Chapter 6—Consumer Choice Theory
MULTIPLE CHOICE
1. Utility is most closely defined by which of the following terms?
a.
Useful.
c.
Necessary.
b.
Worthiness.
d.
Satisfaction.
2. The ability of a good to satisfy a want refers to its:
a.
usefulness.
c.
worthiness.
b.
utility.
d.
necessity.
3. In the context of consumer choice theory, utility means:
a.
usefulness.
b.
satisfaction.
c.
practicality.
d.
boring.
e.
action.
4. A util represents a unit of measurement for the:
a.
dollars a consumer spends on a good.
b.
profit a firm makes from producing a good.
c.
way a consumer will respond to a change in price.
d.
happiness a person obtains from consuming a good.
e.
way a producer will respond to a change in price.
5. The term utility refers to the:
a.
usefulness of a good in relation to its scarcity.
b.
necessity of a good.
c.
price of a good.
d.
number of goods a consumer has.
e.
pleasure or satisfaction a consumer receives upon consuming a good.
6. A util:
a.
can measure satisfaction with factual accuracy.
b.
is not a valid concept.
c.
applies to a good but not to a service.
d.
is purely a fictitious measure of the satisfaction a consumer derives from a product.
e.
can be used in place of money in some countries.
7. ____ is the subjective measure of the physical and mental satisfaction that is anticipated from
consumption.
a.
Demand
b.
Supply
c.
Recognition
d.
Utility
e.
Cognition
8. Utility is:
a.
easily measured, because all people derive the same utility from consumption.
b.
easily measured, because it is an objective concept.
c.
easily measured, because it is a subjective concept.
d.
hard to measure, because it is a subjective concept.
e.
hard to measure, because it is an objective concept.
9. What term do economists use to refer to the satisfaction that an individual expects to receive from
consuming a good or service?
a.
Utility.
b.
Response.
c.
Usability.
d.
Demand.
e.
Desirable.
10. Utility refers to the:
a.
relationship of demand to the supply of a product.
b.
satisfaction a consumer experiences after a good or service is purchased.
c.
satisfaction a consumer expects to receive from a good or service.
d.
ability of a good or a service to have value in the marketplace.
e.
usefulness of the product consumed.
11. Utility is defined as the:
a.
sense of pleasure or satisfaction derived from consuming goods and services.
b.
cost of acquiring goods and services.
c.
profits consumers earn from consuming goods and services.
d.
monetary value to consumers of goods and services.
e.
desire to consume goods and services.
12. The utility of a good is:
a.
different for different consumers.
b.
the same for all consumers.
c.
constant no matter how much is consumed.
d.
related to the cost of producing it.
e.
easily measured.
13. If utility is not maximized, then:
a.
some change in consumption will increase satisfaction.
b.
no change in consumption will increase utility.
c.
only a change in income will increase utility.
d.
only a change in price will increase utility.
e.
the principle of diminishing marginal utility does not hold.
14. Which of the following best describes the economic concept of utility?
a.
Utility is the total number of units a consumer buys.
b.
Utility measures the usefulness of goods, such as tools or food, and so goods such as
artwork or attractive landscaping by definition has no utility.
c.
Utility measures the satisfaction, or pleasure, that people receive from consuming a good
or service.
d.
None of the above are correct.
15. When total utility is at a maximum, marginal utility is:
a.
zero.
b.
positive.
c.
negative.
d.
one.
e.
infinite.
16. A rational consumer should not consume more of a good when:
a.
total utility is decreasing.
b.
marginal utility is diminishing.
c.
both a and b.
d.
income is decreasing.
e.
the price is high.
17. John loves to travel. He would never turn down the opportunity to go on a trip. This means that, for
John:
a.
the total utility of travel always increases.
b.
marginal utility of travel never decreases.
c.
the law of diminishing marginal utility does not apply to travel.
d.
marginal utility of travel is always zero.
e.
extra travel yields zero consumer surplus.
