ECON 101: Chapter 8
C
1) Marginal utility is the A) total satisfaction that a person gets from the consumption of all of the units of a good consumed. B) maximum price that a consumer is willing to pay for an additional unit of a good. C) change in satisfaction that results from a one-unit increase in the quantity of a good consumed. D) additional cost to a consumer when an additional unit of a good is consumed.
B
11) A decrease in consumption will result in A) total utility increasing, but marginal utility decreasing. B) total utility decreasing, but marginal utility increasing. C) both total utility and marginal utility decreasing. D) both total utility and marginal utility increasing.
C
9) Liz loves to eat popcorn. Still, the more she eats, the less she wants each additional bite. Her marginal utility from popcorn is A) negative. B) zero. C) diminishing. D) increasing.
A
12) Utility is best defined as A) the satisfaction from consuming a good. B) the practical usefulness of a good. C) the price of a good. D) the amount one is willing to pay for a good.
D
10) ________ is the additional satisfaction a person receives from consuming an extra unit of a good. A) Preferences B) Diminishing marginal utility C) Total utility D) Marginal utility
A
13) The marginal utility from the consumption of a good is equal to the A) change in total utility divided by the change in the quantity consumed. B) change in total utility divided by the change in price. C) total utility divided by the quantity consumed. D) total utility divided by the price.
B
14) The total utility you get from eating slices of pizza on a given night is the A) marginal utility of the last slice times the total number of slices eaten. B) sum of the marginal utilities of all slices eaten. C) sum of the marginal utilities per dollar spent on all slices eaten. D) sum of the differences in marginal utility as you increase the number of slices eaten.
D
15) 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 A) 15. B) 3. C) 2. D) 1.
A
16) Suppose Jill's consumption bundle is made up of 2 goods, apples and bottles of juice. If the price of an apple increases, then Jill's budget line would A) shift towards the origin on the apples axis only. B) shift towards the origin on both the apples and bottles of juice axes. C) shift away from the origin on the bottles of juice axis only. D) not change.
A
17) In the figure above, the marginal utility of the third crate of tomatoes for the person with total utility curve C is A) 13 units of utility. B) 45 units of utility. C) 16 units of utility. D) 32 units of utility.
D
18) 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 soda A) will increase and she'll buy more soda. B) will decrease and she'll buy more pizza. C) will decrease and she'll buy fewer sodas. D) Both B and C are correct.
A
19) When you chose to buy the second cup of coffee instead of the third bagel, which of the following is necessarily CORRECT? A) The marginal utility per dollar from the third bagel is less than the marginal utility per dollar from the second coffee. B) The second coffee will give you higher marginal utility. C) The second coffee is cheaper than the third bagel. D) Both answers A and C are correct.
B
2) 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 A) diminishing total utility. B) diminishing marginal utility. C) increasing marginal utility. D) the "paradox of value."
B
20) 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 A) buy no chocolate ice cream. B) not change his purchases between chocolate ice cream and vanilla ice cream. C) buy more chocolate ice cream and less vanilla ice cream. D) buy more vanilla ice cream and less chocolate ice cream.
A
21) The table above gives Cathy's total utility from Mt. Dew. Cathy's marginal utility from the 4th Mt. Dew is ________ units. A) 15 B) 75 C) 82.5 D) 90
D
22) 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 A) 85. B) 90. C) 30. D) 10.
C
23) 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 A) 5 CDs and 1 video. B) 4 CDs and 3 videos. C) 3 CDs and 5 videos. D) none of the above.
D
24) Liane maximizes her total utility when she allocates all of her available income such that the marginal utility per dollar spent on each good ________. A) is diminishing B) is increasing C) is maximized D) is the same
A
25) The table above shows Mary's utility from chips and soda. The table shows that A) Mary's marginal utility decreases as she consumes more chips. B) Mary's total utility decreases as she consumes more chips. C) Mary will consume no soda and only chips. D) Mary prefers sodas to chips.
D
26) 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? A) 18 B) 4 C) 36 D) 12
C
27) 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 A) the present combination of goods. B) more bananas and fewer mangos. C) more mangos and fewer bananas. D) only bananas.
A
28) 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 A) 10 B) 32.5 C) 40 D) 20
C
29) The table above shows Tom's total utility from milkshakes and sodas. Tom's total budget for milkshakes and sodas is $10.00 per week. Milkshakes cost $2.00 each and sodas cost $1.00 each. What combination of milkshakes and sodas maximizes Tom's utility? A) 3 milkshakes and 4 sodas B) 5 milkshakes and 0 sodas C) 4 milkshakes and 2 sodas D) 2 milkshakes and 6 sodas
D
3) The principle of diminishing marginal utility says that A) total utility increases by larger and larger amounts as the quantity of the good consumed increases. B) total utility decreases as the quantity of the good consumed increases. C) marginal utility is negative as the quantity of the good consumed increases. D) total utility increases by smaller and smaller amounts as the quantity of the good consumed increases.
A
30) 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 A) Michelle should buy more mangos and less rice to maximize utility. B) Michelle should buy more rice and fewer mangos in order to maximize utility. C) Michelle is maximizing utility from her present consumption bundle. D) None of the above answers is correct.
D
31) 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 A) buy more chocolate bars and fewer magazines. B) buy more magazines and fewer chocolate bars. C) buy more of both goods. D) stay with the current combination of goods.
