ECON Ch. 5 HW & Quiz
Refer to the accompanying figures. If Mallory and Rick are the only two consumers in this market, then the market demand for soda will be 90 cans per month when the price of a can of soda is ____.
$0.50
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 per pound.
At her current level of consumption, Cameron gets 3 times more marginal utility from an additional game of pinball than from an additional game of ping pong. If the price of a ping pong game is $0.50, then she is maximizing utility if the price of a pinball game is
$1.50.
The accompanying figure shows the annual demand for haircuts for one person in the town of Beaumont. There are a total of 300 residents in Beaumont, each with this same demand curve. If the residents of Beaumont purchase a total of 1,800 haircuts each year, then the market price for a haircut must be
$20.
Consider a market for skateboards in which there are 3 potential buyers. The first has a reservation price of $100, the second has a reservation price of $200, and the third has a reservation price of $300. If skateboards sell for $150 and if each potential buyer only wants one skateboard, then what will be total consumer surplus in this market?
$200 Reason: Right! Two skateboards will be sold. One to the potential buyer whose reservation price is $300 (and who will receive a surplus of $150) and the other to the potential buyer whose reservation price is $200 (and who will receive a surplus of 50). Thus, total consumer surplus will be $200.
Given the figure on the right, if strawberries sell for $2 per pound, what is total consumer surplus each day?
$45,000 Reason: If price is $2, 30,000 pounds of strawberries will be purchased each day, so consumer surplus is $45,000 (=3×30,000/2).
At her current level of consumption, Wiebke's marginal utility from an additional pencil is 15 utils, and her marginal utility from an additional pen is 10 utils. This implies that Wiebke would be willing to give up at most _____ pencils for an additional pen.
0.66
Jamie's marginal utility from muffins and from doughnuts (in utils) is shown in the accompanying table. Jamie spends a total of $8 on muffins and/or doughnuts every morning. The price of each muffin is $2 and the price of each doughnut is $1. If Jamie consumes 3 muffins a day, then what is her marginal utility per dollar spent on the third muffin?
10
Casey earns $150 a week and consumes only fish and shrimp. The price of fish is $1.50 a pound and the price of shrimp is $5 a pound. Casey can buy a maximum of ______ pounds fish or a maximum of ______ pounds shrimp.
100; 30
Refer to the accompanying figures. If Mallory and Rick are the only two consumers in this market and the price of soda is $0.25 per can, then what will be the market demand for soda per month?
130 cans
When Kyle eats 1 donut for breakfast, his total utility is 20, when he eats 2 donuts his total utility is 35, and when he eats 3 donuts his total utility is 40. Thus, his marginal utility of going from 1 to 2 donuts is ________ utils.
15
Given the table below, when Sean consumes 4 popsicles per hour, his total utility is ______ utils per hour.
150
Refer to the accompanying table. If the price of Good A is $5 and the price of Good B is $4, then the rational spending rule is satisfied when the consumer purchases ______ units of Good A and ______ units of Good B.
1; 3
Jamie's marginal utility from muffins and from doughnuts (in utils) is shown in the accompanying table. Jamie spends a total of $8 on muffins and/or doughnuts every morning. The price of each muffin is $2 and the price of each doughnut is $1. What is Jamie's optimal combination of muffins and doughnuts each day?
2 muffins, 4 doughnuts
Assume that Destiny 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. Destiny can buy a maximum of ______ loaves of bread or a maximum of ______ jars of peanut butter.
20; 10
Assume that Destiny has $42 in income, the price of a loaf of bread is $2.00, and the price of a jar of peanut butter is $3.00. Destiny can buy a maximum of ______ loaves of bread or a maximum of ______ jars of peanut butter.
21; 14
Given the table below, Sean's marginal utility of going from 2 to 3 popsicles per hour is _______ utils per popsicle.
25
Refer to the accompanying table. If the price of a t-shirt is $10 and the price of a sweater is $40, then the rational spending is satisfied when the consumer purchases ______ t-shirts and ______ sweaters.
2; 3
he accompanying figure below shows a single consumer's demand for ice cream at the student union. 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 per scoop, those 500 students purchase a total of _____ scoops per week from the student union.
3,000
The accompanying figure shows a single consumer's demand for ice cream at the student union: If there are 1,000 students on campus during a regular semester, and each student's weekly demand for ice cream is shown above, then when the student union charges $3 per scoop, those 1,000 students purchase a total of ______ scoops per week.