18. The marginal utilities associated with the first 4 units of consumption of good Y are 10, 12, 9, and 7,
respectively. What is the total utility associated with the third unit?
a.
3.
b.
9.
c.
25.
d.
31.
e.
The amount cannot be determined from the marginal utilities.
19. The marginal utilities associated with the first 5 units of consumption of good Y are 15, 15, 10, 7, and
3, respectively. What is the total utility associated with those 5 units?
a.
5.
b.
−12.
c.
12.
d.
35.
e.
50.
20. Generally speaking, as more of a particular good is purchased, a consumer’s marginal utility ____ and
total utility ____.
a.
increases; decreases
b.
decreases; increases
c.
increases; increases
d.
decreases; decreases
e.
generalizations cannot be made
21. Which of the following statements is true about the total utility provided by a good?
a.
Total utility can never be negative.
b.
Total utility is maximized when marginal utility is maximized.
c.
Total utility continues to increase as more of the good is consumed.
d.
Total utility is maximized when marginal utility is zero (for total utility > 0).
e.
Total utility is maximized when marginal utility is zero (for total utility < 0).
22. Consumers tend to maximize:
a.
marginal utility.
b.
marginal utility per dollar.
c.
total utility.
d.
money holdings.
e.
consumer surplus.
23. The conceptual measure of the satisfaction a person obtains by consuming all the units of a good or
service during a given time period is:
a.
total product.
c.
total utility.
b.
total revenue.
d.
total product.
24. Total utility is measured by a mythical unit called the:
a.
bliss unit.
c.
pleasure unit.
b.
useful unit.
d.
util.
25. The fact that a gallon of gasoline commands a higher market price than a gallon of water indicates that:
a.
gasoline is an economic good but water is not.
b.
the marginal utility of gasoline is greater than the marginal utility of a gallon of water.
c.
the average utility of a gallon of gasoline is greater than the average utility of a gallon of
water.
d.
the total utility of gasoline exceeds the total utility of water.
26. Which of the following is true about marginal utility?
a.
Marginal utility is total utility divided by the total quantity consumed.
b.
Marginal utility is the change in total utility divided by the change in total quantity
demanded.
c.
Marginal utility is the satisfaction that a consumer experiences from all the units of a good
or service consumed.
d.
None of the above are true.
27. Marginal utility (MU) equals:
a.
P/Q.
b.
Q/TU.
c.
PQ/TU.
d.
TU/P.
e.
TU/Q.
28. If water is essential for life, while diamonds are not, then why is water cheaper than diamonds?
a.
Because most people would rather die with a big diamond ring than live without one.
b.
Because the total utility generated by diamonds is larger than the total utility generated by
water.
c.
Because most people do not understand their total need for water.
d.
Because water is abundant, the marginal utility of water is low, and price reflects marginal
utility, not total utility.
29. Marginal utility is the change in:
a.
total utility when an extra unit of output is produced.
b.
marginal utility when an extra unit of output is consumed.
c.
total utility when an extra unit of output is consumed.
d.
marginal utility when an extra unit of output is produced.
e.
average utility when an extra unit of output is consumed.
30. On Thanksgiving, Jake’s mother gives him a huge platter of food. If Jake were to keep eating just to
please his mother (even when he really wanted to stop), his marginal utility would be:
a.
the same as his total utility.
b.
large.
c.
minus one.
d.
positive.
e.
negative.
31. Utility theory assumes that marginal utility:
a.
increases as an individual consumes more of a product.
b.
decreases as an individual consumes more of a product.
c.
is zero as long as the individual derives utility from the product.
d.
is constant as long as the individual derives utility from the product.
e.
is constant as long as the individual derives satisfaction from the product.
