Econ 1010: Ch 8 Moodle Quizzes
consume more of good b and less of good a
Advise Sarah how to maximize her utility if MUa = 8, MUb = 20, Pa = 4 and Pb = 5
less of good a and more of good b
Let MUa and MUb stand for the marginal utility of goods a and b, respectively. Let Pa and Pb stand for the price of goods a and b. Assume that for a given consumer MUa and MUb are equal to each other, and Pa is greater than Pb. In this case, the consumer is better off if he consumes ___
MUa/MUb = Pa/Pb
Let MUa and MUb stand for the marginal utility of goods a and b, respectively. Let Pa and Pb stand for the price of goods a and b. What is the formula for consumer equilibrium?
>; decreases
Ron starts out in consumer equilibrium, consuming two goods, X and Y. The price of Y rises. Immediately after the rise in price MUx/Px ___ MUy/Py, and then Ron ___ his consumption of Y
none of the above
Ron starts out in consumer equilibrium, consuming two goods, X and y. Ron's income rises. At this point, we can definitely conclude that ___
how much income he has to spend and the prices of one litre of gasoline and one cup of coffee
Sam buys gasoline and coffee each week. To draw his budget line for gasoline and coffee, Sam needs to know ___
$0.25
Samir consumes apples and bananas and is in consumer equilibrium. The marginal utility from his last apple is 10 and the marginal utility from his last banana is 5. If the price of an apple is $0.50, then what is the price of a banana?
the marginal utility from the last purchased beer is greater than the marginal utility from the last purchased bubble gum
Sergio is maximizing utility in his consumption of beer and bubble gum. If the price of beer is greater than the price of bubble gum, then we know ___
utility can be increased by increasing the consumption of X and decreasing the consumption of Y
Suppose a consumer spends all his income. His marginal utility per dollar on X is 4 and marginal utility per dollar on Y is 2. We know that ___
the sum of the marginal utilities of each unit consumed
Total utility equals
increasing when marginal utility is positive
Total utility is always ___
bounded self-interest
A behavioural economist will explain Tom's donation to charity by saying that Tom is displaying ___
quantity of one good on the vertical axis and the quantity of the second good on the horizontal axis
A budget line is drawn with the ___
5/7
A consumer maximizes his utility by purchasing 2 units of good X at $5 per unit and 3 units of good Y at $7 per unit. What is the ratio of the marginal utility from X to the marginal utility of good Y at $7 per unit.
the endowment effect
According to a behavioural economist, a person who is unwilling to sell the last kilogram of rice he purchased for the same price that he paid for it is displaying ___
increases at a decreasing rate
According to the principle of diminishing marginal utility, as consumption of a god increases, total utility ___
the demand for normal goods decreases
As a consumer's income decreases, marginal utility theory predicts that ___
marginal utility decreases
As more of a good is consumed, its ___
studies the ways in which limits on the human brain's ability to compute and implement rational decisions influences economic behaviour
Behavioural economics ___
the reason why we do not always make rational economic decisions
Behavioural economics and neuroeconomics seek to achieve ___
increases her total utility
Beverly is currently in consumer equilibrium. An increase in her income ___
the marginal utility from candy will be equal to the marginal utility from popcorn
Billy likes candy and popcorn. Candy sells for $0.50 a bag and popcorn sells for $1 per bag. Currently he is in consumer equilibrium. Then the price of candy rises to $1 a bag. ___ is true in the new consumer equilibrium.
100
Billy likes chocolate bars and popcorn. Chocolate bars sell for $1.50 each and popcorn sells for $3 a bag. Currently he is in consumer equilibrium with marginal utility per dollar on popcorn equal to 100. What is the marginal utility per dollar on chocolate bars?
Chuck will have lower marginal utility than Barry for each normal good consumed
Chuck and Barry have identical total utility schedules but Chuck has a much higher income. If each is maximizing his total utility, then ___
can increase her total utility by spending less time golfing and more time playing tennis
Cindy has $70 a month to spend, and she can spend as much time as she likes playing golf and tennis. The price of an hour of golf is $10, and the price of an hour of tennis is $5. If Cindy equalizes the marginal utility per hour form golf and from tennis, she ___
1 hour of windsurfing and 3 hours of snorkeling
Consider Devon's total utility from snorkeling and windsurfing in Table 8.3.1. Suppose Devon's total income $35. If the price of windsurfing rises $20 per hour, how long does Devon choose to windsurf and to snorkel?
1.5 (cross)
Consider Devon's total utility from snorkeling and windsurfing in Table 8.3.1. Suppose Devon's total income is $35. If the price of windsurfing rises to $20 per hour, what is Devon's cross elasticity of demand of snorkeling with respect to the price of windsurfing?
