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51) When the price of one good changes while another good's price does not change, then there
has been a change in the
A) relative price.
B) marginal utility price.
C) absolute price.
D) marginal price.
E) utility price.
52) A budget line shows the
A) limits to production possibilities.
B) limits to production opportunities.
C) slope of the demand curve.
D) limits to consumption possibilities.
E) way the demand curve shifts if the consumer's budget changes.
53) A budget line
A) represents combinations of goods a consumer desires.
B) marks the boundary between what a consumer can afford and cannot afford.
C) has a positive slope.
D) is the same as the production possibilities frontier.
E) is the same as a demand curve.
54) Linda has $10 a month to spend on ice cream cones and chocolate bars. If the price of an ice
cream cone is $2 a cone and the price of a chocolate bar is $1 a bar, which of the following is a
point on Linda's budget line?
A) 4 cones and 0 chocolate bars
B) 1 cone and 8 chocolate bars
C) 3 cones and 1 chocolate bar
D) 5 cones and 10 chocolate bars
E) 0 cones and 0 chocolate bars
55) If a budget line rotates inward and becomes steeper, then the
A) consumer's budget decreased.
B) consumer's budget increased.
C) price of one of the goods decreased.
D) price of one of the goods increased.
E) price of both of the goods must have decreased.
56) If the budget line rotates inward and becomes steeper, there is a
A) higher opportunity cost of the good measured on the x-axis.
B) lower opportunity cost of the good measured on the x-axis.
C) larger budget.
D) higher price for the good measured on the y-axis.
E) lower price for the good measured on the x-axis.
57) A relative price is the
A) price of a substitute.
B) price of a related good.
C) price of one good divided by the price of another.
D) absolute price of a good.
E) price of one good multiplied by the price of another.
58) If a consumer's budget increases, the budget line
A) rotates outward and its slope changes.
B) rotates inward and its slope changes.
C) shifts outward and its slope does not change.
D) shifts inward and its slope does not change.
E) does not change.
59) Reb buys fishing lures and steaks. If his budget increases, the maximum number of fishing
lures he can purchase ________ and the maximum number of steaks he can purchase ________.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) does not change; does not change
1) Utility is the
A) benefit or satisfaction that a person gets from the consumption of a good or service.
B) measure of how useful a resource is in the production process.
C) measure of productivity associated with a good or service.
D) economic term for consumption possibilities.
E) economic term for how changes in price affect a consumer's purchases.
2) The benefit that John gets from eating an additional grape is called the ________ the grape.
A) net gain from
B) demand for
C) quantity demanded of
D) total utility from
E) marginal utility from
3) As more of a good is consumed, total utility
A) increases.
B) decreases.
C) remains the same.
D) becomes negative and then turns positive.
E) might change but whether or not it changes depends on why more of the good is consumed.
4) If you get 40 units of utility from eating the first bag of pretzels, 30 from the second bag, and
20 from the third bag, the total utility of three bags of pretzels is ________ units of utility.
A) 40
B) 70
C) 90
D) 50
E) 20
5) If a consumer obtains 20 units of utility for the first unit consumed, 10 for the second, and 5
for the third, what is the total utility of consuming three units?
A) 20 units
B) 30 units
C) 35 units
D) 5 units
E) None of the above answers is correct.
6) Marginal utility is equal to which of the following?
A) total income divided by the price of the product
B) the change in total utility from consuming one more unit of a good
C) the satisfaction obtained from consuming any number of units of a good
D) total utility divided by the number of units of the good
E) None of the above answers is correct.
7) Marginal utility is the change in total utility that results from
A) an increase in the price of the good.
B) a change in the budget line.
C) a one-unit change in the quantity of a good consumed.
D) a decrease in the price of the good.
E) an increase in the consumer's income.
8) If the total utility of 2 bags of chips is 25, the total utility of 3 bags is 33, and the total utility
of 4 bags is 40 units, then the marginal utility of the 3rd and 4th bags are
A) 8 and 7, respectively.
B) 12.5 and 11, respectively.
C) 11 and 10, respectively.
D) 58 and 73, respectively.