4,000
Suppose that when the price of a sandwich from Dagwood's Deli is $5, there are 200 people who buy 1 sandwich per week and 100 people who buy 2 sandwiches per week. Thus, at a price of $5, the market demand each week for sandwiches from Dagwood's Deli is ______ (enter a numeric value).
400 sandwiches
Consider a market for snowboards in which there are 4 potential buyers. The first has a reservation price of $200; the second has a reservation price of $300; the third has a reservation price of $400; and the fourth has a reservation price of $500. If snowboards sell for $250 and if each potential buyer only wants one snowboard, then total consumer surplus in this market will be ______ dollars.
450
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.
4; 1
Refer to the accompanying table. If the price of Good A is $1 and the price of Good B is $3, then the rational spending rule is satisfied when the consumer purchases ______ units of Good A and ______ units of Good B.
4; 3
Refer to the accompanying table. If the price of Good A is $2 and the price of Good B is $6, then the rational spending rule is satisfies when the consumer purchases ______ units of Good A and ______ units of Good B.
4; 3
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. If Taylor watches 2 movies a month, Taylor will eat out ______ times per month, and have marginal utility per dollar of ______ from movies and a marginal utility per dollar of ______ from eating out.
4; 5; 5
Refer to the accompanying figure. What is the equilibrium quantity of bananas in this market?
5 pounds/day
The figure to the right shows Geoff's monthly demand for soap. If there are 1,000 people in the market (including Geoff), each with demand curve like Geoff, then what is the market demand for soap each month when the price of soap is $1 per bar? _____ (Enter a numeric value.)
5,000
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
6 pounds per week.
True or false: Economists believe that our preferences for different goods and services are not shaped by our biological needs.
False
True or false: If the real price of food is rising, then we know that nominal price of food must be rising too.
False Reason: The real price of food can go up even when the nominal price of food is falling if the nominal price of other goods falls by more.
True or false: If your marginal utility from watching a second hour of television is less than your marginal utility from the first hour, then watching a second hour of television will decrease your total utility.
False Reason: Your marginal utility from watching a second hour can still be positive even if it's less than your marginal utility from watching the first hour.
Grace's current marginal utility from t-shirts is 10 utils per t-shirt and her marginal utility from shorts is 20 utils per pair of shorts. If a t-shirt costs $20 and a pair of shorts costs $40, then
Grace should not change her consumption of t-shirts and shorts. Reason: Grace gets 1/2 of a util per dollar spent on t-shirts and 1/2 of a util per dollar spent on shorts, so she should not change her consumption of t-shirts and shorts.
Irina's current marginal utility from consuming tofu is 200 utils per pound, and her marginal utility from consuming chicken is 300 utils per pound. If tofu costs $2 per pound and chicken costs $2.50 per pound, then
Irina should buy more chicken and less tofu. Reason: Irina gets 100 utils per dollar spent on tofu and 120 utils per dollar spent on chicken. So, she should buy more chicken and less tofu.
If a consumer reallocates his or her spending away from Good A and towards Good B, then the consumer's total utility will increase if
MUA/PA < MUB/PB.
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
MUA/PA > MUB/PB.
Let MUc denote the marginal utility that Pablo receives from a cup of coffee, and let Pc denote the price of a cup of coffee. We typically expect that as Pablo buys more coffee
MUc/Pc will fall.
Suppose that at Miles's current level of consumption, his marginal utility from a pizza is 16 utils, and his marginal utility from a pint of ice cream is 24 utils. If the price of a pizza is $8.00, and the price of a pint of ice cream is $10.00, is Miles maximizing his utility?
No, he should shift his spending away from pizza and towards ice cream.
Which of the following best illustrates the substitution effect of an increase in the price of peanut butter?
The decrease in the quantity of peanut butter demanded that results because people switch from using peanut butter to almond butter. Reason: The substitution effect of a price increase is the reduction in the quantity demanded that results because buyers switch to substitute goods.
True or false: Once people have acquired the food, shelter, and clothing required to maintain their health, economists refer primarily to the goods and services people "want" rather than those they "need".
True
True or false: economists believe that our preferences for different goods and services can be influenced by our peers.
True
Suppose Zeynep's budget constraint is initially given by BC1. If her budget constraint shifts to BC2, this could be the result of
a decrease in the price of cheese sandwiches and an increase in income.
