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Test Canvas : TestBanks Chapter 10: The Rational Consumer

Microeconom ics, 3e

Test Canvas: TestBanks Chapter 10: The Rational Consumer

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1. True/False: The assumption that a rational consum...

Question The assumption that a rational consumer seeks to maximize his or her utility implies that

utility is measurable according to some objective scale.

2. True/False: Gehrig’s utility from the consumption...

Question Gehrig’s utility from the consumption of mangoes is measured by the level of satisfaction he

gets from only the first mango he buys and eats.

3. True/False: The marginal utility of a good is use…

Question The marginal utility of a good is used to describe any good (such as a mushroom brush or a

shrimp deveiner) that has only limited usefulness.

4. True/False: If Joe drinks iced tea while he is mo…

Question If Joe drinks iced tea while he is mowing his yard, he will probably derive a lower marginal

utility from the sixth glass of tea than from the first glass.

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5. True/False: Mary, an avid gardener, plans to spen…

Question Mary, an avid gardener, plans to spend 8 hours working in her garden. It takes her 45 minutes

to prune a bush and 30 minutes to fertilize a tree. If she prunes eight bushes, she will still

have enough time to fertilize six trees.

6. True/False: A consumer‘s consumption possibilitie…

Question A consumer‘s consumption possibilities include all points on the budget line as well as all

points below the budget line.

7. True/False: The optimal consumption bundle is the…

Question The optimal consumption bundle is the combination of goods that lies above the budget

constraint.

8. True/False: Professor Makrung spends his entire w…

Question Professor Makrung spends his entire weekly income of $700 on economics books (E) and

coffee (C). The price of an economics book (PE) is $50 and the price of a cup of coffee (PC)

is $2. If the professor buys 10 economics books and 50 cups of coffee per week, he finds that

MUE = 75 and MUC = 3. This implies that a consumption bundle consisting of 10 economics

books and 50 cups of coffee per week maximizes the professor’s utility.

9. True/False: Mikaela is buying a new motorcycle. S…

Question Mikaela is buying a new motorcycle. She has narrowed her choices to a BMW Classic

Montauk or a Honda Valkyrie Rune. She likes the Honda exactly twice as much, but it costs

about 40% more. If both bikes are in her budget, she should buy the Honda.

10. True/False: If the price of laundry detergent equ...

Question If the price of laundry detergent equals the price of dishwashing powder, then a utility–

maximizing consumer will always buy equal amounts of laundry detergent and dishwashing

powder.

11. True/False: At Frankie‘s Buy-the-Slice Pizza, Bil...

Question At Frankie’s Buy-the-Slice Pizza, Bill eats three slices of pizza and then realizes that he

enjoyed the second slice more than the third. Even though the price per slice is just $1, the

utility-maximizing decision is to quit eating now, since Bill has reached diminishing marginal

utility.

Points: 0

12. True/False: At Frankie‘s Buy-the-Slice Pizza, Bri…

Question At Frankie’s Buy-the-Slice Pizza, Brian eats eight slices of pizza, explaining that at only $2

per slice, the utility-maximizing decision is to eat until your marginal utility per dollar is zero.

Brian’s explanation is correct.

13. True/False: If the marginal utility of hot dogs e…

Question If the marginal utility of hot dogs exceeds the marginal utility of french fries, then the

consumer should always increase the consumption of hot dogs and decrease the

14. True/False: If the price of pecan rolls is $2, th...

Question If the price of pecan rolls is $2, the price of a gyro is $6, and the marginal utility of pecan rolls

is 12, then the marginal utility of gyros for a consumer purchasing the optimal consumption

bundle of pecan rolls and gyros is 36.

15. True/False: Suppose Sirach knows that the price o…

Question Suppose Sirach knows that the price of doughnuts is $3 and the price of cupcakes is $4. He

also believes that the next doughnut he consumes will increase his total utility by 6 utils and

the next cupcake will increase his total utility by 10 utils. Assuming he has enough money to

buy either, Sirach should buy a doughnut next.