32. Bonnie gets her hair cut at her usual salon and is very happy with the results. Later that afternoon, she
goes to the mall and sees that a hair salon is giving away free haircuts only on that day. If Bonnie does
not take advantage of the giveaway, it is because the:
a.
marginal utility of the next haircut would be zero or negative.
b.
marginal utility of the next haircut would increase.
c.
marginal utility of the next haircut would be zero or positive.
d.
total utility of both haircuts would be zero or negative.
e.
total utility of both haircuts would be higher than just one haircut.
33. If finding the last stamp to complete your collection makes you happier than finding the first, then:
a.
marginal utility is zero.
b.
marginal utility is negative.
c.
total utility is decreasing.
d.
total utility is constant.
e.
marginal utility is not diminishing.
34. Tina’s marginal utility of her first piece of cake is 15, while Jerry’s marginal utility of his first piece of
cake is 24. An economist would conclude that:
a.
Tina likes cake more than Jerry likes cake.
b.
Jerry likes cake more than Tina likes cake.
c.
Tina likes cake less than Jerry likes cake.
d.
Jerry likes cake less than Tina likes cake.
e.
we can’t make a comparison to see who values cake more.
35. If total utility is falling, marginal utility is:
a.
positive.
b.
negative
c.
positive, but declining.
d.
either positive or negative.
e.
zero.
36. At the point where total utility is at its peak, marginal utility is:
a.
zero.
b.
positive.
c.
negative.
d.
positive, but declining.
e.
positive, but increasing.
37. If the marginal utility of each good consumers buy does not diminish but remains constant, we should
witness consumers:
a.
buying no goods at all.
b.
spending all of their income on the good with the highest MU.
c.
buying one of each good.
d.
buying only the least expensive goods.
e.
become indifferent to what goods they buy.
38. Marginal utility is defined as:
a.
the extra satisfaction the consumer receives from an extra $1 of income.
b.
the total level of satisfaction a consumer receives upon the consumption of a certain
number of goods.
c.
the number of hours a consumer would be willing to work to receive a certain product.
d.
the extra satisfaction a person derives from consuming an additional unit of a good.
e.
a comparison of the utility a good provides with the price of that good.
39. A utility-maximizing consumer would never purchase a good if the:
a.
MU/P is positive.
c.
marginal utility is negative.
b.
marginal utility is positive.
d.
none of these is correct.
40. Marginal utility can be measured by the change in:
a.
total utility / the change in quantity.
b.
income / the change in utility.
c.
quantity / the change in income.
d.
price / the change in utility.
e.
income / the change in price.
41. The change in total utility due to a 1-unit change in the quantity consumed is:
a.
marginal utility.
b.
average utility.
c.
per capita utility.
d.
total utility.
e.
the principle of diminishing marginal utility.
42. Marginal utility is measured by:
a.
a ray from the origin to a point on the total utility curve.
b.
the change in total utility for a 1-unit change in the quantity consumed.
c.
total utility divided by total quantity consumed.
d.
the first utility minus the last utility.
e.
average utility multiplied by the total quantity consumed.
43. The total utilities associated with the first 5 units of consumption of good X are 15, 30, 40, 47, and 50,
respectively. What is the marginal utility associated with the third unit?
a.
15.
b.
70.
c.
85.
d.
10.
e.
45.
44. As a general rule, marginal utility will be less:
a.
as less of the good is consumed.
b.
as more of the good is consumed.
c.
when average utility is at a maximum.
d.
only when the good is inferior.
e.
when satisfaction is less than cost.
45. A fall in marginal utility reflects:
a.
the water and diamond paradox.
b.
the law of supply.
c.
the principle of diminishing marginal utility.
d.
decreased consumption of a good.
e.
the fact that total utility must be declining.
46. Marginal utility will generally decrease when:
a.
more of a particular good is consumed.
b.
less of a particular good is consumed.
c.
average utility is the least.
d.
per capita utility is the least.
e.
the TU curve’s slope is positive rather than negative.
