumed. 
A)  utility per unit of production. 
B)  extra output divided by extra utility. 
C)  output of a good or service divided by price. 
D)  extra utility from each additional good consumed.

Question 15

In order to maximize utility, a consumer should allocate money income so that

Accepted Answer

A)  the marginal utility of the last unit of each product consumed is greater than the total utility of each product consumed. 
B)  the total utility derived from each product consumed is the same. 
C)  the marginal utility obtained from the last dollar spent on each product is the same. 
D)  the elasticity of demand on all products purchased is the same. 
A)  the marginal utility of the last unit of each product consumed is greater than the total utility of each product consumed. 
B)  the total utility derived from each product consumed is the same. 
C)  the marginal utility obtained from the last dollar spent on each product is the same. 
D)  the elasticity of demand on all products purchased is the same.

Question 16

A consumer's optimum is found when

Accepted Answer

A)  prices of goods go down. 
B)  the consumer is achieving the maximum level of utility given market prices and their limited income. 
C)  the marginal utility of the last dollar spent equals 0 for every good. 
D)  the consumer saves part of their income. 
A)  prices of goods go down. 
B)  the consumer is achieving the maximum level of utility given market prices and their limited income. 
C)  the marginal utility of the last dollar spent equals 0 for every good. 
D)  the consumer saves part of their income.

Question 17

-Refer to the above table. Michelle's utility schedule is characterized by

Accepted Answer

A)  diminishing marginal utility. 
B)  increasing marginal utility. 
C)  constant marginal utility. 
D)  constant total utility. 
A)  diminishing marginal utility. 
B)  increasing marginal utility. 
C)  constant marginal utility. 
D)  constant total utility.

Question 18

If you could pay for a product according to the marginal utility that you gain from additional consumption, then as you consume more of a product the price you pay would

Accepted Answer

A)  remain the same. 
B)  increase. 
C)  be deferred. 
D)  decline. 
A)  remain the same. 
B)  increase. 
C)  be deferred. 
D)  decline.

Question 19

Along an indifference curve, as the consumer reduces the quantity of Good A in favor of more Good B the marginal rate of substitution of Good A for Good B will

Accepted Answer

A)  fall. 
B)  rise. 
C)  stay the same. 
D)  fall and eventually turn negative. 
A)  fall. 
B)  rise. 
C)  stay the same. 
D)  fall and eventually turn negative.

Question 20

Which of the following is NOT true of utility?

Accepted Answer

A)  It represents the want-satisfying power of a good. 
B)  It is measured using a representative unit called a util. 
C)  The utility that a good provides depends on a consumer's preferences. 
D)  Utility can be measured objectively. 
A)  It represents the want-satisfying power of a good. 
B)  It is measured using a representative unit called a util. 
C)  The utility that a good provides depends on a consumer's preferences. 
D)  Utility can be measured objectively.

Exam 20: Consumer Choice

-Use the above figure. The consumer's choice changes from YA to YB. Which of the following statements about good Y is true?

The real-income effect of a price change is most significant when

What is the relationship between marginal utility and total utility? What happens to total utility as marginal utility declines?

When Stephanie increases the consumption of pizza and decrease the consumption of soda, her marginal utility of

Consumers usually buy fewer units of a good than the quantity that would maximize total utility from consuming the good because

Marginal utility is defined as

A consumer has been buying 4 magazines and 3 books a month for many months. The price of magazines then decreases, which directly causes the marginal utility per dollar spent on

When marginal utility is zero, total utility is

Bob's Marginal Utility for consuming beer and pizza with $8.00 in income -According to the above table, how much total utility does Bob get from 3 pieces of pizza?

-In the above table, what is the marginal utility of the fourth slice of pizza consumed?

Bob's Marginal Utility for consuming beer and pizza with $8.00 in income -In the above table, how much beer and pizza will Bob consume if the price of a piece of pizza is $2.00 and the price of a beer is $2.00?

If total utility is increasing, then marginal utility is

Marginal utility is measured as

In order to maximize utility, a consumer should allocate money income so that

A consumer's optimum is found when

-Refer to the above table. Michelle's utility schedule is characterized by

If you could pay for a product according to the marginal utility that you gain from additional consumption, then as you consume more of a product the price you pay would

Along an indifference curve, as the consumer reduces the quantity of Good A in favor of more Good B the marginal rate of substitution of Good A for Good B will

Which of the following is NOT true of utility?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

-Use the above figure. The consumer's choice changes from Y_A to Y_B. Which of the following statements about good Y is true?