16. True/False: At the optimal consumption bundle, th…

Question At the optimal consumption bundle, the marginal utility of each good purchased is the same.

17. True/False: The optimal consumption rule implies …

Question The optimal consumption rule implies that if Pascal is maximizing his utility by spending all of

his income on two goods, concert tickets and cab rides, with prices equal to PTickets and

PRides, respectively, then it must be the case that MUTickets/MURides = PTickets/PRides.

18. True/False: For most goods, the income effect has...

Question For most goods, the income effect has no significant effect on individual consumption.

Points: 0

19. True/False: If the substitution effect and the in...

Question If the substitution effect and the income effect of a price change move in opposite directions

for a particular good, then the good must be an inferior good.

20. True/False: When the price of Spam (an inferior g...

Question When the price of Spam (an inferior good) decreased, Dale bought more Spam. For Dale, the

income and substitution effects moved in the same direction.

21. True/False: For a Giffen good, the income effect ...

Question For a Giffen good, the income effect works in the opposite direction from the substitution

effect, and the income effect is larger than the substitution effect.

22. Multiple Choice: The relationship between an individua…

Question The relationship between an individual’s consumption bundle and utility is called a:

Answer demand function.

23. Multiple Choice: To say that you can’t have too much o…

Question To say that you can‘t have too much of a good thing means that for any good that you enjoy

(for example, pizza):

24. Multiple Choice: Economists identify the satisfaction …

Points: 0

Question Economists identify the satisfaction a person derives from the consumption of goods and

services as:

Answer happiness.

25. Multiple Choice: The utility of a good is determined b…

Question The utility of a good is determined by how much ________ a particular consumer obtains from

it.

26. Multiple Choice: Economists describe the satisfaction ...

Question Economists describe the satisfaction consumers receive from consuming goods and services

as:

27. Multiple Choice: Utility is the:

Question Utility is the:

Answer difference between a firm’s total revenue and its total economic cost.

28. Multiple Choice: For economists, the satisfaction an i...

Points: 0

Question For economists, the satisfaction an individual derives from the consumption of goods and

services is best described as:

Answer happiness.

29. Multiple Choice: The ability of pumpkin pie to satisfy…

Question The ability of pumpkin pie to satisfy a want is referred to as its:

30. Multiple Choice: Utility is most closely related to:

Question Utility is most closely related to:

Answer usefulness.

31. Multiple Choice: How much ________ Susan obtains from ...

Question How much ________ Susan obtains from eating green beans is a measure of the utility of

green beans.

Answer efficiency

32. Multiple Choice: Which of the following goods is most …

Question

Points: 0

Which of the following goods is most likely to display increasing marginal utility over some

range?

Answer chicken during the 1920s, when it was considered a luxury good

33. Multiple Choice: The marginal utility of coffee consum…

Question The marginal utility of coffee consumption for Steve is the change in ________ generated by

consuming an additional cup of coffee.

34. Multiple Choice: Xavier notices that the marginal util...

Question Xavier notices that the marginal utility of working with a tutor seems to fall with each hour the

tutor helps him study. If Xavier keeps the tutor until his grade actually begins to fall, his

marginal utility will be:

35. Multiple Choice: On a deserted island, high-speed Inte…

Question On a deserted island, high-speed Internet service would have a ________ marginal utility than

in New York City, while quiet evenings in New York City would carry a ________ marginal

utility than on a deserted island.

Points: 0

36. Multiple Choice: Suppose bad weather and pollution dra…

Question Suppose bad weather and pollution dramatically reduce the supply of crawfish in Louisiana

next year. This would also lead to ________ in the marginal utility of crawfish consumption.

