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51
53) ________ utility is the additional satisfaction gained by consuming ________ of a good.
A) Marginal; all units
B) Total; one more unit
C) Total; no more units
D) Marginal; one more unit
Topic: The Basis of Choice: Utility
Skill: Definition
Learning Outcome: Micro-10
54) Ricardo eats 20 pieces of sushi on a Friday night. When he eats the 21st piece, he starts to feel
nauseous and realizes he probably should not have eaten the last piece. This suggests that for Ricardo the
A) marginal utility of the 21st piece of sushi is positive and increasing.
B) marginal utility of the 21st piece of sushi is negative.
C) total utility of pieces of sushi is increasing.
D) total utility of pieces of sushi is increasing by larger and larger increments.
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-10
55) The law of diminishing marginal utility is in effect when marginal utility is
A) positive and increasing.
B) positive and decreasing.
C) initially zero and then increasing.
D) initially zero and then decreasing.
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-10
52
Refer to the information provided in Table 6.3 below to answer the question(s) that follow.
Table 6.3
Dozens of Oysters per
Day
Total Utility Marginal Utility
1
60
2
104
3
134
4
152
5
8
Number of
Beers per Day
Total Utility Marginal Utility
1
40
2
70
3
94
4
114
5
14
56) Refer to Table 6.3. The marginal utility of the second dozen oysters per day is
A) 20.
B) 30.
C) 44.
D) 104.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-10
57) Refer to Table 6.3. The marginal utility of the third dozen oysters per day is
A) 10.
B) 30.
C) 44.
D) 134.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-10
53
58) Refer to Table 6.3. Diminishing marginal utility sets in after the ________ dozen oysters per day.
A) first
B) second
C) third
D) fourth
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-10
59) Refer to Table 6.3. The total utility of five dozen oysters per day is
A) 152.
B) 160.
C) 192.
D) indeterminate from this information.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-10
60) Refer to Table 6.3. The total utility of five beers per day is
A) 70.
B) 128.
C) 184.
D) indeterminate from this information.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-10
61) Refer to Table 6.3. If the price of a beer is $4, the price of a dozen oysters is $12, and Tyler has $28 of
income, Tyler's utility-maximizing combination of beers and oysters per day is
A) 1 beer and 2 dozen oysters.
B) 4 beers and 1 dozen oysters.
C) 3 beers and 1.5 dozen oysters.
D) indeterminate from this information.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-10
54
62) Refer to Table 6.3. Assume that a store is giving oysters and beers away for free. Consumers can have
as many beers and oysters (by the dozen) as they want, but the food has to be consumed one unit at a
time. If Tyler has already had one beer and two dozen oysters, then Tyler should
A) next consume a beer to maximize his utility.
B) next consume a dozen oysters to maximize his utility.
C) be indifferent between consuming the second beer or the third dozen oysters.
D) consume neither another beer nor another dozen oysters to maximize his utility.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-10
Refer to the information provided in Table 6.4 below to answer the question(s) that follow.
Table 6.4
Number of
Donuts per Day
Total Utility Marginal Utility
1
80
2
150
3
200
4
230
5
10
Number of
Burritos per Day
Total Utility Marginal Utility
1
60
2
108
3
144
4
168
5
12
63) Refer to Table 6.4. The marginal utility of the second donut per day is
A) 20.
B) 30.
C) 70.
D) 110.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-10
55
64) Refer to Table 6.4. Diminishing marginal utility sets in after the ________ donut per day.
A) first
B) second
C) third
D) fourth
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-10
65) Refer to Table 6.4. The total utility of five donuts per day is
A) 230.
B) 240.
C) 260.
D) indeterminate from this information.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-10
66) Refer to Table 6.4. If the price of a donut is $2, the price of a burrito is $4, and Luigi has $12 of income,
Luigi's utility-maximizing combination of donuts and burritos per day is
A) 1 donut and 2 burritos.
B) 4 donuts and 1 burrito.
C) 2 donuts and 1.5 burritos.
D) indeterminate from this information.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-10
67) Daisy is consuming X and Y so that she is spending her entire income and MUx/Px = 12 and
MUy/Py = 10. To maximize utility, she should
A) continue to consume the same amount of X and Y since she is already maximizing utility.
B) consume less of both X and Y.
C) consume more X and less Y.
D) consume less X and more Y.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-10
56
68) Sanjay is consuming X and Y so that he is spending his entire income and MUx/Px = 8 and
MUy/Py = 14. To maximize utility, he should consume
A) the same amount of X and Y since he is already maximizing utility.
B) less of both X and Y.
C) more X and less Y.
D) less X and more Y.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-10
69) Tyrell is consuming X and Y so that he is spending his entire income and MUx/Px = 7 and
MUy/Py = 7. To maximize utility, he should consume
A) the same amount of X and Y since he is already maximizing utility.
B) less of both X and Y.
C) more X and less Y.
D) less X and more Y.
Topic: The Basis of Choice: Utility
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-10
70) If MUx/Px > MUy/Py, then
A) spending a dollar less on Y and a dollar more on X increases utility.
