108)
The consumer optimum (for two goods, a and b) is reached when
108)
A)
MUa= MUb.
B)
TUa/Pa= TUb/Pb.
C)
MUa/Pa= MUb/Pb.
D)
TUa= TUb.
109)
The price of a magazine is $2, the price of a paperback book is $5, and the consumer has $33.
According to the above table, the rational consumer will purchase
109)
A)
5 magazines and 6 books.
B)
2 magazines and 3 books.
C)
4 magazines and 5 books.
D)
1 magazine and 2 books.
110)
In the above table, the total utility of 4 slices of pizza is
110)
A)
20.
B)
70.
C)
80.
D)
50.
111)
When DVDs and hamburgers were the same price, Mavis consumed 3 hamburgers and 5 DVDs,
and Mavis received 10 utils from the last hamburger and 15 utils from the last DVD consumed.
What should be Mavis’ consumption strategy?
111)
A)
consume more of both items
B)
consume more DVDs and fewer burgers
C)
consume more burgers and fewer DVDs
D)
consume less of both items
112)
If Frank has been consuming 5 hamburgers per week at a consumer optimum, and the price of
hamburgers falls, how will Frank respond?
112)
A)
He will save more income.
B)
He will buy more burgers.
C)
He will buy more of everything.
D)
He will buy more of everything except burgers.
113)
To calculate marginal utility, divide the change in total utility by
113)
A)
the price of the product.
B)
the number of units consumed.
C)
the change in the number of units consumed.
D)
the consumer’s subjective level of preference.
114)
Refer to the above table. At what quantity does diminishing marginal utility set in?
114)
A)
After 5.
B)
After 6.
C)
After 4.
D)
1st.
115)
A well–known athlete loves cupcakes. He receives 200 utils for the first cupcake, an additional 160
for the second, an additional 120 for the third, another 80 for the fourth, and another 40 for the fifth.
The marginal utility of the fourth cupcake is ________ and the total utility of consuming four
cupcakes is ________.
115)
A)
40; 80
B)
40; 40
C)
80; 600
D)
80; 560
116)
When indifference curve analysis is used, a consumer optimum occurs at the point at which
116)
A)
marginal utility/price ratio of all goods consumed is equal.
B)
the indifference curve is tangent to the budget line.
C)
total utility is maximum.
D)
the indifference curves intersect.
B
117)
Economists assume that people make decisions regarding consumption based on comparing
117)
A)
additional units of satisfaction with additional costs.
B)
average satisfaction with average costs.
C)
additional units of satisfaction with average costs.
D)
average satisfaction with additional costs.
A
118)
Using the above table, what is the total utility of the third piece of pizza?
118)
A)
75 utils
B)
–25 utils
C)
25 utils
D)
0 utils
A
D
119)
Which economic principle accounts for the fact that all–you–can–eat buffet restaurants can be
profitable?
119)
A)
The principle of diminishing marginal product
B)
The law of supply
C)
The law of demand
D)
The principle of diminishing marginal utility
120)
Given the above figure, if Joey was a rational consumer he would NOT eat more than ________
piece(s) of pizza.
120)
A)
1
B)
5
C)
4
D)
6
121)
Explain how utility analysis can be used to derive a downward sloping demand curve.
121)
122)
Explain how a consumer maximizes utility.
122)
123)
Restaurants that allow customers to eat as much as they want for a fixed price must make
money or they would not remain in business. How can they earn profits when people can
always eat more so that the restaurant’s costs keep getting higher? What practice that
regular restaurants use will not be used by all–you–can–eat places?
123)
124)
Suppose a family purchases 10,000 gallons of water a year at 20 cents a gallon and one
diamond ring at a price of $1000. Can we conclude that the diamond ring provides more
utility to the family than water? Explain.
124)
125)
What do we know about total utility when marginal utility is zero?
125)
126)
“As an individual consumes more units of a good, her total utility falls because of the law
of diminishing marginal utility.” Do you agree or disagree? Explain.
126)
127)
How does an increase in the price of an individual good or service affect a consumer
optimum, and how does this help explain the law of demand?
127)
128)
What is utility analysis? What is the goal of this analysis?
128)
129)
Why is water much cheaper than diamonds even though water is essential to human lives
while diamonds are not?
129)
130)
Why can’t an indifference curve be a straight line?
130)
131)
What is the relationship between marginal utility and total utility? What happens to total
utility as marginal utility declines?
131)
132)
Suppose that Jacob is going to a buffet restaurant that allows him to eat as many chicken
wings as he wants at a fixed price. How would you predict the number of chicken wings
that Jack will eat using utility theory?
132)