Econ 101 Module 6

The paradox of value refers to the fact that

water costs little, while diamonds cost a lot.

The table above gives Cathy's total utility from Mt. Dew. If the price of a Mt. Dew is $2, Cathy's marginal utility per dollar from the 3rd Mt. Dew is ________ units per dollar

10

Betsy's utility depending from her consumption of coffee is shown in the table above. Betsy's marginal utility from the 3rd cup of coffee per day is

10.

Suppose that you consume only pizza and Diet Pepsi. The table above gives your utility from consuming these two goods. What is the marginal utility you get from the fourth slice of pizza?

12

In the figure above, the marginal utility of the third crate of tomatoes for the person with total utility curve C is

13 units of utility

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

15

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

As more of a good is consumed, the decrease in the marginal utility from the good means that the total utility from the good decreases also.

A decrease in consumption will result in

both total utility and marginal utility decreasing

Marginal utility is the

change in satisfaction that results from a one-unit increase in the quantity of a good consumed.

The marginal utility from the consumption of a good is equal to the

change in total utility divided by the change in the quantity consumed.

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. David maximizes his utility by buying only sodas and pizza. He buys 5 sodas and 10 slices of pizza. If the price of a soda increases to $3 each, David will

decrease the number of sodas bought and move along the demand curve for soda.

As the quantity of a good consumed increases, its marginal utility ________ and its total utility ________.

decreases; increases

Liz loves to eat popcorn. Still, the more she eats, the less she wants each additional bite. Her marginal utility from popcorn is

diminishing

The fact that the fourth plate from the "All You Can Eat Country Buffet" generated more satisfaction than the fifth plate is an example of

diminishing marginal utility.

The diamond-water paradox of value can be explained by Correct Answer

distinguishing between total utility and marginal utility.

The table above shows the total utility from the two goods Freddy likes to consume. Suppose that Freddy has already eaten 5 bags of Fritos. If he consumes one more bag, his marginal utility will

equal 15.

Joshua consumes only apples and bread and is in consumer equilibrium. Joshua reads that eating bread is healthy, so his total utility from each loaf of bread increases. To maximize his total utility, Joshua would consume

fewer apples and more bread.

Teddy buys only chocolate chip cookies and hot chocolate and spends all of his income on the two items. Suppose the price of a cookie rises. According to marginal utility theory, Teddy will buy

fewer cookies and more hot chocolate, which increases his marginal utility from cookies and decreases his marginal utility from hot chocolate.

With respect to water and diamonds, water

has a lower marginal utility than diamonds.

According to the paradox of value, expensive goods, such as gemstones, provide consumers with

low total utility and high marginal utility.

The above table gives the total utility that Homer obtains from consuming various quantities of chocolate chip cookies. The marginal utility from the fifth pound of cookies is

1

Julie's total utility from cheeseburgers is given in the table above. What is the marginal utility of the third cheeseburger?

20

The above table shows Tammy's total utility from videos and CDs. If Tammy has $110 to spend on videos and CDs and if the price of a video is $10 and the price of a CD is $20, then Tammy maximizes her utility by purchasing

3 CDs and 5 videos

Gunther rents Nintendo games and videos. The marginal utility from his last Nintendo game is 10 and that from his last video is 5. Nintendo games rent for $2 each. Gunther's demand curve for games is shown in the figure above. How many videos a week does Gunther rent?

4

Bobby spends $100 per month on pizza and CDs. His utility from these goods is shown in the table above. The price of a pizza is $10 and the price of a CD is $20. Which of the following combinations of the two goods maximizes Bobby's utility?

4 pizzas and 3 CDs

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. Jean maximizes utility and buys only sodas and slices of pizza. If the price of a soda increases to $3 each, Jean's marginal utility per dollar for soda

Both will decrease and she'll buy fewer sodas. and will decrease and she'll buy more pizza are correct.

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

Marginal utility

The table above shows Mary's utility from chips and soda. The table shows that

Mary's marginal utility decreases as she consumes more chips.

Michelle spends all of her income on mangos and rice. Mangos cost $2 per pound and rice costs $1.50 per pound. If Michelle is spending all of her income and the marginal utility per dollar spent is 20 for the last pound of mangos purchased and 10 for the last pound of rice purchased, then

Michelle should buy more mangos and less rice to maximize utility.

When you chose to buy the second cup of coffee instead of the third bagel, which of the following is necessarily CORRECT?

The marginal utility per dollar from the third bagel is less than the marginal utility per dollar from the second coffee.

Liane maximizes her total utility when she allocates all of her available income such that the marginal utility per dollar spent on each good ________.

is the same

Robinson spends all his income on mangos and bananas. Mangos cost $3 per pound and bananas cost $1 per pound. The marginal utility is 30 for the last pound of mangos purchased and 8 for the last pound of bananas. To maximize his utility, Robinson should buy

more mangos and fewer bananas.

Marginal utility theory is used in the derivation of the

negative slope of demand curves.

Bobby consumes only chocolate ice cream and vanilla ice cream. He is spending all of his income. His marginal utility of chocolate is 100 and his marginal utility of vanilla is 200, and the price of chocolate is $1.00 per scoop and the price of vanilla is $2.00 per scoop. To maximize his utility, Bobby should

not change his purchases between chocolate ice cream and vanilla ice cream.

Water has a ________ marginal utility and brings a ________ consumer surplus; diamonds have a ________ marginal utility and bring a ________ consumer surplus.

small; large; large; small

Sonya's budget for magazines and chocolate bars is $50. Her marginal utility from these goods is shown in the table above. The price of a magazine is $5 and the price of a chocolate bar is $2.50. Sonya currently buys 3 magazines and 14 chocolate bars. To maximize her utility, she should

stay with the current combination of goods.

The total utility you get from eating slices of pizza on a given night is the

sum of the marginal utilities of all slices eaten.

Danny has $12 to spend on two goods: pies and soda. The price of a pie is $4, and the price of a can of soda is $2. To maximize his utility, Danny buys ________.

the combination that gives him the same marginal utility per dollar spent on pies as on soda

A measure of all the satisfaction you receive from all the coffee that you consume is your

total utility from coffee.

The principle of diminishing marginal utility says that

total utility increases by smaller and smaller amounts as the quantity of the good consumed increases.