47. As more bananas are consumed, other things constant, marginal utility tends to decrease at:
a.
the same rate for all people.
b.
the same rate for all goods for a given person.
c.
the same rate for all people.
d.
different rates for different people and for other goods.
e.
different rates for different people, but at the same rate as other goods.
48. If marginal utility is positive, then total utility is:
a.
constant.
b.
negative.
c.
increasing.
d.
decreasing.
e.
zero.
49. Suppose that for Merv the marginal utility of $50-per-serving caviar is 100 and the marginal utility of
$1-per-serving popcorn is 10. For his snack, Merv should buy:
a.
the caviar if he has the $50; otherwise, the popcorn.
b.
the caviar if he has the $50; otherwise, nothing.
c.
the popcorn, whether he has the $50 or not.
d.
one serving each of the caviar and popcorn, if he has $51.
e.
five servings of popcorn for each serving of caviar.
50. Suppose that the price of telephones decreases. If more are purchased then:
a.
the total utility of telephones will decrease.
b.
the total utility of telephones will be unchanged.
c.
the marginal utility of telephones will likely increase.
d.
the marginal utility of telephones will likely decrease.
e.
both a and d.
51. The amount by which an additional unit of a good or service increases a consumer’s total utility is:
a.
marginal bliss.
c.
marginal utility.
b.
marginal benefit.
d.
marginal.
52. Marginal utility is best computed as the ratio of:
a.
total utility to change in quantity consumed.
b.
the change in total utility to total quantity consumed.
c.
total quantity consumed to total utility.
d.
the change in total utility to change in quantity consumed.
53. Assume the total utilities corresponding to the first four units of a product consumed are 8, 12, 14, and
15, respectively. The marginal utility of the second unit consumed is:
a.
0.
c.
12.
b.
4.
d.
20.
54. Assume the total utilities corresponding to the first four units of a product consumed are 8, 12, 14, 15,
respectively. The marginal utility of the third unit consumed is:
a.
2.
c.
3
b.
14.
d.
34.
55. As more Big Macs are consumed each day, the marginal utility that a person gets from each additional
Big Mac:
a.
rises at a steady rate.
c.
remains constant.
b.
decreases.
d.
accelerates.
56. “I’m tired of eating muffins for breakfast. Today, I’m trying a bagel.” These statements most clearly
reflect the:
a.
law of increasing returns to scale.
c.
law of diminishing marginal utility.
b.
second law of demand.
d.
law of comparative advantage.
57. Which of the following most directly reflects the law of diminishing marginal utility?
a.
After watching two football games, Terry decides to watch a third game.
b.
A sports fan enjoys watching Monday night football rather than going to the theater.
c.
After listening to three compact discs, Kim decides to go bowling rather than listen to a
fourth disc.
d.
A musician receives the biggest ovation of the evening after playing the final number of a
recital.
58. The statement “as more of a good is consumed, the utility a person derives from each additional unit
diminishes” is known as the:
a.
water and diamond paradox.
b.
law of diminishing marginal utility.
c.
law of total utility.
d.
marginal-utility-to-price ratio equalization rule.
e.
law of diminishing demand.
59. If the price of a good falls, the marginal utility per dollar spent on that good:
a.
also falls.
b.
stays the same.
c.
rises.
d.
will rise or fall, depending on the consumer.
e.
remains unchanged, provided the consumer buys no more of the good.
60. “As consumption of a good increases, the extra satisfaction received from consuming an additional
unit of the good decreases.” This statement is known as the law of:
a.
demand.
b.
increasing costs.
c.
diminishing marginal utility.
d.
diminishing marginal returns.
e.
total utility.
61. If the price of a product rises, consumers buy less of the good because the:
a.
MU/P of the good falls below the MU/P of other goods.
b.
MU/P of the good rises above the MU/P of other goods.
c.
marginal utility of the good diminishes.
d.
total utility of the good diminishes.
e.
marginal utility of the good rises.
