arec quiz 2

At his current level of consumption, Cameron get 3 times more marginal utility from an additional game of pinball than from an additional game of ping pong. If the price of a pingpong game is $0.50, then he is maximizing utility if the price of a pinball game is: A. $1.00 B. $1.50 C. $2.00 D. $3.00

$1.50

Assume that Darren has $50 in income and the price of a loaf of bread is $2 and the price of a jar of peanut butter is $5. Darren can buy a maximum of ----- loaves of bread or a maximum of ----- jars of peanut butter.

25, 10

Suppose a cup of tea costs $0.60 and a scone costs $1.20. If Felipe spends all of his income on these two goods, and at his current level of consumption, he receives a marginal utility of 6 utils from the last cup of tea he buys and a marginal utility of 24 utils from the last scone he buys, then Felipe should: -not change his consumption of tea and scones -buy less tea and more scones -buy more tea and more scones -buy more tea and fewer scones

-buy less tea and more scones

The additional utility gained from consuming an additional unit of a good is called: -an util -costly utility -total utility -marginal utility

-marginal utility

Sam wants to maximize her utility across 2 goods: pizza and tortilla chips. She has a total of $19.00 to spend. Pizza costs $3/slice and chips are $2.50/basket. Her marginal utility of 1 slice of pizza is 100 utils, her marginal utility from consuming the second slice is 150, 60 from the third, and 55 from the fourth. Her marginal utility of 1 basket of chips is 150, her marginal utility from consuming the second basket is 250, 75 from the third, and 50 from the fourth. She can maximize her total utility by consuming ------ slices of pizza and -----baskets of tortilla chips.

3, 4

Mark has to choose between consuming an additional ham sandwich or an additional hummus wrap. At this point in his lunch, the marginal utility per dollar of ham sandwiches is higher than the marginal utility per dollar of hummus wraps. Which should he eat next? A. Ham sandwich B. Hummus wrap C. Both D. Neither

A. Ham sandwich

The additional utility gained from consuming an additional unit of a good is called A. marginal utility B. an util C. costly utility D. total utility

A. marginal utility

Perfectly competitive firms are able to choose: A. quantity to produce B. price to charge C. both A & B D. neither A nor B

A. quantity to produce

Monique is shopping for a new computer. A computer can be delivered to Joe's home for $1,200.Alternatively, Joe can pick up the same computer at the warehouse for $1,000. How should Joe buy the computer? A. Monique should drive to the warehouse because $1,000 is less than $1,200. B. Monique should drive to the warehouse if his cost of driving to the warehouse is less than $200. C. Monique should drive to the warehouse if his cost of driving to the warehouse is greater than $200. D. Monique should drive to the warehouse because the $200 he would save by driving to the warehouse is more than 10% of the purchase price.

B. Monique should drive to the warehouse if his cost of driving to the warehouse is less than $200.

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. You got ______ utility from eating the first pie than from eating the third pie. A. less B. more C. the same amount of

B. more

As Lynn eats more pizza, we would typically expect her marginal utility from eating pizza to: A. equal the price of pizza. B. increase. C. decrease. D. stay the same

C. decrease.

The goal of utility maximization is to allocate your ____ in order to maximize your ___. A. utility; spending B. resources; desires C. resources; satisfaction D. time; work

C. resources; satisfaction

The short-run is best defined as: A. one year or less B. a period of time sufficiently short that all factors of production are variable C. the period of time between quarterly accounting reports D. a period of time sufficiently short that at least one factor of production is fixed

D. a period of time sufficiently short that at least one factor of production is fixed

The law of demand indicates that as the cost an activity: A. rises, the level of the activity may or may not increase depending on the individual B. rises, more of the activity will occur C. falls, less of the activity will occur D. rises, less of the activity will occur

D. rises, less of the activity will occur

10. The tendency for marginal utility to decline as consumption increases beyond some point is called: A. the law of demand B. the rational spending rule C. utility maximization D. the law of diminishing marginal utility

D. the law of diminishing marginal utility

Anita lives in a suburb of Denver and commutes by bus each day to her job in the city center (20 round trips per month). When the price of a round trip goes up from $10 to $20, she responds by consuming exactly the same number of trips as before, while spending $200 per month less on restaurant meals. Does the fact that her quantity of bus travel is completely unresponsive to the price increase imply that Anita is not rational, in an economic sense? Sometimes. No. Yes. Always.

No.

How do economists measure the amount of happiness or satisfaction that consumption of goods and services brings people? Number of needs Number of wants Market price Utility

Utility

Sue gets a total of 20 utils per week from her consumption of pizza and a total of 40 utils per week from her consumption of yogurt. The price of pizza is $1 per slice and the price of yogurt is $1 per cup. She consumes 10 slices of pizza and 20 cups of yogurt each week. Which of the following statements is correct regarding Sue's current consumption of pizza and yogurt? Sue should eat more pizza and less yogurt because she is getting more utils from her last dollar spent on pizza than her last dollar spent on yogurt. We cannot determine if Sue is maximizing her total utility with the information provided. Sue should eat more yogurt and less pizza because she is getting more utils from her last dollar spent on yogurt than her last dollar spent on pizza. Sue should eat more yogurt and less pizza because she is getting more utils from the $20 spent on yogurt than from the $10 spent on pizza.

We cannot determine if Sue is maximizing her total utility with the information provided.

