Econ 101 Exam 2 Study Ch. 6
What is the marginal utility of the 4 pound of bananas?
30
Assume that Jill is consuming at the utility-maximizing point. If the utility from the last soda she consumes is 40 and its price is $2, and the utility from the last bucket of popcorn is 20, then we know that the price of the bucket of popcorn is ____.
$1
if the price of a hot dog is $2 and your willingness to pay is $3, then your consumer surplus is _____.
$1
What is the producer surplus at the market equilibrium monthly rent and quantity?
$1,445.0 million
What is the consumer surplus at the market equilibrium monthly rent and quantity?
$2,167.5 million
What is the producer surplus at the market equilibrium monthly rent and quantity in 2029 if the market is allowed to adjust to the increase in demand over time?
$2,645.0 million
What is the market equilibrium monthly rent and quantity of apartments rented in 2029 if the market is allowed to adjust to the increase in demand over time?
$3,000 per month and 2.3 million units.
What is the market equilibrium monthly rent and quantity of apartments rented?
$3,400 per month and 9.0 million units.
Using the graph, if the price increases from $1 to $1.50, consumer surplus will decrease by _____.
$3.50
Suppose Gail is willing to pay $89 for a new pair of shoes and Karen is willing to pay $60. What is the gain in total consumer surplus if the price of the shoes falls from $70 to $50?
$30
What is the consumer surplus at the market equilibrium monthly rent and quantity in 2029 if the market is allowed to adjust to the increase in demand over time?
$7,935.0 million
How many pounds of apples should Bill buy if he wants to maximize his utility and he has $23 to spend?
1
If Bill spends all his money on apples that cost $3 per pound and Bill has $31 to spend, how many whole pounds can he buy?
10
What is the consumer surplus at a price of $10, assuming the demand relationship is linear?$______
100
What is the marginal utility of the 2 pound of apples?
15
Frank is willing to pay $1,000 for the first class he takes this semester, $850 for the second, $700 for the third and $500 for the fourth. If the price of a class is $750, how many classes will he take?
2
If apples cost $3 per pound and bananas cost $5 per pound, how many pounds of apples should Bill buy if he wants to maximize his utility and he has $31 to spend?
2
Using the graph, if the price of an ice cream cone is $2.00, consumer surplus will equal ______.
2
What is the consumer surplus at a price of $5? $______
225
If apples cost $3 per pound, how much marginal utility per dollar is Bill getting with the 4 pound of apples?
3
Frank is willing to pay $1,000 for the first class he takes this semester, $850 for the second, $700 for the third and $500 for the fourth. Using the information above, what is Frank's consumer surplus?
350
How many pounds of bananas should Bill buy if he wants to maximize his utility and he has $23 to spend?
4
If apples cost $3 per pound and bananas cost $5 per pound, how many pounds of bananas should Bill buy if he wants to maximize his utility and he has $31 to spend?
5
If Bill spends all his money on bananas that cost $5 per pound and Bill has $31 to spend, how many whole pounds can he buy?
6
Using the graph, if the price of an ice cream cone is $1, consumer surplus will equal ___
8
Assuming a good is a normal good, a decrease in price will lead to a substitution effect that does what?
Along with the income effect, increases quantity
If the price of a good falls and, because of the income effect, consumption of the good also decreases, we know that the good is __________.
An inferior good
Suppose that the price of a pizza is $10 and the price of a video game is $30. Currently, Aaron is consuming such that the ratio of his marginal utility of pizza to marginal utility of video games is ¼. If he wants to maximize his utility, what should he do?
Buy fewer pizzas and more video games
Assume that Jill is NOT consuming at the utility-maximizing level. The marginal utility of soda is 40 and its price is $2, but the marginal utility of popcorn is now 30, and its price is $1. What should Jill do to maximize her utility?
Consume less soda and more popcorn
Assume Anna is consuming two goods, movies and books, and at her current level of consumption, the marginal utility of the last movie is 60 and the marginal utility of the last book is 30. The price of a movie is $12 and the price of a book is $4. In order to maximise her utility, what should Anna do?
Decrease her consumption of movies and increase her consumption of books
Assuming a fixed budget, when the price good X increases, consumers will adjust their consumption patterns in a way that the marginal utilities of all other goods will _________.
Decrease, but the marginal utility of good X will increase.
If the price of a normal good increases, the income effect ______________ the quantity demanded of that good.
Decreases
Suppose Frank chooses to buy hot dogs at their current price. When the price of hot dogs increases, Frank's consumer surplus ________.
Decreases
A consumer is maximizing her satisfaction and currently consuming three goods. If her tastes change so that the marginal utility she gains from movies increases, what will happen to her consumption of the other two goods - hamburgers and football games?
Her consumption will decrease because the ratio of their marginal utilities to their prices is now less than the ratio of the marginal utility of movies to the price of a movie.
When Jane's income doubles, she increases her consumption. For all normal goods that Jane consumes, what is true?
Her marginal utility per dollar will decrease
Fred just ate a hamburger and received total utility of 15 from consuming it. If he eats another one, which of the following will be true?
His total utility will likely increase
If David buys more coffee and less ice cream, the ______________ of coffee will ______________ , and the ___ of ice cream will ______________.
If David buys more coffee and less ice cream, the ______________ of coffee will ______________ , and the ___ of ice cream will ______________.
Assume you spend all of your income on two goods: peanuts and chips. Also assume that you are consuming the combination of peanuts and chips that maximize your utility. Which of the following statements is true?
If the price of peanuts is equal to the price of chips, then the marginal utilities must also be equal.
If the price of a normal good decreases, the substitution effect ______________ the quantity demanded of that good.
Increases
What happens to total surplus over 10 years if the market is allowed to adjust to the increase in demand over time?
Increases by $6,967.5 million (more than doubles).
The marginal utility from drinking one more glass of water is likely to be ______________ the marginal utility from going to one more movie.
Less than
If a good is provided for free, it is likely to have a marginal utility that is relatively ______________ and be ______________ the marginal utility that could be gained from consuming some other good which must be paid for.
Low; less than
The reason the demand curve slopes downward is that for most goods which of the following is true?
The income effect of a price change is less than the substitution effect, and the substitution effect of a price increase always causes reductions in consumption.
If the price of a good changes, why does an income effect exist?
The price change causes a change in real income
Which of the following would cause an increase in consumer surplus in the market for cars?
The price of steel decreases.
Grace likes eating pizza and going to the movies. If she has $120 to spend in a month, and pizza and movies each cost $10, she decides to eat 5 pizzas and see 7 movies. If the price of movies increases to $12 what is likely to happen?
The substitution effect would predict that she consumes more pizzas and fewer movies; the income effect would predict that she would consume fewer of both
Which of the following is an example of the income effect?
When the price of tuition increases, Amy eats fewer restaurant meals.
If a consumer is currently maximizing her satisfaction, what will happen to the marginal utility of a good when its price increases and the consumer adjusts consumption accordingly? The marginal utility will __________.
increase, because the consumer will decrease her consumption of the good.