37. Multiple Choice: An individual gets 5 units of utility…

Question An individual gets 5 units of utility from one slice of pizza and 9 units of utility from two slices

of pizza. The principle of diminishing marginal utility implies that the total utility from three

slices of pizza will be:

38. Multiple Choice: The principle of diminishing marginal...

Question The principle of diminishing marginal utility states that as an individual consumes more of a

good:

39. Multiple Choice: The principle of diminishing marginal...

Question The principle of diminishing marginal utility means that when Sarah eats pizza, her

satisfaction from the second slice of pizza is probably:

Points: 0

40. Multiple Choice: The amount by which total utility inc...

Question The amount by which total utility increases when an additional unit of a good is consumed is

called ________ utility.

41. Multiple Choice: The amount by which an additional uni…

Question The amount by which an additional unit of a good or service increases a consumer‘s total

utility, all other things unchanged, is:

42. Multiple Choice: Assume that the marginal utilities fo...

Question Assume that the marginal utilities for the first three units of a good consumed are 200, 150,

and 125, respectively. The total utility for the first unit is:

43. Multiple Choice: Assume that the marginal utilities fo...

Question Assume that the marginal utilities for the first three units of a good consumed are 200, 150,

and 125, respectively. The total utility when two units are consumed is:

Points: 0

44. Multiple Choice: Reference: Ref 10-1 (Table: Utility ...

Question

Reference: Ref 10-1

(Table: Utility of Pecan Rolls) Look at the table The Utility of Pecan Rolls. The marginal utility for the

second roll is:

45. Multiple Choice: Reference: Ref 10-1 (Table: Utility ...

Question

Reference: Ref 10-1

(Table: Utility of Pecan Rolls) Look at the table The Utility of Pecan Rolls. The marginal utility for the

fifth roll is:

46. Multiple Choice: Reference: Ref 10-1 (Table: Utility ...

Question

Reference: Ref 10-1

(Table: Utility of Pecan Rolls) Look at the table The Utility of Pecan Rolls. The marginal utility for the

sixth roll is:

Points: 0

47. Multiple Choice: Reference: Ref 10-1 (Table: Utility ...

Question

Reference: Ref 10-1

(Table: Utility of Pecan Rolls) Look at the table The Utility of Pecan Rolls. Total utility is maximized

at the ________ roll.

48. Multiple Choice: Reference: Ref 10-1 (Table: Utility ...

Question

Reference: Ref 10-1

(Table: Utility of Pecan Rolls) Look at the table The Utility of Pecan Rolls. Marginal utility is zero for

the ________ roll.

49. Multiple Choice: Reference: Ref 10-1 (Table: Utility ...

Question

Reference: Ref 10-1

(Table: Utility of Pecan Rolls) Look at the table The Utility of Pecan Rolls. Marginal utility first

becomes negative at the ________ roll.

Points: 0

50. Multiple Choice: Reference: Ref 10-1 (Table: Utility ...

Question

Reference: Ref 10-1

(Table: Utility of Pecan Rolls) Look at the table The Utility of Pecan Rolls. Diminishing marginal utility

is first observed at the ________ roll.

51. Multiple Choice: When total utility is at a maximum, m…

Question When total utility is at a maximum, marginal utility is:

52. Multiple Choice: The law of diminishing marginal utili...

Question The law of diminishing marginal utility indicates that the slope of the marginal utility curve

eventually becomes:

Points: 0

53. Multiple Choice: The principle of diminishing marginal...

Question The principle of diminishing marginal utility:

54. Multiple Choice: Which of the following statements is ...

Question Which of the following statements is true because of the principle of diminishing marginal

utility?

55. Multiple Choice: If total utility is rising as more sa…

Question If total utility is rising as more salsa is consumed, we can definitely say that marginal utility

is:

56. Multiple Choice: Freddy has eaten three corn dogs at t...

Question Freddy has eaten three corn dogs at the county fair and knows that if he eats another, he will

get sick on the roller coaster. Knowing this, and ignoring any impact that price might have on

his decision, we can say that the:

Points: 0

57. Multiple Choice: Reference: Ref 10-2 (Table: Exercise…

Question

Reference: Ref 10-2

(Table: Exercise and Utility) Look at the table Exercise and Total Utility. The table shows

Marta’s total utility from hours of exercise at the gym. Given this information, what can be

said about Marta’s marginal utility from exercise?