62. The principle of diminishing marginal utility says that:
a.
as more of a good or service is consumed, demand decreases.
b.
as more of a good or service is consumed, the price will rise.
c.
the marginal utility of additional units consumed increases.
d.
an increase in income causes demand to increase.
e.
the marginal utility of additional units consumed decreases.
63. Diminishing marginal utility means that as you consume more of a good, other things constant, the:
a.
total satisfaction you obtain from consuming this good falls.
b.
total amount produced falls.
c.
marginal product falls.
d.
additional satisfaction you obtain from each additional unit of the good falls.
e.
total satisfaction you obtain from each extra good becomes constant.
64. Which of the following is true, according to the law of diminishing marginal utility?
a.
The marginal utility of Diane’s second Coke is greater than the marginal utility of her third
pretzel, other things constant.
b.
The marginal utility of Diane’s second Coke is greater than the marginal utility of Ken’s
third pretzel, other things constant.
c.
The marginal utility of Diane’s second Coke is greater than the marginal utility of her third
Coke, other things constant.
d.
The total utility of two Cokes is greater than the total utility of three Cokes, other things
constant.
e.
The marginal utility of Diane’s second Coke is greater than the marginal utility of Ken’s
third Coke, other things constant.
65. According to the law of diminishing marginal utility, the marginal utility curve is ____.
a.
vertical
c.
upward sloping.
b.
flat.
d.
downward sloping.
66. The law of diminishing marginal utility is the principle that the marginal utility curve ____ as people
consume more of a product in a given period.
a.
rises.
c.
remains unchanged.
b.
falls.
d.
first falls and then rises.
67. The law of diminishing marginal utility indicates that the marginal utility curve is:
a.
downward sloping.
b.
upward sloping.
c.
U-shaped.
d.
flat.
e.
vertical.
68. If the first four units of a good consumed have marginal utilities of 8, 4, 2, and 1, respectively, this
trend is an indication of the:
a.
law of consumer equilibrium.
c.
law of diminishing consumer surplus.
b.
law of diminishing marginal utility.
d.
law of supply.
69. The law of diminishing marginal utility exists for the first four units of a good if they have marginal
utilities of:
a.
1, 2, 4, 8.
c.
4, 8, 2, 1.
b.
8, 4, 1, 2.
d.
8, 4, 2, 1.
70. Suppose the law of diminishing marginal utility holds for coffee. As a person drinks more coffee
during the day, the total utility he or she receives will:
a.
increase faster and faster.
c.
remain constant.
b.
fall steadily.
d.
rise, but at slower and slower rates.
71. The demand curve is downward-sloping because of the law of ____.
a.
diminishing marginal utility
c.
consumer equilibrium
b.
diminishing consumer equilibrium
d.
diminishing utility maximization
Exhibit 6-1 Total utility for good X
Total utility (utils)
0
120
148
160
Quantity consumed per day
0
2
3
4
72. As shown in Exhibit 6-1, the marginal utility for the second unit consumed is:
a.
0.
c.
80.
b.
40.
d.
200.
73. As shown in Exhibit 6-1, the marginal utility for the fifth unit consumed is:
a.
305.
c.
5.
b.
155.
d.
0.
74. As shown in Exhibit 6-1, the law of diminishing marginal utility is first observed at the:
a.
first unit.
b.
second unit.
c.
third unit.
d.
fourth unit.
e.
fifth unit.
Exhibit 6-2 Total utility for hamburgers, fries, and Cokes
Total Utility
from Hamburgers
Total Utility
from Fries
Total Utility
from Cokes
1 hamburger (100 utils)
1 order of fries (30 utils)
1 Coke (40 utils)
2 hamburgers (180 utils)
2 orders of fries (50 utils)
2 Cokes (60 utils)
3 hamburgers (240 utils)
3 orders of fries (60 utils)
3 Cokes (70 utils)
75. In Exhibit 6-2 assume that the price of hamburgers is $2 each, fries cost 50 cents each, and Cokes cost
$1 each. What is the marginal utility of having a second order of fries?
a.
