Econ Chapt 5 Quiz

Refer to the accompanying table. The marginal utility of the 3rd dinner is: Number of Dinners Out Per Week Total Utility Marginal Utility 1 100 2 75 3 235 4 250

60.

Joe 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?

NOT: Joe should drive to the warehouse because the $200 he would save by driving to the warehouse is more than 10% of the purchase price.

The tendency for consumers to purchase more of a good or service as its price falls is captured by the:

law of demand.

The ______ combination of goods is the combination that yields the highest total utility given a consumer's income.

optimal

According to the law of demand, when the price of shoes ______, people will consume ______ shoes

falls; more

Refer to the accompanying figure. If Laura and Chris are the only two consumers in this market, then the market demand for hamburger will be 9 pounds per week when the price of hamburger is:

$1.00 per pound.

Suppose that at Miles's current level of consumption, his marginal utility from a pizza is 10 utils, and his marginal utility from a pint of ice cream is 16 utils. If the price of a pizza is $8, and the price of a pint of ice cream is $5, is Miles maximizing his utility?

No. He should shift his spending away from frozen pizza and towards ice cream.

Refer to the accompanying figure. If Laura and Chris are the only two consumers in this market, then at a price of $2.00 per pound, the market demand for hamburger is:

Not:4 pounds per week.

Refer to the accompanying figure. picture Suppose that James' initial budget constraint shifts from BC1 to BC2, and as a result, his best affordable bundle moves from point A to point B. According to this figure

Not:spinach and potatoes are complements.

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.

Suppose that at your current consumption of two goods, A and B, MUA/PA = 25 and MUB/PB = 20. In order to maximize, your utility you should:

purchase more of A and less of B.

If marginal utility is positive, then as consumption increases:

total utility will increase.

Refer to the accompanying figure. The marginal utility of the 7th pizza is

-5.

Assume that Dusty has $30 in income, the price of a loaf of bread is $1.50, and the price of a jar of peanut butter is $3. Suppose that at the original income of $30, the price of a loaf of bread increased to $3 and the price of a jar of peanut butter decreased to $2. Dusty can buy a maximum of ______ loaves of bread or a maximum of ______ jars of peanut butter.

10; 15

Taylor's marginal utility from watching movies and from eating out (in utils) is shown in the accompanying table. Taylor spends exactly $100 every month on these two forms of entertainment; the price of each movie is $10 and the price of each dinner is $20. Movies Per Month Marginal Utility Per Movie Dinners Out Per Month Marginal Utility Per Dinner 1 60 1 150 2 50 2 140 3 20 3 120 4 5 4 100 Taylor's optimal combination of movies and eating out is

2 movies and 4 dinners.

Refer to the accompanying table. If the price of a t-shirt is $6 and the price of a sweater is $80, then the rational spending rule is satisfied when the consumer purchases _____ t-shirts and ______ sweaters. Units Utils Per Year from T-shirts Utils Per Year from Sweaters 0 0 0 1 75 400 2 135 720 3 180 960 4 210 1120

4; 1

Refer to the accompanying table. The law of diminishing marginal utility: Units Utils Per Year from T-shirts Utils Per Year from Sweaters 0 0 0 1 75 400 2 135 720 3 180 960 4 210 1120

applies to both t-shirts and sweaters.

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:

is experiencing diminishing marginal utility.

The rational spending rule is derived from the consumer's desire to

maximize utility.

The accompanying figure below shows a single consumer's demand for ice cream at the student union. picture During a regular semester, there are 500 students on campus. Each student's weekly demand for ice cream is shown above. When the price of ice cream is $2.00 per scoop, those 500 students purchase a total of _____ scoops per week from the student union.

3,000