C
32) 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 ________. A) only sodas because they are less expensive B) 2 pies and 2 cans of soda C) the combination that gives him the same marginal utility per dollar spent on pies as on soda D) the combination that gives him equal total utility from pies and soda
C
33) 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? A) 6 pizzas and 2 CDs B) 2 pizzas and 4 CDs C) 4 pizzas and 3 CDs D) 8 pizzas and 1 CDs
B
34) 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. At his new consumer equilibrium Joshua would consume A) some combination of apples and bread corresponding to a lower ratio of the marginal utility of bread to the marginal utility of apples. B) fewer apples and more bread. C) more apples and less bread. D) the same quantity of apples and the same quantity of bread.
A
35) Sue consumes only sub sandwiches and Mountain Dew. Subs and Mountain Dew are complements. If the price of a Mountain Dew increases A) Sue will move upward along her demand curve for Mountain Dews. B) Sue's demand curve for sub sandwiches will shift rightward. C) Sue will move downward along her demand curve for Mountain Dews. D) Both answers A and C are correct.
D
36) Sue consumes only sub sandwiches and Mountain Dew. Subs and Mountain Dew are complements. If the price of a sub sandwiches increases A) Sue's demand curve for subs will shift rightward. B) Sue's demand curve for subs will shift leftward. C) Sue will move downward along her demand curve for subs. D) Sue will move upward along her demand curve for subs.
D
37) With respect to water and diamonds, water A) is cheaper than diamonds because it has a higher total utility. B) is cheaper than diamonds because it has a lower total utility. C) has a higher marginal utility than diamonds. D) has a lower marginal utility than diamonds.
D
38) Marginal utility theory is used in the derivation of the A) positive slope of supply curves. B) negative slope of supply curves. C) positive slope of demand curves. D) negative slope of demand curves.
D
39) 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? A) 1 B) 2 C) 3 D) 4
B
4) 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 A) equal 35. B) equal 15. C) equal 40. D) depend on the price of the extra bag.
B
40) 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 A) decrease the number of sodas bought and the demand curve for sodas will shift leftward. B) decrease the number of sodas bought and move along the demand curve for soda. C) buy less pizza and the demand curve for pizza will shift leftward. D) buy more pizza and move along the demand curve for pizza.
A
41) Marginal utility theory predicts that if a consumer's income decreases, the consumer A) buys fewer normal goods. B) buys more of all goods. C) might either increase or decrease purchases of normal goods. D) buys fewer inferior goods.
D
42) 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 A) fewer cookies and more hot chocolate, which decreases his marginal utility from cookies and increases his marginal utility from hot chocolate. B) more cookies and less hot chocolate, which decreases his marginal utility from cookies and increases his marginal utility from hot chocolate. C) more cookies and less hot chocolate, which increases his marginal utility from cookies and decrease his marginal utility from hot chocolate. D) fewer cookies and more hot chocolate, which increases his marginal utility from cookies and decreases his marginal utility from hot chocolate.
A
43) Marginal utility theory concludes that a decrease in the price of a good increases the quantity demanded and A) increases total utility. B) increases the total expenditure on the good. C) increases the demand for substitutes. D) decreases the demand for complements.
B
44) Renee consumes pizza and rice. An increase in her income causes her to consume fewer pizzas and more rice. The change in pizzas consumed means that A) her marginal utility from consuming pizzas had been zero. B) pizza is an inferior good for Renee. C) her marginal utility from consuming pizzas had been negative. D) her total utility from consuming pizzas had been negative.
C
45) The diamond-water paradox of value can be explained by A) water's high level of utility relative to diamonds. B) water's low price relative to diamonds. C) distinguishing between total utility and marginal utility. D) the fact that utility cannot be measured.
D
46) The above table gives Sue's marginal utility schedules for sub sandwiches and Mountain Dew, the only products Sue consumes. Suppose initially the price of a sub sandwich is $4 each and the price of a Mountain Dew is $2 each. Sue's income is $12. If the price of subs rises to $6 each, Sue will consume A) fewer subs. B) more Mountain Dews. C) fewer Mountain Dews so that she can still afford to buy two subs. D) Both answers A and B are correct.
D
47) Marginal utility theory predicts that a rise in the price of a banana results in A) the demand curve for bananas shifting leftward. B) the demand curve for bananas shifting rightward. C) a movement downward along the demand curve for bananas. D) a movement upward along the demand curve for bananas.
B
48) The paradox of value refers to the fact that A) different consumers value the same items differently. B) water costs little, while diamonds cost a lot. C) water brings little consumer surplus. D) the value of a good depends on its total utility.
D
49) According to the paradox of value, expensive goods, such as gemstones, provide consumers with A) high marginal utility and high total utility. B) low total utility and low marginal utility. C) high total utility and low marginal utility. D) low total utility and high marginal utility.
B
5) A measure of all the satisfaction you receive from all the coffee that you consume is your A) marginal utility per dollar spent on coffee. B) total utility from coffee. C) marginal utility of coffee. D) marginal utility per dollar spent on coffee when you are in your consumer equilibrium.
C
50) Water has a ________ marginal utility and brings a ________ consumer surplus; diamonds have a ________ marginal utility and bring a ________ consumer surplus. A) small; small; large; large B) large; small; small; large C) small; large; large; small D) large; large; small; small
B
6) Julie's total utility from cheeseburgers is given in the table above. What is the marginal utility of the third cheeseburger? A) 28.7 B) 20 C) 14 D) 86
A
7) Which of the following is NOT an assumption of marginal utility theory? A) 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. B) Consumers maximize their total utility. C) A consumer derives utility from the goods consumed. D) Each additional unit of consumption yields additional utility.
C
8) As the quantity of a good consumed increases, its marginal utility ________ and its total utility ________. A) increases; decreases B) decreases; decreases C) decreases; increases D) increases; increases