1.5 (demand)
Consider Devon's total utility from snorkeling and windsurfing in Table 8.3.1. Suppose Devon's total income is $35. If the price of windsurfing rises to $20 per hour, what is Devon's price elasticity of demand for windsurfing?
0.64
Consider Devon's total utility from snorkeling and windsurfing in Table 8.3.1. Suppose that Devon's total income rises from $35 to $55, ceteris paribus. Given that Devon changes his choice of windsurfing and snorkeling, what is his income elasticity for windsurfing?
4 hours of windsurfing and 3 hours of snorkeling
Consider Devon's utility from snorkeling and windsurfing in Table 8.3.1. Devon has $55 to spend. What are devon's choices for time spent on the two activities?
3 hours windsurfing and 1 hour snorkeling
Devon enjoys windsurfing and snorkeling. His total utility from each activity is summarized in table 8.3.1. Devon has $35 to spend. How long will Devon choose to windsurf and to snorkel?
the marginal utility per dollar from all goods and services consumed must be equal
For a consumer to maximize utility from a given income,
bounded willpower
Gene plays another hour of computer games rather than study for the hour even though he knows that the next day when he takes his test he will regret his decision. Gene is showing ___
consumption of oranges decreases; consumption of apples could either increase or decrease
Harold can consume apples and oranges. He likes them equally well and currently is in consumer equilibrium. Then the price of oranges rises, while his income remains the same. What will happen to his consumption?
by consuming more pens and fewer milkshakes
Harold can consume either pens or milkshakes. The price of a pen is $1, and the price of a milkshake is $1. Harold knows that when his income is spent, his marginal utility from pens will be 10 and his marginal utility from milkshakes will be 8. Harold is better off ___
her marginal utility from the second slice of pizza divided by the price of a slice of pizza is equal to her marginal utility from the sixth breadstick divided by the price of a breadstick
If Katie purchases two slices of pizza and six breadsticks to maximize her total utility, then
MUa/Pa = MUb/Pb
If Ms. Peterson is maximizing her utility in the consumption of goods a and b, what is the formula?
bounded rationality
If Sean thinks that the choice between gong to Olive Garden or Red Lobster is simply too confusing, a behavioural economist will explain that Sean is showing ___
is paying the same price for each good
If Soula is maximizing her utility and consuming two goods that have the same marginal utility, she ___
total utility is maximized
If a consumer spends all his income and his marginal utility per dollar is equal for all goods, then ___
the quantity bought of each good increases
If a consumer's income increases and if all goods are normal goods, ___
the marginal utility form normal goods increases
If income falls, then in the new consumer equilibrium ___
the marginal utility from normal goods decreases and the marginal utility from inferior goods increases
If income rises, then in the new consumer equilibrium
may possibly be in equilibrium
If the marginal utilities from two goods are not equal, then the consumer ___
maximized given the consumer's income and the prices of goods
In consumer equilibrium, total utility ___
Both will consume the same amount of all goods
John and Sally have identical preferences except Sally's utility units are exactly 10 times that of John's. Both have the same income and face the same prices. What is their consumption?
oranges decreases
John likes to eat apples, oranges, and pears. If John increases his consumption of oranges, ceteris paribus, marginal utility theory tells us that John's marginal utility from ___
Lucy's demand curve for CDs shifts leftward, Lucy's demand curve for magazines shifts leftward, and Lucy buys fewer magazines and fewer CDs
Lucy buys only magazines and CDs. Both are normal goods. Lucy's income decreases, but the prices of magazines and CDs do not change. Marginal utility theory predicts that ___
the slope of the total utility curve
Marginal utility equals
marginal utility increases
Marginal utility theory assumes that when Kelly decreases the number of hockey games that she attends each week from 3 to 2, her ___
a downward-sloping demand curve
Marginal utility theory derives ___
buys fewer normal goods
Marginal utility theory predicts that when a consumer's income decreases, the consumer ___
choose to consume the same set of goods
Martha and Sarah have the same preference, face the same prices, and have the same income. Sarah's utility is measured in units while Martha's is measured in units squared. Martha and Sarah will ___
can increase his total utility by spending less time windsurfing and more time snorkeling
Max has $35 a day to spend, and he can spend as much time as he likes on his leisure pursuits. Windsurfing equipment rents for $10 an hour, and snorkeling equipment rents for $5 an hour. If Max equalizes the marginal utility per hour from windsurfing and from snorkeling, he ___
the possibilities frontier
Neuroeconomics does not study ___
decreases the consumer surplus
Other things remaining the same, marginal utility theory implies that a rise in the price of a good ___
4 units of X and 5 units of Y
Refer to 8.2.3. If income is $13, then utility is maximized when consumption is ___
47
Refer to Table 8.1.1. The value of B is ___
3
Refer to Table 8.1.1. The value of C is
more time sailing than skiing
Refer to Table 8.2.1 Consider Sam's utility from sailing and skiing. If the price of sailing is $10 per hour and the price of skiing is $20 per hour, Sam will choose to spend
4 hours and ski for 2 hours
Refer to Table 8.2.1. Consider Sam's utility from sailing and skiing. The price of sailing is $10 per hour and the price of skiing is $20 per hour; Sam's income to spend on these activities is $80. In consumer equilibrium, Sam will sail for ___
4/3
Refer to Table 8.2.2. Henry is maximizing his utility by consuming 3 bags of popcorn and 3 bottles of pop. What is the ratio of the price of popcorn to the price of pop?
