AREC 202 Quiz #2 Ch. 5-7

Mark has to choose between consuming an additional ham sandwich or an additional hummuswrap. At this point in his lunch, the marginal utility per dollar of ham sandwiches is higher thanthe 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. a 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

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

A. utility

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.

At his current level of consumption, Cameron get 3 times more marginal utility from anadditional 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

B. $1.50

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.

B. is experiencing diminishing marginal utility.

During Thanksgiving you participated in a pumpkinpie eating contest. You really enjoyed thefirst two pies, the third one was okay, but as soon as you ate the fourth one you became ill and lostthe contest. You got ______ utility from eating the first pie than from eating the third pie. A. less B. more C. the same amount of D. less variable

B. more

For two goods, coffee and scones, suppose that MU(coffee)/P(coffee) = 4 and MU(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.

B. more coffee and fewer scones

Refer to the figure below. If the price of Good A is $5 and the price of Good B is $4, thenthe rational spending rule is satisfied when the consumer purchases ______ units of GoodA and _____ units of Good B. UNITS. MU GOOD A MU GOOD B ----- 1 ------- 30. ------- 40 ----- 2. ------- 27. ------- 33 ----- 3. ------- 15. ------- 24 ----- 4. ------- 8. ------- 14 A. 3; 3 B. 4; 2 C. 1; 3 D. 3; 2

C. 1; 3 remember MUa/Pa = MUb/Pb

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

C. nominal price

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; sstisfaction

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

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

D. falls; less

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.

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

The law of demand indicated that as the cost of 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

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

D. the difference between the most a buyer would be willing to pay for a product and the price actually paid

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

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