Question 1

The accompanying figure below shows a single consumer's demand for ice cream at the student union.  During a regular semester, there are 500 students on campus. Each student's weekly demand for ice cream is shown above. When the price of ice cream is $2.00 per scoop, those 500 students purchase a total of ________ scoops per week from the student union.

Accepted Answer

A) 2,000 
B) 2,500 
C) 3,000 
D) 5,000

Question 2

According to the law of demand, when the price of shoes ________, people will consume ________ shoes.

Accepted Answer

A) rises; more 
B) falls; more 
C) rises; the same amount 
D) falls; the same amount

Question 3

Refer to the accompanying table. If the price of a t-shirt is $10 and the price of a sweater is $40, then the rational spending is satisfied when the consumer purchases ________ t-shirts and ________ sweaters.

Accepted Answer

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

Question 4

Fran runs a doughnut shop in a tiny 3-person town. The accompanying table shows the quantity demand by the three townspeople at various prices.  
 When the price of a doughnut is 25 cents, what is the market demand for doughnuts?

Accepted Answer

A) 9 doughnuts 
B) 13 doughnuts 
C) 16 doughnuts 
D) 20 doughnuts

Question 5

Suppose that Coke and Sprite each sell for $2 a can. Each month Joe buys 6 cans of Sprite and 30 cans of Coke. From this we can infer that:

Accepted Answer

A) Joe is buying too many cans of Sprite. 
B) Joe is buying too many cans of Coke. 
C) Joe is maximizing his utility if his marginal utility from the 6ᵗʰ can of Sprite he buys is less than his marginal utility from the 30ᵗʰ can of Coke he buys. 
D) Joe is maximizing his utility if his marginal utility from the 6ᵗʰ can of Sprite he buys is equal to his marginal utility from the 30ᵗʰ can of Coke he buys.

Question 6

The rational spending rule is derived from the consumer's desire to:

Accepted Answer

A) maximize utility. 
B) minimize expenditures. 
C) obtain the lowest possible price. 
D) maximize the number of goods purchased.

Question 7

Joaquin's marginal utility from an additional slice of pumpkin pie is 4 utils and his marginal utility from an additional slice of pecan pie is 6 utils. If a slice of pumpkin pie costs $2.50, and a slice of pecan pie costs $3.00, then Joaquin:

Accepted Answer

A) should reallocate his spending towards pumpkin pie and away from pecan pie. 
B) should reallocate his spending towards pecan pie and away from pumpkin pie. 
C) is maximizing his utility. 
D) should spend more on pumpkin pie and more pecan pie.

Question 8

The ________ combination of goods is the combination that yields the highest total utility given a consumer's income.

Accepted Answer

A) affordable 
B) economical 
C) utility satiating 
D) optimal

Question 9

Casey earns $150 a week and consumes only fish and shrimp. The price of fish is $3 a pound and the price of shrimp is $5 a pound. If Casey's income rises to $210, he could buy a maximum of ________ pounds of fish or a maximum of ________ pounds of shrimp.

Accepted Answer

A) 30; 24 
B) 24; 30 
C) 70; 42 
D) 42; 70

Question 10

The dollar price of a good relative to the average dollar price of all other goods is the good's:

Accepted Answer

A) market price. 
B) equilibrium price. 
C) nominal price. 
D) real price.

Question 11

Refer to the accompanying figure. If Laura and Chris are the only two consumers in this market, then at a price of $2.00 per pound, the market demand for hamburger is:

Accepted Answer

A) 2 pounds per week. 
B) 4 pounds per week. 
C) 6 pounds per week. 
D) 8 pounds per week.

Question 12

Refer to the accompanying figure. The marginal utility of the 7ᵗʰ pizza is

Accepted Answer

A) 100. 
B) 5. 
C) -100. 
D) -5.

Question 13

Refer to the accompanying figure. For Jeff, the consumption of movies reflects the law of:

Accepted Answer

A) demand. 
B) diminishing marginal utility. 
C) total utility maximization. 
D) marginal utility maximization.

