Chapter Eight

When consumption of a good increases, marginal utility will __________.

decrease

Kumiko is not at her consumer equilibrium. She sees too many movies and buys too few books. As she moves toward her consumer equilibrium, her total utility from movies will __________.

decrease, but her total utility from books will increase

Usharani consumes 35 apples a week and 14 loaves of bread. Apples cost $1 each and bread costs $2 per loaf. Usharani is maximizing his utility and finds that the marginal utility from his 35th apple __________.

is half his marginal utility from his 14th loaf of bread

Marginal utility __________.

is the additional utility derived from the last unit of a good consumed

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 __________.

pizza is an inferior good for Renee

When Ramona is in consumer equilibrium, __________.

she is maximizing her utility, given her income and the prices of goods and services

Ben thinks that playing another round of a video game is worth $1.00; to play another round costs Ben $0.50. Ben's consumer surplus from playing another round of the video game is __________.

$0.50

Lily is a college student who likes to buy only two goods: Cheetos and Pepsi. To determine how Lily can maximize her utility from consuming Cheetos and Pepsi, you need to know which of the following: I. Lily's preferences for Cheetos and Pepsi II. the respective prices of Cheetos and Pepsi III. Lily's income

I, II, and III

Diminishing marginal utility is __________.

an assumption of utility theory

Diminishing marginal utility means that __________.

Ralph will enjoy his second hamburger less than the first

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 __________.

fewer apples and more bread

The principle of diminishing marginal utility means that the consumer surplus from the first slice of pizza is .

greater than that from the second

Marginal utility theory implies that, starting from consumer equilibrium, a rise in income will __________.

increase a consumer's total utility

Lynette's marginal utility per dollar spent on tacos and shakes is shown in the figure. If the price of a taco is $2 and the price of a shake is $1, then Lynette's __________.

marginal utility from tacos is twice as much as her marginal utility from shakes

The fact that rubies are more expensive than milk reflects the fact that for most consumers __________.

more milk is consumed than rubies

Marginal utility theory is used in the derivation of the .

negative slope of demand curves

Tonya, who is rich, and Jerome, who is less rich, both buy orange juice and croissants for lunch at the student cafeteria. Their budget constraints as drawn on a diagram, with orange juice on the vertical axis and croissants on the horizontal, have the same __________.

slopes

The predictions of marginal utility theory __________.

support the idea that the demand curve slopes downward

An individual demand curve would NOT shift as a result of a change in __________.

the cost of producing the good

To maximize total utility, a consumer equates __________.

the marginal utility per dollar spent on each good