A price-taker face a demand curve that is: a. Horizontal at the market price b. Downward sloping c. Upward sloping d. Vertical at the market price

a. Horizontal at the market price

Productivity is calculated as a. Outputs divided by inputs b. Inputs divided by outputs c. Outputs times inputs d. Outputs minus inputs

a. Outputs divided by inputs

A rational seller will sell another unit of output: a. If the seller can charge more than equilibrium price b. If the cost of making another unit is less than the revenue gained from selling another unit c. Whenever the seller is earning a profit d. As long as the quantity demanded is greater than zero

b. If the cost of making another unit is less than the revenue gained from selling another unit

Opportunity cost is a. The explicit cost of the activity b. The value of the next best alternative forgone c. The value of your wage paying job d. The value of time

b. The value of the next best alternative forgone

Individual supply curves generally slope __________ because _________. a. Upward; profits increase with quantity b. Upward; of increasing opportunity cost c. Downward; inputs are cheaper when purchased in high volume d. Downward; sellers become more efficient with practice

b. Upward; of increasing opportunity cost

Which of the following is a defining characteristic of all perfectly competitive markets? a. Each firm in the market faces a perfectly inelastic demand curve b. The market demand curve is perfectly elastic c. All firms sell the same standardized product d. Consumers display strong brand loyalty

c. All firms sell the same standardized product

Which of the following is NOT true of a perfectly competitive firm? a. It is unable to influence the price of the good it sells b. It sells only a small fraction of the total quantity exchanged in the market c. It faces a perfectly elastic demand curve d. It seeks to maximize revenue

d. It seeks to maximize revenue

A seller's supply curve shows the seller's: a. Hourly wage for producing an additional unit of output at each quantity b. Willingness to pay for an additional unit of output at each quantity c. Profit from producing an additional unit of output at each quantity d. Opportunity cost of producing an additional unit of output at each quantity

d. Opportunity cost of producing an additional unit of output at each quantity

When the price of a good rises, marginal utility per dollar spent on that good ______, leading consumers to purchase ______ of that good. A. rises; more B. falls; more C. rises; less D. falls; less

falls; less

Suppose that each week Enzo 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 Enzo the Law of Diminishing Marginal Utility does not apply to peaches -if Enzo 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 -Enzo is not maximizing his utility -if Enzo 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

if Enzo 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

Cory gets 18, 23, and 25 units worth of total utility from consuming 10, 11, and 12 raw oysters, respectively, and the price per oyster is 25 cents. Thus, one can infer that Cory: A. is not maximizing his utility. B. is experiencing diminishing marginal utility. C. should not consume any more oysters. D. has consumed too many oysters.

is experiencing diminishing marginal utility.

The Law of Demand states that as market price or cost faced by consumers increases, people consume _________. more because people have unlimited wants more because people like spending money less because as price increases, quantity demanded decreases less because the won't enjoy it as much knowing it costs so much

less because as price increases, quantity demanded decreases

Economists, for the most part, assume that the primary objective of most private firms is to: maximize revenue maximize output minimize cost maximize profit

maximize profit

For two goods, coffee and scones, suppose that MU(coffee)/P(coffee) = 4 andMU(scones)/P(scones) = 3. To maximize your total utility from these two goods, you should purchase: A. less coffee and more scones. B. more coffee and fewer scones. C. less coffee and fewer scones. D. more coffee and more scones.

more coffee and fewer scones.

The absolute price of a good in dollar terms is the good's: A. real price B. equilibrium price C. nominal price D. marginal price

nominal price

Production possibilities curves for large economies are generally bow-shaped because: specialization gives some producers a comparative advantage opportunity costs tend to increase with increases in production as more resources are used to produce a good, those resources become less expensive opportunity costs tend to decrease with increases in production

opportunity costs tend to increase with increases in production

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 less 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 more than 25 units of good Y

purchase less than 20 units of good X and more than 25 units of good Y

If the market for sport utility vehicles has excess supply, then one can say that: supply is greater than demand quantity demanded is greater than quantity supplied quantity supplied is greater than quantity demanded demand is greater than supply

quantity supplied is greater than quantity demanded

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

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

Which of the following factors would impact a buyer's reservation price for a given good or service? Social influence The price of the item The cost of producing the item The price paid for inputs to produce the item

social influence

If we plot Deacona's opportunity cost per stall on the vertical axis and the number of stalls cleaned each day on the horizontal axis, we will have Deacona's _________ curve for stall-cleaning services. supply demand explicit cost production possibilities

supply

Consumer surplus measures: A. the increase in a buyer's total utility when the buyer purchases additional units of a good. B. the difference between the quantity demanded and the quantity supplied at a given price. C. the difference between a buyer's marginal utility from consuming a product and the price actually paid. D. 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.

Your neighbors have offered to pay you to look after their dog while they are on vacation. It will take you one hour per day to feed, walk, and care for the dog, which you can do either before or after you go to work. Your regular job pays $10 per hour, and you can work up to eight hours per day. The smallest amount of money you would accept to look after your neighbor's dog is equal to: a- zero, because your regular job is not available for more than eight hours per day. b- $10 per day, because that is your opportunity cost of one hour of work. c- $15 per day, because overtime wages are generally 1.5 times your regular wage when you work more than eight hours a day. d- the value of one hour of leisure, which is greater than zero.

the value of one hour of leisure, which is greater than zero.

According to economists, the satisfaction people get from their consumption activities is called: A. utility B. a want C. demand D. a need

utility