The figure on the right shows the relationship between the number of hours of TV that Mike watches each day and his total utility. Mike's marginal utility of going from 1 to 2 hours of TV per day is _____.
about two utils per day.
Marginal utility is the _____ gained from consuming an additional unit of a good.
additional utility
The law of diminishing marginal utility captures the tendency for the _____ gained from consuming an additional unit of a good to diminish as consumption increases beyond some point.
additional utility
If peanut butter is a normal good, and the price of peanut butter decreases, then the income effect will lead to
an increase in the quantity of peanut butter demanded. Reason: If the price of peanut butter decreases, consumers' purchasing power will increase, so if peanut butter is a normal good, the income effect will lead to an increase in the quantity of peanut butter demanded. Note: a change in the price of peanut butter will lead to a change in the quantity of peanut butter demanded, not a change in the demand for peanut butter.
Refer to the accompanying table. The law of diminishing marginal utility
applies to both Good A and Good B.
The difference between a buyer's reservation price for a product and the price a buyer actually paid is _____.
consumer surplus
As Lynn eats more pizza, we would typically expect her marginal utility from eating pizza to
decrease.
Refer to the accompanying figure. Suppose the dairy lobby convinces the government to impose price controls in this market. If the government requires cheese to be sold for a price of $8 per pound, then, relative to before the price controls, total consumer surplus in the market would
decrease.
If the dollar price of a bus ticket falls and the average dollar price of other goods falls by less, then the nominal price of bus tickets will ____ and the real price of bus tickets will _____.
decrease; decrease
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
decreased.
The figure on the right shows the relationship between the number of hours of TV that Mike watches each day and his total utility. When Mike goes from 3 to 4 hours of TV per day, his total utility _____.
decreases
Given the table to the right, as Catherine goes from consuming 3 to 4 cookies per hour, her total utility _____.
decreases Reason: As Catherine goes from consuming 3 to 4 cookies per hour, so her total utility decreases from 70 to 60 utils per hour.
When Kim drinks 1 cup of coffee per day her total utility is 10, when she drinks 2 cups her total utility is 14, and when she drinks 3 cups her total utility is 16. Thus, her marginal utility from consuming coffee is _____.
decreasing Reason: Her marginal utility of going from 2 to 3 cups a day is only 2, while her marginal utility of going from 1 to 2 cups is 4.
The law of ________ states that people do less of what they want to do as the cost of doing it rises.
demand
The law of _______ marginal utility captures the tendency for the additional utility gained from consuming an additional unit of a good to diminish as consumption increases beyond some point.
diminishing
If total consumer surplus in a market is $2,000 per day, then the total amount, in aggregate, that consumers would be willing to pay to participate in that market is ______.
equal to $2,000 per day.
When the price of a good rises, marginal utility per dollar spent on that good ______, leading consumers to purchase ______ of that good.
falls; less
Suppose most people either drive or take the bus to work. If bus fares increase, then you would expect _____ people to take the bus and _____ people to drive. Multiple choice question.
fewer; more
Suppose most people either fly or drive when they go on vacation. If airfare increases, then you would expect _____ people to fly and _____ people to drive.
fewer; more
Refer to the accompanying table. Total utility ______ as additional apples are consumed, but marginal utility ______ with each additional apple consumed.
first increases then decreases; decreases
The figure on the right shows the relationship between the number of hours of TV that Mike watches each day and his total utility. Mike's marginal utility of going from 1 to 2 hours of TV per day is _____ his marginal utility of going from 2 to 3 hours of TV per day.
greater than
When Lorenzo eats 1 slice of pizza for lunch, his total utility is 32, and when he eats 2 slices of pizza for lunch, his total utility is 54. Assuming that Lorenzo's marginal utility from eating pizza is always positive, we can infer that his total utility from eating 3 slices of pizza at lunch is
greater than 54 and less than 76.
Refer to the accompanying figure: From the figure, we can infer that James's marginal rate of substitution is
higher at point A than point B.
If the dollar price of gold doesn't change, but the average dollar price of all other goods decreases, then the real price of gold will
increase. Reason: If the dollar price of a good increases relative to the average dollar price of all other goods, then the real price of a good will increase.
If the dollar price of ibuprofen increases, and the average dollar price of all other goods stays the same, then the real price of ibuprofen will
increase. Reason: If the dollar price of a good increases relative to the average dollar price of all other goods, then the real price of a good will increase.