E) 33 and 40, respectively.
9) If Joan consumes 1 dinner roll, she has total utility of 15; if she consumes 2, she has total
utility of 27; if she consumes 3, she has total utility of 37; and if she consumes 4, she has total
utility of 45. What is the marginal utility of the fourth dinner roll consumed?
A) 124 units of utility
B) 45 units of utility
C) 11.25 units of utility
D) 8 units of utility
E) 37 units of utility
10) If Sarah gets 40 units of utility from her first piece of toast for breakfast and a total of 70
units from two pieces of toast, then the marginal utility of the first piece is ________ units and
the marginal utility of the second piece is ________ units.
A) 40; 70
B) 40; 110
C) 40; 30
D) 40; 35
E) 70; 40
11) The above table shows Homer's total utility from boxes of doughnuts. As Homer's
consumption of doughnuts increases,
A) both his total utility and his marginal utility increase.
B) his total utility increases, but his marginal utility decreases.
C) his total utility decreases, but his marginal utility increases.
D) both his total utility and his marginal utility decrease.
E) None of the above answers are correct.
12) The above table shows Homer's utility from boxes of doughnuts. If Homer decreases his
consumption of doughnuts from 4 boxes to 3 boxes, his
A) total utility and marginal utility will both decrease.
B) total utility will decrease, but his marginal utility will increase.
C) total utility will increase, but his marginal utility will decrease.
D) total utility and marginal utility will both increase.
E) None of the above answers are correct.
13) The above table shows Homer's utility from boxes of doughnuts. The marginal utility that
Homer receives from the third box of doughnuts is equal to
A) 75.
B) 25.
C) 20.
D) 3.
E) 50.
14) The above table shows Homer's utility from boxes of doughnuts. As Homer's consumption of
doughnuts increases, his
A) marginal utility is positive and increasing.
B) marginal utility is positive but decreasing.
C) marginal utility is negative but increasing.
D) marginal utility is negative and decreasing.
E) total utility is not related to his marginal utility.
15) Give the data in the above table, what is the marginal utility of the third unit of ice cream?
A) 80
B) 70
C) 60
D) 230
E) 210
16) Give the data in the above table, what is the marginal utility of the second unit of ice cream?
A) 80
B) 70
C) 60
D) 75
E) 150
17) Give the data in the above table, what is the marginal utility of the fourth unit of ice cream?
A) 210
B) 50
C) 60
D) 65
E) 260
18) If a consumer's total utility increases when another unit of a good is consumed, which of the
following is true? Marginal utility must be
A) negative.
B) equal to one.
C) positive.
D) increasing.
E) some amount, but more information is needed to determine if marginal utility is positive,
negative, or equal to zero.
19) Diminishing marginal utility means that as more of a good is consumed,
A) the price of the good rises.
B) the price of the good falls.
C) more income is spent.
D) the utility of an additional unit decreases.
E) the consumption of some other good must diminish.
20) Diminishing marginal utility means that
A) marginal utility decreases as consumption decreases.
B) marginal utility increases as consumption increases.
C) marginal utility decreases as consumption increases.
D) total utility decreases as marginal utility decreases.
E) total utility decreases as marginal utility increases.
21) Brenda's marginal utility per dollar from the second hamburger is 20. Her marginal utility
from the third hamburger would be
A) less than 20.
B) more than 20.
C) equal to 20.
D) not comparable to the marginal utility per dollar from the second hamburger.
E) some amount, but we need more information to determine how it compares to 20.
22) Total utility ________ as a person consumes more of one good and marginal utility
________.
A) increases; increases
B) increases; decreases
C) remains constant; decreases
D) fluctuates; decreases
E) decreases; increases
23) Diminishing marginal utility means that an increase in the consumption of a good leads to
A) a decrease in total utility.
B) a decrease in marginal utility.
C) a decrease in the fall of the price of the good.
D) a decrease in the consumer's budget.
E) an increase in the consumer's budget.
24) Kevin likes weasel leg stew. But every bite of the stew that he eats provides him with less
and less total utility. This fact means that Kevin's marginal utility is
A) decreasing.