490
Refer to Table 8.2.2. What is the total utility if 3 bags of popcorn and 2 bottles of pop are consumed?
5 units of X and 6 units of Y
Refer to Table 8.2.4. Suppose the price of X is $1 and the price of Y is #1. How much of each should you purchase to maximize utility from a total expenditure of $11?
decreases; decreases
Refer to Table 8.2.5. Cindy enjoys golf and tennis. The table shows the marginal utility she gets from each activity. Cindy has $70 a month to spend, and she can spend as much time as she likes on her leisure pursuits. The price of an hour of golf is $10, and the price of an hour of tennis is $5. Cindy decides to golf for 5 hours a month and play tennis for 4 hours a month. If Cindy spends a dollar more on golf and a dollar less on tennis, her total utility ___. If Cindy spends a dollar less on golf and a dollar more on tennis, her total utility ___.
<; decreases
Ron starts out in consumer equilibrium, consuming two goods, X and Y. The price of X rises. Immediately after the rise in price MUx/Px ___ MUy/Py, and then Ron ___ his consumption of X
the marginal utilities from hot dogs and Cokes must be equal
Suppose you are consuming hot dogs and Cokes and believe you are receiving maximum total utility form the meal for your entire budget of $12. The price of a hot dog is #2 and the price of a Coke is $2. You can conclude that ___
receive the same marginal utility from the third unit consumed
Table 8.1.2 gives total utilities for Jim and Sally. Jim and Sally ___
the limits to household's consumption choices
The budget line shows ___
are affordable and those that are unaffordable
The budget line shows the boundary between those combinations of goods and services that ___
diminishing marginal utility
The fact that your fourth slice of pizza does not generate as much satisfaction as your third slice is an example of ___
8 units
The first can of Coke gives 15 units of utility to Witney, while the second can of Coke increases her total utility to 23. What is the marginal utility of the second can of Coke?
34
The first can of Sprite Jack drinks give him 22 units and the second can gives him an additional 12 units of utility. How many units of utility do the two cans of sprite give jack?
the marginal utility from diamonds is greater than the marginal utility from water
The high price of diamonds relative to the price of water reflects the fact that, at typical levels of consumption, ___
more pizza and less pop
The marginal utility per dollar from pizza is greater than the marginal utility per dollar from pop. To maximize utility, a consumer buys ___
is resolved by an appeal to the difference between marginal utility and total utility
The paradox of value ___
the price of water is low and the price of a diamond is high, but water is essential to life while diamonds are not
The paradox of value asks why ___
consume less beer and more bacon
The relative price of beer to bacon is 2:1. If Bob's current consumption is at a level where MUbeer/MUbacon is 1:2, then to maximize total utility Bob must ___
bounded rationality, bounded willpower, and bounded self-interest
The three limitations of human rationality that behavioural economics emphasizes are ___
total utility, while price relates to marginal utility
The value of a good relates to ___
prices, income, and marginal utility
To determine consumer equilibrium, we need to know only ___
False (marginal utility)
True or False: If the price of a good rises, then in the new consumer equilibrium that marginal utility from the good equals its new higher price
True (marginal utility)
True or False: if the marginal utility per dollar from good X is less than the marginal utility per dollar from good Y, then the consumer should shift some spending from X to Y
True (law of demand)
True or False: it is possible to derive the law of demand-that a higher price decreases the quantity demanded-using marginal utility theory
the benefit or satisfaction from consuming goods and services
Utility is ___
both have units of measurement that are arbitrary
Utility is similar to temperature because ___
utility can be measured
What is not an assumption of marginal utility theory?
is either increasing or decreasing
When total utility is increasing, marginal utility
has a lower marginal utility
With respect to water and diamonds, water ___
decreases
if the price of a good increases, everything else remaining the same, then the consumer's total utility ___