Question 1

Pizza Pepsi
 
-The above table shows Priscilla's marginal utility from the two goods she consumes, pizza and Pepsi. The price of a slice of pizza is $2 and of a can of Pepsi is $1. Suppose Priscilla has $6 to spend. Which combination of pizza and Pepsi will maximize Priscilla's utility?

Accepted Answer

A)  3 slices of pizza 
B)  2 slices of pizza and 2 cans of Pepsi 
C)  3 cans of Pepsi and 1 slice of pizza 
D)  1 slice of pizza and 3 cans of Pepsi

Question 2

________ is the additional satisfaction a person receives from consuming an extra unit of a good.

Accepted Answer

A)  Total utility 
B)  Marginal utility 
C)  Diminishing marginal utility 
D)  Preferences

Question 3

Jeannie's marginal utility from her 4th book in a month is 50. Her marginal utility from her 5th book

Accepted Answer

A)  is greater than 50. 
B)  equals 50. 
C)  is less than 50. 
D)  might be more than, less than, or equal to 50 but more information is needed.

Question 4

-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

Question 5

-The table above gives Cathy's total utility from Mt. Dew. Cathy's marginal utility from the 3rd Mt. Dew is ________ units.

Accepted Answer

A)  75 
B)  65 
C)  25 
D)  20

Question 6

Apples Tacos
 
-Sasha derives utility from consuming apples and tacos as shown in the table above. Apples cost $1 each and tacos cost $2 each. If Sasha's income is $8, he will consume

Accepted Answer

A)  4 apples and 2 tacos. 
B)  2 apples and 3 tacos. 
C)  0 apples and 4 tacos. 
D)  3 apples and 3 tacos.

Question 7

-The table above gives Cathy's total utility from Mt. Dew. Cathy's marginal utility from the 4th Mt. Dew is ________ units.

Accepted Answer

A)  75 
B)  90 
C)  15 
D)  82.5

Question 8

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

Question 9

John and Sally have identical preferences except that Sally's utility is exactly 10 times John's for each basket of goods. If they have the same income and face the same prices

Accepted Answer

A)  Sally will consume 10 times the amount that John consumes. 
B)  Sally will receive 1/10 the satisfaction of John. 
C)  both will consume the same amount of all goods. 
D)  John and Sally will have equal total utility.

Question 10

-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. What is the marginal utility per dollar from magazines when the sixth magazine is purchased?

Accepted Answer

A)  36 units 
B)  15 units 
C)  9 units 
D)  5 units

Question 11

Marginal utility

Accepted Answer

A)  characterizes things of little use. 
B)  is the additional utility derived from the last unit of a good consumed. 
C)  is an implication of the law of demand. 
D)  is always negative when total utility is positive and positive when total utility is negative.

Question 12

Which of the following is NOT an assumption of marginal utility theory?

Accepted Answer

A)  People derive utility from their consumption. 
B)  More consumption yields more total utility. 
C)  Marginal utility diminishes with more consumption. 
D)  Utility can be measured and the units of utility are precisely defined.

Question 13

-The table above gives Jane's total utility from magazines and CDs. What is the marginal utility of the sixth CD?

Accepted Answer

A)  150 units 
B)  100 units 
C)  50 units 
D)  5 units

Question 14

Neuroeconomists believe that one day measuring the amount of brain hormone called ________, which increases in response to pleasures and decreases in response to disappointments, will allow them to measure utility more accurately.

Accepted Answer

A)  dopamine 
B)  estrogen 
C)  progesterone 
D)  oxytocin

Question 15

Suppose that Richard has just told you that he would not pay more than $100 dollars for one of his favorite baseball cards. You offer to give him $110 dollars for his card and he refuses. What consumer choice theory or effect explains this result?

Accepted Answer

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

Question 16

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

Accepted Answer

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

Question 17

-The table above gives Cathy's total utility from Mt. Dew. Cathy's marginal utility from additional Mt. Dews is

Accepted Answer

A)  diminishing. 
B)  increasing. 
C)  constant. 
D)  negative.

Question 18

The total benefit that a person receives from the consumption of goods and services is called

Accepted Answer

A)  total utility. 
B)  marginal utility. 
C)  marginal cost. 
D)  opportunity cost.

Question 19

Renee consumes pizza and rice. An increase in her income causes her to consume fewer pizzas and more rice. The change in pizzas consumed means that

Accepted Answer

A)  her total utility from consuming pizzas had been negative. 
B)  her marginal utility from consuming pizzas had been negative. 
C)  her marginal utility from consuming pizzas had been zero. 
D)  pizza is an inferior good for Renee.

Question 20

Emma consumes only tacos and pizza. They are substitute goods for her. The price of a taco falls. Emma will buy ________ tacos and her marginal utility from the last slice of pizza she eats ________.

Accepted Answer

A)  more; does not change 
B)  more; decreases 
C)  the same quantity; does not change 
D)  less; increases

Exam 8: Utility and Demand

Pizza Pepsi -The above table shows Priscilla's marginal utility from the two goods she consumes, pizza and Pepsi. The price of a slice of pizza is $2 and of a can of Pepsi is $1. Suppose Priscilla has $6 to spend. Which combination of pizza and Pepsi will maximize Priscilla's utility?