B) spending a dollar less on X and a dollar more on Y increases utility.
C) X is more expensive than Y.
D) Y is more expensive than X.
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-10
71) Adriana is maximizing her utility. Her MUx/Px = 10 and MUy = 60. Then the price of Y must be
A) $1.
B) $6.
C) $10.
D) $60.
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Analytical Thinking
Learning Outcome: Micro-10
57
72) Geneva is spending her entire income on goods X and Y. Her marginal utility from the last units of X
and Y that she consumes is 36. Geneva's utility is only maximized if
A) the prices of X and Y are the same.
B) the price of good X is twice that of good Y.
C) the price of good Y is twice that of good X.
D) We cannot determine whether Geneva is maximizing her utility.
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Analytical Thinking
Learning Outcome: Micro-10
73) Juanita is spending her entire income on goods X and Y. Her marginal utility from the last unit of X is
50 and the marginal utility from the last unit of Y that she consumes is 100. Juanita's utility is only
maximized if
A) the prices of X and Y are the same.
B) the price of good X is twice that of good Y.
C) the price of good Y is twice that of good X.
D) We cannot determine whether Juanita is maximizing her utility.
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Analytical Thinking
Learning Outcome: Micro-10
74) The marginal utility of the first smoothie that Jimmy drinks in the morning is worth $3.00. The
marginal utility of the 4th smoothie he drinks is positive while the marginal utility of the 5th smoothie he
drinks in the morning is worth $0. This implies that at a price of $0, Jimmy would drink
A) zero smoothies per morning.
B) at most, 5 smoothies per morning.
C) more than 5 smoothies per morning, but the actual number is indeterminate from this information.
D) an infinite number of smoothies each morning.
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Analytical Thinking
Learning Outcome: Micro-10
58
75) For Adrian, the marginal utility of the 5th energy drink in a day is positive and the marginal utility of
the 6th energy drink in a day is zero. This
A) implies that Adrian's demand curve for energy drinks per day will become upward sloping at 6
energy drinks per day.
B) is impossible because each additional unit of consumption of any good must provide positive marginal
utility.
C) implies that at a zero price Adrian's demand curve will intersect the quantity axis at 6.
D) implies that Adrian maximizes utility by consuming 5 energy drinks per day.
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Analytical Thinking
Learning Outcome: Micro-10
76) The total amount of satisfaction yielded by the consumption of a good or service is called
A) total utility.
B) total demand.
C) market equilibrium.
D) maximized behavior.
Topic: The Basis of Choice: Utility
Skill: Definition
Learning Outcome: Micro-10
77) The law of ________ refers to a consumer's decrease in additional satisfaction as she consumes more
and more units of a good.
A) consumer choice
B) diminishing marginal utility
C) utility maximization
D) infinite demand
Topic: The Basis of Choice: Utility
Skill: Definition
Learning Outcome: Micro-10
78) A person maximizes utility when he equalizes the ________ across products.
A) total utility
B) total utility per dollar spent
C) marginal utility
D) marginal utility per dollar spent
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-10
59
79) ________ buys so as to make MUx/MUy = Px/Py for all pairs of goods.
A) A utility-minimizing consumer
B) Every consumer
C) A utility-maximizing consumer
D) Only a consumer with an unlimited budget
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-10
80) The ratio of the marginal utility of tea to the marginal utility of scones is six for an individual
maximizing utility. This implies that
A) a scone is six times more valuable than a cup of tea.
B) the tea to scones price ratio is one to six.
C) the tea to scones price ratio is six to one.
D) this person always eats scones with tea.
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-10
81) Sierra likes chocolate-covered deviled eggs. After eating 10 chocolate-covered deviled eggs, she
switches to strawberry ice cream covered in sauerkraut. We can conclude that
A) the chocolate-covered deviled eggs made Sierra sick.
B) the chocolate-covered deviled eggs now have a negative marginal utility.
C) at this point, the chocolate-covered deviled eggs have a lower marginal utility per dollar spent than
that of strawberry ice cream covered in sauerkraut.
D) Sierra is minimizing her utility.
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-10
82) The ________ states that things with the greatest value in use frequently have little or no value in
exchange.
A) law of diminishing marginal utility
B) utility conundrum
C) diamond/water paradox
D) law of reverse exchange
Topic: The Basis of Choice: Utility
Skill: Definition
Learning Outcome: Micro-10
60
83) The law of diminishing marginal utility implies that as a household consumes more of a product, its
total utility will increase by smaller amounts, assuming marginal utility remains positive.
Topic: The Basis of Choice: Utility
Skill: Definition
Learning Outcome: Micro-10
84) The law of diminishing marginal utility implies that total utility never reaches a maximum.
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-10
85) When consumers maximize utility, they are equating the ratio of marginal utility to price across all
goods consumed.
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-10
86) A negative marginal utility implies negative total utility.
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-10
87) If MUx/Px exceeds MUy/Py, then a household can increase its utility by spending more on X and less
on Y.
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-10
88) When marginal utility is zero, total utility is at a minimum.
Topic: The Basis of Choice: Utility
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-10