Refer to the accompanying figure. If Laura and Chris are the only two consumers in this market, then when the price of hamburger decreases from $2.50 to $2 per pound, the quantity demanded in the market will ______ by ______ pound(s) per week.
increase; 1.5
Given the table to the right, as Catherine goes from consuming 2 to 3 cookies per hour, her total utility _____.
increases Reason: As Catherine goes from consuming 2 to 3 cookies per hour, so her total utility increases from 60 to 70 utils per hour.
The additional utility gained from consuming an additional unit of a good is _____.
marginal utility
The additional utility gained from consuming an additional unit of a good is called
marginal utility.
The prices listed on the menu at your favorite restaurant are _____.
nominal prices
The affordable combination of goods that yields the highest total utility for a consumer is known as the _______ combination of goods.
optimal
Utility maximization refers to the process whereby
people allocate their income between different goods and services in order to maximize their total satisfaction.
If a consumer buys two different goods, the rational spending rule requires that the
ratio of marginal utility to price be equal for the two goods.
According to the _____ spending rule, spending should be allocated across goods so that the marginal utility per dollar is the same for each good.
rational
The dollar price of a good relative to the average dollar price of all other goods is the _____ of a good.
real price
When the price of a good goes up, part of the reason consumers purchase less of the good is that they
switch to less expensive substitutes.
The nominal price of a good is
the absolute price of a good in dollar terms
A consumer's optimal combination of goods is
the affordable combination that yields the highest total utility.
Consumer surplus is
the difference between a buyer's reservation price for a product and the price a buyer actually paid.
The real price of a good is
the dollar price of a good relative to the average dollar price of all other goods.
The tendency for the additional utility gained from consuming an additional unit of a good to diminish as consumption increases beyond some point is known as
the law of diminishing marginal utility.
According to the rational spending rule, spending should be allocated across goods so that
the marginal utility per dollar is the same for each good.
Suppose that in response to a decrease in the price of Hondas, people switch from buying Toyotas to Hondas. This is an example of _____ of a price change.
the substitution effect Reason: The substitution effect of a price decrease is the increase in the quantity demanded that results because buyers switch away from substitute goods.
Total consumer surplus in a market is
the total amount that consumers would be willing to pay, in aggregate, for the right to participate in that market.
The process whereby people allocate their income between different goods and services in order to maximize their total satisfaction is known as
utility maximization.
Taking a limousine to a five-star restaurant in New York is a
want to both Joe Average and Richie Rich.
Higher education is a ______ and assigned textbooks are ______.
want; wants
Provided people have achieved bare subsistence levels of consumption, economists speak mainly in terms of people's ______.
wants
Refer to the accompanying figure. The marginal utility of the 6th pizza is
5.
The law of demand states that people do _____ of what they want to do as the cost of doing it rises.
less
Given the table below, Sean's marginal utility of going from 1 to 2 popsicles per hour is ______ utils per popsicle.
50
Refer to the accompanying figure. The total utility of consuming 4 pizzas a week is
90.
Given the table to the right, Catherine's marginal utility of consuming cookies is _____.
decreasing Reason: As Catherine consumes more cookies, the amount by which her total utility increases gets smaller and smaller (and eventually becomes negative), so her marginal utility is decreasing.
Given the table to the right, Sean's marginal utility of consuming popsicles is _____.
decreasing Reason: As Sean consumes more popsicles, the amount by which his total utility increases gets smaller and smaller (and eventually becomes negative), so his marginal utility is decreasing.
Sienna 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 Sienna
is experiencing diminishing marginal utility.
The affordable combination of goods that yields the highest total utility for a consumer
is the optimal combination of goods for a consumer.
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. You got ______ utility from eating the fourth pie than from eating the second pie.
less
If Charlie's consumption of chocolate bars satisfies the law of diminishing marginal utility, then if Charlie's marginal utility of going from 1 to 2 chocolate bars is 18, then his marginal utility of going from 2 to 3 chocolate bars must be
less than 18.
If Bud's consumption of beer satisfies the law of diminishing marginal utility, then if Bud gets 75 utils from consuming 12 beers per week and 79 utils from consuming 13 beers per week, then his marginal utility of going from 13 to 14 beers per week must be ______.
less than 4 Reason: Bud's marginal utility of going from 12 to 13 beers per week is 4 (=79 - 75). So, his marginal utility of going from 13 to 14 beers per week must be less than 4.
