Chapter 6 review questions

If a good is free, _____. a. people will continue to increase consumption until total utility is equal to marginal utility. b. people will continue to increase consumption until total utility is equal to opportunity cost. c. people will continue to increase consumption until total utility is equal to zero. d. people will continue to increase consumption until marginal utility is equal to zero.

D

John's total utility from the consumption of two ice creams is 10, and his total utility from the consumption of three ice creams is 9.7. John's marginal utility from the third ice cream is _____. a. 9.7 b. 10 c. -1 d. -0.3

D

Table 6.1 shows the total utility derived from hamburgers by an individual. The individual experiences disutility from the consumption of the _____ hamburger. Table 6.1 Number of hamburgers consumed Total Utility 0 0 1 10 2 20 3 25 4 22 a. second b. first c. fourth d. third

D

Table 6.1 shows the total utility derived from hamburgers by an individual. The marginal utilities derived from the _____ hamburgers are the same. Table 6.1 Number of hamburgers consumed Total Utility 0 0 1 10 2 20 3 25 4 22 a. second and the third b. first and the third c. third and the fourth d. first and the second

D

Which of the following statements is true of the law of diminishing marginal utility? a. The law of diminishing marginal utility states that as more units of a good are consumed, total utility becomes higher. b. The law of diminishing marginal utility states that as more units of a good are consumed, total utility becomes lesser. c. The law of diminishing marginal utility states that as more units of a good are consumed, the marginal utility from the consumption of the next unit becomes higher. d. The law of diminishing marginal utility states that as more units of a good are consumed, the marginal utility from the consumption of the next unit becomes lesser.

D

A consumer continues to buy a product as long as: a. the value that consumer places on the product is greater than the price of the product. b. the marginal utility derived from the product is negative. c. the consumer surplus from the good is negative and the producer surplus for the sellers is positive. d. the price of the product exceeds the value that consumer places on the product.

A

According to the law of diminishing marginal utility, the more of a product a person consumes per time period, other things constant, _____. a. the smaller will be the addition to total utility b. the higher will be the price of the product in the market c. the larger will be the satisfaction derived per unit d. the smaller will be the total utility

A

Consumer surplus is represented by: a. the area under the demand curve but above the price. b. the total area under the demand curve. c. the area above the supply curve but below the price. d. the area under the demand curve and below the price.

A

Suppose Pedro buys a mountain bike for $200, which he was willing to pay up to $300 for. Pedro's consumer surplus in this transaction equals _____. a. $100 b. $200 c. $500 d. $300

A

The utility derived by a consumer from consuming a good depends on: a. the consumer's tastes and preferences. b. the price of the good. c. his or her income. d. the market demand for the good.

A

Which of the following is true of marginal utility? a. Marginal utility is the change in total utility derived from a one-unit change in the consumption of a good. b. Marginal utility always increases with an increase in consumption. c. Marginal utility is equal to total utility divided by the total quantity consumed. d. Marginal utility is the total satisfaction that a consumer derives from all the units of a good or service consumed

A

Which of the following situations is clearly inconsistent with the law of diminishing marginal utility? a. Diamond jewelry consumption having no disutility to the elite class as it signals prestige. b. New residents of the California coast visiting the beach much more frequently than long-term residents or natives. c. Some western ski areas closing down when there is still considerable snow in the mountains in May because they can no longer attract enough skiers to the slopes. d. A person with a huge appetite eventually turning away food at an all-you-can-eat buffet.

A

At a given price, the consumer surplus in a market is the: a. difference between the quantity demanded and the quantity supplied of the product being sold. b. difference between what most consumers are willing to pay for a given quantity of the product being sold and what they actually pay. c. product of the total quantity supplied of the product being sold in the market and the price of the product. d. product of the total quantity demanded of product being sold and the price of the product.

B

Marginal utility is defined as: a. the total satisfaction per unit of consumption. b. the addition to total satisfaction resulting from an additional unit of consumption. c. the difference in the total satisfaction derived from the consumption of any two products. d. the total satisfaction derived from consuming a given amount of a product.

B

The utility derived from a particular good, service, or activity depends on an individual's tastes and preferences. Economists assume that the tastes and preferences of individuals are: a. determined by product prices. b. given and are relatively stable. c. determined by market demand for products. d. constantly in flux.

B

Which of the following is known to occur when consumer equilibrium is achieved for someone at a carnival? a. He has ample money in his budget for additional rides at the carnival. b. The marginal utility per dollar spent on the last roller coaster ride he took is equal to the marginal utility per dollar spent on the last hammerhead ride he took. c. He spent his money on the roller coaster ride till his marginal utility became negative. d. The total utility of the last ride he took on the roller coaster, a $7 ride, is equal to the total utility of the last ride he took on the hammerhead, a $3 ride.

B

Table 6.1 shows the total utility derived from hamburgers by an individual. The marginal utility from the third hamburger equals _____. Table 6.1 Number of hamburgers consumed Total Utility 0 0 1 10 2 20 3 25 4 22 a. 0 b. 10 c. 5 d. 8

C

Which of the following statements describes the economic concept of utility? a. Utility measures the purchasing power of individuals. b. Utility measures the usefulness of goods such as tools or food, so goods such as artwork or attractive landscaping by definition have no utility. c. Utility measures the satisfaction, or pleasure, that people receive from consuming a good or service. d. Utility is the total number of units of a commodity that a consumer buys.

C

Which of the following statements is true of the law of diminishing marginal utility? a. The total utility derived from the consumption of a good increases proportionately with the marginal utility. b. The total utility derived from the consumption of a good starts falling once consumer equilibrium is achieved. c. The total utility derived from the consumption of a good remains constant after consumer equilibrium is achieved. d. The total utility derived from the consumption of a good continues to increase even after consumer equilibrium is achieved.

C

Which of the following statements is true of utility? a. Utility scale for every consumer is objective in nature. b. Utilities provided by identical commodities are identical to all consumers. c. Utility levels across consumers cannot be compared by attaching a numerical value to utility. d. Utility levels across consumers can be compared by attaching a numerical measure to utility.

C