B) increasing, but at a decreasing rate.
C) increasing at an increasing rate.
D) not changing.
E) changing but the rate of change is not certain without more information.
25) The table above shows Buffy's utility from wooden stakes and cloves of garlic. The total
utility Buffy gets from 5 wooden stakes is
A) 7.
B) 65.
C) 222.
D) 122.
E) None of the above answers is correct.
26) The table above shows Buffy's utility from wooden stakes and cloves of garlic. If Buffy
increases her consumption of wooden stakes from 4 to 5 stakes, her marginal utility from the 5th
stake is
A) 65.
B) 7.
C) 58.
D) 7÷ 5 = 1.29.
E) None of the above answers is correct.
27) The table above shows Buffy's utility from wooden stakes and cloves of garlic. The marginal
utility of which clove of garlic is the largest?
A) the first clove
B) the second clove
C) the fifth clove
D) the third clove
E) The marginal utility of all cloves is the same.
28) The table above shows Buffy's utility from wooden stakes and cloves of garlic. As Buffy
uses more stakes, the marginal utility of a stake ________ and as she uses more cloves of garlic,
the marginal utility of a clove of garlic ________.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
E) does not change; does not change
29) The table above gives Matt's utility from consuming slices of pizza. His marginal utility from
the 3rd slice is
A) 27 units.
B) 5 units.
C) 9 units.
D) 11 units.
E) None of the above answers is correct.
30) The table above gives Matt's utility from consuming slices of pizza. His marginal utility from
the 4th slice is
A) 30 units.
B) 3 units.
C) 94 units.
D) 23.5 units.
E) 7.5 units.
31) The table above gives Matt's utility from consuming slices of pizza. As Matt consumes more
slices of pizza, he
A) obtains greater amounts of marginal utility.
B) obtains less total utility.
C) has diminishing marginal utility.
D) has diminishing total utility.
E) has unchanging marginal utility.
32) For a consumer to maximize utility, in part the consumer must
A) allocate the entire available budget.
B) make the marginal utility per dollar from each good as much different as possible for all
goods.
C) make the marginal utility per dollar from each good as small as possible for all goods.
D) spend as little of the budget as possible.
E) Answers A and B are both correct.
33) In order to maximize his or her utility, a consumer must
A) not allocate his or her entire available budget.
B) allocate his or her entire available budget in order to buy the combination of goods that
equalizes the total utility per dollar from all goods.
C) allocate his or her entire available budget and do nothing else because when the entire budget
is allocated, utility is maximized.
D) allocate his or her entire available budget in order to buy the combination of goods that
equalizes the marginal utility per dollar from all goods.
E) allocate his or her entire available budget in order to buy the combination of goods that makes
the marginal utility per dollar from all goods as large as possible.
34) The utility-maximizing rule says that consumers must
A) only allocate the entire available budget.
B) only make the marginal utility per dollar the same for all goods.
C) allocate the entire available budget and make the marginal utility per dollar the same for all
goods.
D) either allocate the entire available budget or make the marginal utility per dollar the same for
all goods but not both.
E) None of the above answers are correct.
35) Suppose the consumer has allocated his or her entire budget. Which of the following
conditions is also required for total utility to be maximized?
A) Marginal utility has decreased to zero for all goods.
B) The least inexpensive combination of goods has been purchased.
C) The marginal utility for each good is equal.
D) The marginal utility divided by price for each good is equal.
E) The number of units of each good consumed must be the same.
36) Carter spends his entire budget on pizza and Pepsi. He maximizes his utility when he
allocates his entire available budget and buys pizza and Pepsi so that the
A) marginal utility from pizza is equal to the marginal utility from Pepsi.
B) total utility from both pizza and Pepsi is maximized.
C) marginal utility per dollar from pizza is equal to the marginal utility per dollar from Pepsi.
D) total utility per dollar from both pizza and Pepsi are equal.
E) None of the above answers is correct.
37) For David, the marginal utility from an additional car is 2,000 units and the marginal utility
from an additional vacation is 1,000 units. David is allocating all his budget. Hence to maximize
his utility, David will
A) shift his consumption from the vacation to the car.