Suppose that when you eat a second slice of your mom's homemade lasagna your total utility increases but it doesn't quite double. In this case, your marginal utility from the second slice is _____ than your marginal utility from the first slice.
positive but less
The law of demand indicates that as the cost of an activity
rises, less of the activity will occur.
If your marginal utility from eating French fries is positive but decreasing, then this implies that if you eat another French fry, your total utility
will increase. Reason: As long as your marginal utility is positive, consuming more of a good will increase your total utility, even if your marginal utility is decreasing.
Refer to the accompanying figure. The marginal utility of the 5th apple is
−5.
Which of the following best illustrates the income effect of a decrease in the price of pasta?
The change in the quantity of pasta demanded that results because people will be able to afford more of everything Reason: The income effect of a price decrease is the change in the quantity demanded of a good that results because a fall in the price of the good increases purchasing power.
Given the table below, Sean's marginal utility of going from 2 to 3 popsicles per hour is ________ utils per popsicle.
25
Refer to the accompanying figure. The marginal utility of the 7th pizza is
−5.
Refer to the accompanying figure. Total utility increases with each additional pizza up to the ______ and then declines, but marginal utility ______ with each additional pizza consumed.
6th pizza; decreases
Casey earns $210 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.
70; 42
Suppose that Fiona spends all of her income on 7 units of good X and 11 units of good Y. Fiona's marginal utility from the 7th unit of good X is 40 utils, and her marginal utility from the 11th unit of good Y is 50 utils. If the price of good X is $16 per unit and the price of good Y is $17.50 per unit, then to comply with the rational spending rule, Fiona should:
purchase less than 7 units of good X and more than 11 units of good Y.
The figure on the right shows the relationship between the number of hours of TV that Mike watches each day and his total utility. Mike's marginal utility of going from 3 to 4 hours of TV per day is _____.
negative
The figure on the right shows the relationship between the number of hours of TV that Mike watches each day and his total utility. Mike's marginal utility of going from 4 to 5 hours of TV per day is _____.
negative
When the price of a good or service goes up, consumers will tend to
switch to less expensive substitutes.
Julie's marginal utility from consuming coffee is 150 utils per cup, and her marginal utility from consuming Coke is 100 utils per can. If coffee costs $2 per cup and Coke costs $1 per can, then
Julie should buy more Coke and less coffee. Reason: Julie gets 75 utils per dollar spent on coffee and 100 utils per dollar spent on Coke. So, she should buy more Coke and less coffee.
If pasta is a normal good, and the price of pasta increases, then the income effect will lead to
a decrease in the quantity of pasta demanded. Reason: If the price of pasta decreases, consumers' purchasing power will increase, so if pasta is a normal good, the income effect will lead to an increase in the quantity of pasta demanded. Note: a change in the price of pasta will lead to a change in the quantity of pasta demanded, not a change in the demand for pasta.
When Kim drinks 1 cup of coffee per day, her total utility is 10. When she drinks 2 cups, her total utility is 14. When she drinks 3 cups, her total utility is 16. Thus, her marginal utility of going from 2 to 3 cups of coffee per day is:
2 utils per cup.
Total utility refers to the
total satisfaction that people derive from all of their consumption activities.
Economists refer to the total satisfaction that people derive from all of their consumption activities as _____.
total utility
The term marginal utility denotes the amount by which ______ changes when consumption changes by ______ unit(s).
total utility; 1
Suppose that in response to an increase in the price of electricity, people use less electricity because they can afford less of everything. This is an example of ____ of a price change.
The income effect Reason: The income effect of a price increase is the change in the quantity demanded of a good that results because an increase in the price of a good decreases buyers' purchasing power.
Given the figure on the right, if strawberries sell for $4 per pound, what is total consumer surplus in this market each day?
$5,000 per day Reason: If price is $4, consumer surplus is $5,000 (=1×10,000/2). This is the maximum amount that consumers would be willing to pay, in the aggregate, to participate in this market.
Given the table below, when Sean consumes 3 popsicles per hour, his total utility is ________ utils per hour.
175
Given the table to the right, Kate's marginal utility after the consumption of the second doughnut _____.
decreases Reason: As Kate consumes more doughnuts, the amount by which her total utility increases gets smaller and smaller (and eventually becomes negative), so her marginal utility is decreasing.
The figure on the right shows the relationship between the number of hours of TV that Mike watches each day and his total utility. When Mike goes from watching 2 to 3 hours of TV per day, his total utility _____.
increases