10 utils.
c.
30 utils.
b.
20 utils.
d.
50 utils.
76. In Exhibit 6-2, assume that the price of hamburgers is $2 each, fries cost 50 cents each, and Cokes cost
$1 each. Suppose the consumer has $6 to spend on hamburgers, fries, and Cokes. Which of the
following meals gives the consumer the most utility?
a.
3 hamburgers, no fries, and no Cokes.
b.
2 hamburgers, no fries, and 2 Cokes.
c.
2 hamburgers, 2 orders of fries and 1 Coke.
d.
1 hamburger, 2 orders of fries, and 3 Cokes.
77. In Exhibit 6-2, assume that the price of hamburgers is $2 each, fries cost 50 cents each, and Cokes cost
$1 each. Suppose the consumer has $6 to spend on hamburgers, fries, and Cokes. In the consumer
equilibrium, what is the marginal utility per dollar for each of the three goods?
a.
20 utils per dollar.
c.
90 utils per dollar.
b.
40 utils per dollar.
d.
270 utils per dollar.
78. If Mr. Smith thinks the last dollar spent on shirts yields less satisfaction than the last dollar spent on
cola, and Smith is a utility-maximizing consumer, he should:
a.
decrease his spending on cola.
b.
decrease his spending on cola and increase his spending on shirts.
c.
increase his spending on shirts.
d.
increase his spending on cola and decrease his spending on shirts.
79. A local restaurant offers an “all you can eat” ribs special. You pay $11.95, and then you can eat as
many servings as you desire at no additional cost. It would follow that you will stop eating when:
a.
your marginal utility (or value) derived from eating another serving is zero.
b.
your total utility (or value) derived from all of the servings consumed just equals $11.95.
c.
your marginal utility (or value) derived from another serving equals $11.95.
d.
it is physically impossible for you to eat any more.
80. If John’s marginal benefit derived from the consumption of another candy bar is greater than the price
of the candy bar:
a.
John will not purchase any more candy bars.
b.
John will increase his total satisfaction by purchasing the candy bar.
c.
the opportunity cost of the candy bar is lower than the price.
d.
John will decrease his total utility if he purchases the candy bar.
81. If Jane’s marginal benefit as a consumer in the jeans market is larger than the price of a pair of jeans:
a.
Jane will not purchase any more jeans.
b.
Jane can benefit by purchasing more jeans.
c.
the opportunity cost of a pair of jeans is lower than the price.
d.
Jane will decrease her total utility by purchasing more jeans.
82. If Mr. McLean thinks the last dollar spent on bowling yields more satisfaction than the last dollar spent
on hamburgers, and McLean is a utility-maximizing consumer, he should:
a.
bowl less, so the marginal satisfaction from expenditures in this area will increase.
b.
spend more on hamburgers, so total satisfaction from that activity will increase.
c.
eliminate spending on hamburgers.
d.
bowl more and spend less on hamburgers.
83. If Mr. Smith thinks the last dollar spent on shirts yields more satisfaction than the last dollar spent on
cola, and Smith is a utility-maximizing consumer, he should:
a.
decrease his spending on cola.
b.
decrease his spending on cola and increase his spending on shirts.
c.
increase his spending on shirts.
d.
increase his spending on cola and decrease his spending on shirts.
84. Consumer equilibrium is a condition in which total utility cannot increase by spending more of a given
budget on one good and spending ____ on another good.
a.
an equal amount
c.
less
b.
more
d.
zero
85. A state of consumer equilibrium for two goods consumed exists when the:
a.
marginal utility of all goods is the same for the last dollar spent on each good.
b.
marginal utility per dollar’s worth of two goods is the same for the last dollar spent on
each good.
c.
price of two goods is the same for the last dollar spent on each good.
d.
marginal cost per dollar spent on two goods is the same.
