Chapter 5

After subsistence levels of food, shelter, and clothing have been provided, economists refer to all other goods and services as: A. "inferior goods" B. "needs" C. "wants" D. "luxuries"

"wants"

If a consumer reallocates his or her spending away from good B and towards good A, then the consumer's total utility will increase if: A. MUA/PA > MUB/PB B. MUA/PA < MUB/PB C. MUA/PA > 0 and MUB/PB > 0 D. MUA/PA < 0 and MUB/PB < 0

MUA/PA > MUB/PB

Donald has vast riches and consumes thousands of dollars' worth of consumer goods each week, yet he is never satisfied. Why not? A. People's wants are unlimited. B. Donald fails to choose rationally. C. The law of diminishing marginal utility shows that consuming too many material goods lowers total utility. D. Utility is unrelated to the level of consumption.

People's wants are unlimited.

Casey earns $150 a week and consumes only fish and shrimp. The price of fish is $3 a pound and the price of shrimp is $5 a pound. Suppose the price of fish decreased to $1.50 a pound, and the price of shrimp remains $5 a pound. At Casey's original income of $150 per week, Casey can now buy a maximum of ______ pounds fish or a maximum of ______ pounds shrimp. A. 10; 30 B. 30; 50 C. 30; 100 D. 100; 30

100; 30

Casey earns $150 a week and consumes only fish and shrimp. The price of fish is $3 a pound and the price of shrimp is $5 a pound. Casey can buy a maximum of ______ pounds of fish or a maximum of ______ pounds of shrimp. A. 30; 50 B. 50; 30 C. 15; 30 D. 30; 15

50; 30

Suppose Chris's marginal utility from the first taco he eats is 15, and his marginal utility from the second taco he eats is 12. One can infer that: A. Chris's total utility from eating two tacos is 27. B. Chris should eat one taco. C. Chris's average utility from eating two tacos is 27. D. Chris should eat two tacos.

Chris's total utility from eating two tacos is 27.

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. After the third pie, your total utility A. increased, but by less than for the first three pies. B. decreased. C. stayed the same. D. was zero.

decreased.

Sven likes to water ski, but can only water ski during the one week each year when he is on vacation. Therefore, he plans to ski every day, for eight hours a day. The first day, Sven skied for eight hours and enjoyed every hour. The second day, Sven slept in and then skied for seven hours, which was fun but not as much fun as the first day. The third day, Sven skied for six hours, but was starting to get a bit bored by the end. The fourth day, Sven skied for four hours and then took a nap. On the fifth day of Sven's vacation, Sven went blueberry picking all day. Sven's total utility ______ with each hour that he skied. A. increased B. decreased C. remained constant D. first increased than decreased

increased

You are trying to decide how to spend your last lunch dollar. You should use that dollar to buy more of the item: A. that costs the least. B. that gives you the highest average utility per dollar. C. that gives you the highest marginal utility per dollar. D. from which you already have gained the greatest total utility.

that gives you the highest marginal utility per dollar.

According to the law of diminishing marginal utility: A. as you consume less of something, your total utility will decrease. B. as you consume less of something, your marginal utility from consuming that good will increase. C. you should never consume more of something if your marginal utility is decreasing. D. if your total utility is increasing as you consume more of something, then your marginal utility must be increasing as well.

as you consume less of something, your marginal utility from consuming that good will increase.

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. Your total utility ______ with the first three pies you ate. A. increased B. decreased C. stayed the same D. first increased than decreased

first increased than decreased

Sven likes to water ski, but can only water ski during the one week each year when he is on vacation. Therefore, he plans to ski every day, for eight hours a day. The first day, Sven skied for eight hours and enjoyed every hour. The second day, Sven slept in and then skied for seven hours, which was fun but not as much fun as the first day. The third day, Sven skied for six hours, but was starting to get a bit bored by the end. The fourth day, Sven skied for four hours and then took a nap. On the fifth day of Sven's vacation, Sven went blueberry picking all day. On the fifth day of Sven's vacation, he had decided that another hour of skiing would yield: A. more utility than blueberry picking. B. the same level of utility as the day before. C. less utility than blueberry picking. D. no utility at all.

less utility than blueberry picking.

The dollar price of a good relative to the average dollar price of all other goods is the good's: A. market price B. equilibrium price C. nominal price D. real price

real price