B) shift his consumption from the car to the vacation.
C) save his budget by not spending it until he can afford both the car and the vacation.
D) buy both the car and the vacation now.
E) possibly do something, but there is not enough information available to determine what he
would do.
38) If a consumer has allocated his or her budget and found the combination of goods where all
marginal utilities divided by price are equal, what would happen if the consumer were forced to
consume some other combination of goods? The consumer
A) will definitely have higher total utility.
B) will definitely have lower total utility.
C) will definitely not experience any change in total utility.
D) might be have higher, lower, or the same total utility but more information is needed to
determine which.
E) None of the above answers is correct.
39) If Raul's marginal utility per dollar from bread is 25 and the marginal utility per dollar from
butter is 30,
A) Raul should purchase more butter and less bread to increase his total utility.
B) Raul's marginal utility from butter will fall if he buys more butter.
C) Raul's marginal utility from bread will rise if he buys less bread.
D) Only answer B and answer C are correct.
E) Answer A, answer B, and answer C are correct.
40) Sheryl is maximizing her utility. She notices that her marginal utility from the last package
of bubble gum consumed is greater than her marginal utility from the last package of mints
consumed. This result means that the
A) price of a package of gum is greater than the price of a package of mints.
B) price of a package of mints is greater than the price of a package of gum.
C) total utility of gum must be falling as more gum is consumed.
D) total utility of mints must be falling as more mints are consumed.
E) More information is needed which, if any, of the above answers is correct.
41) Assume you are in a store looking at a shirt you want. You expect to buy the shirt until you
look at the price, then you decide the shirt is not a good buy. How can your decision be viewed
in economic terms?
A) The shirt's marginal utility divided by price was too low compared to other goods.
B) The shirt has zero marginal utility for you.
C) The opportunity cost of the shirt was too low.
D) The shirt's marginal utility divided by price was too high compared to other goods.
E) None of the above answers is correct.
42) In a month, Samantha consumes the quantity of lobster dinners so that her marginal utility
from a lobster dinner is 500 units. The price of a lobster dinner is $25. She also is consuming the
quantity of spaghetti dinners so that its marginal utility is 300 units, while its price is $15.
Samantha is allocating her entire budget. What should she do to maximize her total utility?
A) consume more lobster dinners and fewer spaghetti dinners
B) consume more spaghetti dinners and fewer lobster dinners
C) consume the current combination of lobster and spaghetti dinners
D) consume fewer lobster dinners and fewer spaghetti dinners
E) Not enough information is given to answer the question.
43) Suppose the price of a pair of jeans is $25 and the price of a T-shirt is $15. The consumer's
budget is entirely allocated. If the marginal utility from a pair of jeans is 100 units and the
marginal utility from a T-shirt is 75 units, the consumer is
A) in equilibrium because his or her utility is maximized.
B) not in equilibrium and should purchase fewer jeans and more T-shirts.
C) not in equilibrium and should purchase fewer T-shirts and more jeans.
D) not in equilibrium, but should maintain the current level of purchases.
E) not in equilibrium and should purchase more T-shirts and more jeans.
44) Mary is currently buying apples and oranges such that the last unit of apples has 30 units of
utility and the last unit of oranges has 40 units of utility. She has allocated her entire budget. If
the price of an apple is 10 cents and the price of an orange is 20 cents, to maximize her utility,
what should Mary do?
A) buy more apples and fewer oranges
B) buy more oranges and fewer apples
C) continue to buy the same amounts of both goods
D) buy fewer apples and fewer oranges
E) None of the above answers is correct.
45) Suppose that Jen receives 400 units of utility from her last soda and 200 units of utility from
her last slice of pizza. What can we conclude about Jen's choices if the price of a soda is $1 and
the price of a slice of pizza is $2?
A) Jen is maximizing utility because she buys more of the good providing the most utility.
B) Jen should buy more soda to maximize her utility.
C) Jen should buy more pizza to maximize her utility.
D) Jen needs to buy less soda and less pizza to maximize her utility.
E) None of the above answers is correct.
