Chapter 5 microeconomics quiz

Higher education is a ______ and assigned textbooks are ______ . wants, needs . needs, needs . needs, wants . wants, wants

Wants, wants

The rational spending rule is derived from the consumer's desire to: . Maximize utility . maximize the number of goods purchased. . obtain the lowest possible price. . minimize expenditures.

maximize utility.

It is impossible for total utility to be ______ when marginal utility is ______. . increasing, increasing . increasing, decreasing . decreasing, positive . positive, negative

Decreasing, positive

For the demand curve shown, find the total amount of consumer surplus that results in the gasoline market if gasoline sells for $12 per gallon.

$20,000

Moe's reservation price for his economics textbook is $100. The week before the semester begins, Moe finds a copy of his textbook online for $75. Moe's consumer surplus from buying the textbook online is: . $75 . $25 . $125 . $100

$25

For the demand curve shown, find the total amount of consumer surplus that results in the gasoline market if gasoline sells for $2 per gallon.

$32,000 per year

Assume that Dusty has $30 in income, the price of a loaf of bread is $1.50, and the price of a jar of peanut butter is $3. Dusty can buy a maximum of ______ loaves of bread or a maximum of ______ jars of peanut butter. . 20; 10 . 10; 20 . 10; 5 . 15; 15

20; 10

Laura's total utility from consuming 8, 9, and 10 bonbons is 35, 42, and 45, respectively. Her marginal utility from the 9th bonbon is _____. . 77 . 4.67 . 42 . 7

4.67

For Michael, the first cup of coffee he drinks every morning is heavenly. The second one is pretty good, but not as good as the first, and if he drinks a third cup he feels jittery and sick. For Michael, the marginal utility from drinking a cup of coffee is clearly: . Increasing . Decreasing . Positive . Negative

Decreasing

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. . stayed the same . first increased than decreased . decreased . increased

Increased

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: . MUc/Pc will rise. . MUc/Pc will fall. . MUc/Pc will not change. . MUc and Pc will both fall.

MUc/Pc will fall.

to the accompanying figure. The marginal utility of the 6th pizza is:

Marginal utility is the additional utility gained from consuming an additional unit of a good. Here, when consumption increases from 5 to 6 pizzas a week (an one-unit increase), total utility increases from 100 to 105. Therefore, marginal utility is 5.

Consumer surplus measures: . the increase in a buyer's total utility when the buyer purchases additional units of a good. . the difference between a buyer's marginal utility from consuming a product and the price actually paid. . the difference between the quantity demanded and the quantity supplied at a given price . the difference between the most a buyer would be willing to pay for a product and the price actually paid.

The difference between the most a buyer would be willing to pay for a product and the price actually paid.

If the marginal utility of the 3rd cup of coffee is 23 and the marginal utility of the 4th cup is 15, then: . It is optimal for the consumer to have two cups of coffee . It is optimal for the consumer to have three cups of coffee . There is evidence of diminishing marginal utility . The price of a coffee cup most be relatively low

There is evidence of diminishing marginal utility

According to the law of diminishing marginal utility: . you should never consume more of something if your marginal utility is decreasing. . as you consume less of something, your marginal utility from consuming that good will increase. . if your total utility is increasing as you consume more of something, then your marginal utility must be increasing as well. . as you consume less of something, your total utility will decrease.

as you consume less of something, your marginal utility from consuming that good will increase.

Suppose that each week Henry buys 12 peaches and 3 apples at his local farmer's market. Both kinds of fruit cost $1 each. From this we can infer that: . for Henry the law of diminishing marginal utility does not apply to peaches. . if Henry is maximizing his utility, then his marginal utility from the 12th peach he buys must equal his marginal utility from the 3rd apple he buys. . Henry is not maximizing his utility. . if Henry is maximizing his utility, then his marginal utility from the 12th peach he buys must be greater than his marginal utility from the 3rd apple he buys.

If Henry is maximizing his utility, then his marginal utility from the 12th peach he buys must equal his marginal utility from the 3rd apple he buys.

Pat's total utility after eating 99 Reese's Peanut Butter Cups was greater than his total utility after eating 100 Reese's Peanut Butter Cups. Therefore, Pat's marginal utility from the 100th peanut butter cup was: . Negative . positive, but less than his marginal utility for the 99th peanut butter cup . Positive, but less than one . zero

Negative

Suppose that Cathy spends all of her income on 20 units of good X and 25 units of good Y. Cathy's marginal utility from the 20th unit of good X is 9 utils, and her marginal utility from the 25th unit of good Y is 19 utils. If the price of good X is $0.50 per unit and the price of good Y is $1.00 per unit, then to comply with the rational spending rule, Cathy should: . purchase less than 20 units of good X and more than 25 units of good Y. . purchase more than 20 units of good X and more than 25 units of good Y. . continue to purchase 20 units of good X and 25 units of good Y. . purchase more than 20 units of good X and less than 25 units of Y.

Purchase less than 20 units of good X and more than 25 units of good Y.

Suppose that at your current consumption of two goods, A and B, MUA/PA = 25 and MUB/PB = 20. In order to maximize, your utility you should: . Produce less of A and B. . Purchase less of A and more of B . Purchase more of A and less of B . Leave your spending unchanged

Purchase more of A and less of B

If a consumer buys two different goods, the rational spending rule requires that the: . ratio of average utility to price be equal for the two goods. . total expenditure on the two goods be equal. . total expenditure on the two goods be equal. . ratio of total utility to price be equal for the two goods.

Ratio of marginal utility to price be equal for the two goods.

Alex wants to maximize his utility. At his current level of consumption, Alex's marginal utility from an additional cup of coffee is 15 utils, and his marginal utility from an additional can of soda is 11 utils. If the price of a cup of coffee is $3 and the price of a can of soda is $2, Alex should: . reallocate his spending away from soda and towards coffee. . decrease his spending on both coffee and soda. . not change his consumption of either coffee or soda. . reallocate his spending away from coffee and towards soda.

Reallocate his spending away from coffee and towards soda.

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: . should reallocate his spending towards pecan pie and away from pumpkin pie . should reallocate his spending towards pumpkin pie and away from pecan pie. . should spend more on pumpkin pie and more pecan pie. . is maximizing his utility.

Should reallocate his spending towards pecan pie and away from pumpkin pie

You are trying to decide how to spend your last lunch dollar. You should use that dollar to buy more of the item: . That gives you the highest marginal utility per dollar . That costs the least . From which you already had gained the greatest total utility . That gives you the highest average utility per dollar

That gives you the highest marginal utility per dollar

Sven likes to water ski, but can only water ski during the one week each year when he is on vacation. Therefore, he plans to ski every day, for eight hours a day. The first day, Sven skied for eight hours and enjoyed every hour. The second day, Sven slept in and then skied for seven hours, which was fun but not as much fun as the first day. The third day, Sven skied for six hours, but was starting to get a bit bored by the end. The fourth day, Sven skied for four hours and then took a nap. On the fifth day of Sven's vacation, Sven went blueberry picking all day. On the fifth day of Sven's vacation, he had decided that another hour of skiing would yield: . less utility than blueberry picking. . the same level of utility as the day before. . more utility than blueberry picking. . no utility at all.

less utility than blueberry picking.