86. Consumers should continue to rearrange their consumption of two goods until:
a.
the prices of the two goods are equal for the last dollar spent on each good.
b.
marginal utility is the same for each good for the last dollar spent on each good.
c.
the marginal utility per dollar’s worth of the two goods is the same for the last dollar spent
on each good.
d.
the same amount of each is purchased.
87. The consumer equilibrium condition for two goods is achieved by equating the:
a.
marginal utility of one to the price of the other for the last dollar spent on each good.
b.
prices of both goods for the last dollar spent on each good.
c.
marginal utilities of both goods for the last dollar spent on each good.
d.
ratios of marginal utility to the price of both goods for the last dollar spent on each good.
88. Suppose that an individual consumes just two goods: Big Macs and milkshakes. In order to reach
consumer equilibrium, the individual must arrange the consumption of Big Macs and milkshakes so
that the:
a.
marginal utility of the two goods is equal for the last dollar spent on each good.
b.
ratio of marginal utility to price is the same for both goods for the last dollar spent on each
good.
c.
ratio of marginal utility of milkshakes to the marginal utility of Big Macs is 1 for the last
dollar spent on each good.
d.
price paid for the two goods is the same.
89. Total utility is maximized in the consumption of two goods by equating the:
a.
prices of both goods for the last dollar spent on each good.
b.
marginal utilities of both goods for the last dollar spent on each good.
c.
ratios of marginal utility to the price of both goods for the last dollar spent on each good.
d.
marginal utility of one good to the price of the other.
90. A consumer buys only food and clothing. If the quantity of food bought increases while that of
clothing remains the same, the marginal utility of food will:
a.
fall, but not as fast as the marginal utility of clothing falls.
b.
rise, but not as fast as the marginal utility of clothing rises.
c.
rise relative to the marginal utility of clothing.
d.
fall relative to the marginal utility of clothing.
91. Assume a consumer purchases a combination of goods X and Y such that MUx / −Px = 20 units of
utility per dollar and MUy / Py = 10 units of utility per dollar. To maximize utility, the consumers
should buy:
a.
neither X nor Y.
b.
less of both X and Y.
c.
more of both X and Y.
d.
more of X and less of Y.
e.
less of X and more of Y.
92. Assume that an individual consumes only hotdogs and colas and that the last hotdog consumed yields
15 utils and the last cola 10 utils. If the price of a hotdog is $1 and the price of a cola is $.50, we can
conclude that the:
a.
consumer should consume more hotdogs and less cola.
b.
price of hotdogs is too high.
c.
consumer should consume fewer hotdogs and more cola.
d.
consumer is in equilibrium.
93. Assume that an individual consumes only coffee and bagels and that the last cup of coffee yields 12
utils and the last bagel 6 utils. If the price of a cup of coffee is $1 and the price of the bagel is $.50, we
can conclude that the:
a.
consumer should consume more coffee and fewer bagels.
b.
price of coffee is too high relative to bagels.
c.
consumer should consume less coffee and more bagels.
d.
consumer is in equilibrium.
Exhibit 6-3 Marginal utility data for goods X and Y
Units of good X
Marginal utility of
good X
Units of good Y
Marginal utility of
good Y
1
20
1
14
2
16
2
12
3
12
3
10
4
8
4
8
5
4
5
6
94. As shown in Exhibit 6-3, assume that the price of both goods is $1 per unit. To maximize total utility
without a budget, you should consume:
a.
neither X nor Y.
b.
more of X and less of Y.
c.
less of X and more of Y.
d.
more of both X and Y.
e.
less of both X and Y.
95. As shown in Exhibit 6-3, assume that the price of both goods is $1 per total unit, and your budget is
$8. If you consume 4 units of good X and 1 unit of good Y. To maximize utility, you should consume:
a.
neither X nor Y.
b.
more of X and less of Y.
c.
less of X and more of Y.
d.
more of both X and Y.