Question 14

During Thanksgiving you participated in a pumpkin-pie eating contest. You really enjoyed the first two pies, the third one was okay, but as soon as you ate the fourth one you became ill and lost the contest. Your total utility ________ with the first three pies you ate.

Accepted Answer

A) increased 
B) decreased 
C) stayed the same 
D) first increased than decreased

Question 15

At her current level of consumption, Jess gets half as much marginal utility from an additional bagel as from an additional muffin. If the price of muffin is $2 each, then Jess is maximizing her utility if the price of a bagel is:

Accepted Answer

A) $1.00 
B) $1.50 
C) $2.00 
D) $4.00

Question 16

Taylor's marginal utility from watching movies and from eating out (in utils)is shown in the accompanying table. Taylor spends exactly $100 every month on these two forms of entertainment; the price of each movie is $10 and the price of each dinner is $20. $$\begin{array} { | c | r | c | c | } 
\hline \begin{array} { c } 
\text { Mavies } \
\text { Per Manth }
\end{array} & \begin{array} { c } 
\text { Mar ginal Utility } \
\text { Per Movie }
\end{array} & \begin{array} { c } 
\text { Dingers Out } \
\text { Per Month }
\end{array} & \begin{array} { c } 
\text { Marginal Utility } \
\text { Per Dinner }
\end{array} \
\hline 1 & 60 & 1& 150 \
\hline 2 & 50 & 2 & 140 \
\hline 3 & 20 & 3 & 120 \
\hline 4 & 5 & 4 & 100 \
\hline
\end{array}$$  
If Taylor watches 2 movies a month, Taylor will eat out ________ times per month, and have marginal utility per dollar of ________ from movies and a marginal utility per dollar of ________ from eating out.

Accepted Answer

A) 3; 5; 6 
B) 2; 5; 7 
C) 4; 5; 5 
D) 4; 4; 6

Question 17

Let MUc denote the marginal utility that Pablo receives from a cup of coffee, and let Pc denote the price of a cup of coffee. We typically expect that as Pablo buys more coffee:

Accepted Answer

A) MUc/Pc will rise. 
B) MUc/Pc will fall. 
C) MUc/Pc will not change. 
D) MUc and Pc will both fall.

Question 18

Refer to the accompanying table. Total utility ________ as additional apples are consumed, but marginal utility ________ with each additional apple consumed. $$\begin{array} { | c | c | } 
\hline \text { Number of Apples } & \begin{array} { c } 
\text { Tatal } \
\text { Utility }
\end{array} \
\hline 1 &20 \
\hline 2 & 35 \
\hline 3 & 45 \
\hline 4 & 50 \
\hline 5 & 45 \
\hline
\end{array}$$

Accepted Answer

A) first decreases then increases; decreases 
B) first increases then decreases; decreases 
C) first decreases then increases; increases 
D) first increases then decreases; increases

Question 19

If the marginal utility of the 3ʳᵈ cup of coffee is 23 and the marginal utility of the 4ᵗʰ cup is 15, then:

Accepted Answer

A) it is optimal for the consumer to have 3 cups of coffee. 
B) the price of a cup of coffee must be relatively low. 
C) it is optimal for the consumer to have 4 cups of coffee. 
D) there is evidence of diminishing marginal utility.

Question 20

Taking a limousine to a five-star restaurant in New York is a:

Accepted Answer

A) necessity to Richie Rich but a luxury to Joe Average. 
B) necessity to both Joe Average and Richie Rich. 
C) want to both Joe Average and Richie Rich. 
D) want to Richie Rich and a luxury to Joe Average.

Exam 5: Demand

According to the law of demand, when the price of shoes , people will consume shoes.

Refer to the accompanying table. If the price of a t-shirt is $10 and the price of a sweater is $40, then the rational spending is satisfied when the consumer purchases t-shirts and sweaters.

Fran runs a doughnut shop in a tiny 3-person town. The accompanying table shows the quantity demand by the three townspeople at various prices. When the price of a doughnut is 25 cents, what is the market demand for doughnuts?