58. Multiple Choice: Reference: Ref 10-2 (Table: Exercise…

Question

Reference: Ref 10-2

(Table: Exercise and Utility) Look at the table Exercise and Total Utility. The table shows

Marta’s total utility from hours of exercise at the gym. The principle of diminishing marginal

utility is seen:

Points: 0

59. Multiple Choice: When an individual continues to eat m…

Question When an individual continues to eat more turkey, each additional serving yields:

60. Multiple Choice: Which of the following statements is ...

Question Which of the following statements is true?

61. Multiple Choice: The amount by which total utility ris…

Question The amount by which total utility rises when an additional slice of pie is consumed is called:

62. Multiple Choice: As you consume more turkey relative t...

Question As you consume more turkey relative to mashed potatoes, the ________ of turkey eventually

decreases.

Points: 0

63. Multiple Choice: The amount by which total utility ___…

Question The amount by which total utility ______ when an additional unit of a good is consumed is

________.

64. Multiple Choice: Reference: Ref 10-3 (Table: The Util...

Question

Reference: Ref 10-3

(Table: The Utility of Macaroni and Cheese) Look at the table The Utility of Macaroni and Cheese. Carmen

loves macaroni and cheese for Thanksgiving. The marginal utility she derives from the second serving she

eats is:

65. Multiple Choice: Reference: Ref 10-3 (Table: The Util...

Question

Reference: Ref 10-3

(Table: The Utility of Macaroni and Cheese) Look at the table The Utility of Macaroni and Cheese. Carmen

loves macaroni and cheese for Thanksgiving. The marginal utility she derives from the fifth serving she eats

is:

Points: 0

66. Multiple Choice: Reference: Ref 10-3 (Table: The Util...

Question

Reference: Ref 10-3

(Table: The Utility of Macaroni and Cheese) Look at the table The Utility of Macaroni and Cheese. Carmen

loves macaroni and cheese for Thanksgiving. The marginal utility she derives from the sixth serving she eats

is:

67. Multiple Choice: Reference: Ref 10-3 (Table: The Util...

Question

Reference: Ref 10-3

(Table: The Utility of Macaroni and Cheese) Look at the table The Utility of Macaroni and Cheese. Carmen

loves macaroni and cheese for Thanksgiving. Carmen’s total utility is maximized when she eats the

________ serving.

68. Multiple Choice: Reference: Ref 10-3 (Table: The Util...

Question

Points: 0

Reference: Ref 10-3

(Table: The Utility of Macaroni and Cheese) Look at the table The Utility of Macaroni and Cheese. Carmen

loves macaroni and cheese for Thanksgiving. Carmen’s marginal utility from eating macaroni and cheese is

zero for the ________ serving.

69. Multiple Choice: Reference: Ref 10-3 (Table: The Util...

Question

Reference: Ref 10-3

(Table: The Utility of Macaroni and Cheese) Look at the table The Utility of Macaroni and Cheese. Carmen

loves macaroni and cheese for Thanksgiving. Carmen’s marginal utility from eating macaroni becomes

negative at the ________ serving.

70. Multiple Choice: The marginal utility of eating sweet ...

Question The marginal utility of eating sweet potatoes is the:

71. Multiple Choice: If Vanessa buys more pomegranates and...

Question

Points: 0

If Vanessa buys more pomegranates and fewer bananas, the ________ of pomegranates will

_______, and the ________ of bananas will ________.

72. Multiple Choice: If a consumer buys more plastic bins ...

Question If a consumer buys more plastic bins and fewer door hooks, the ________ of plastic bins will

________, and the ________ of door hooks will ________.

73. Multiple Choice: Abdul spends all of his income on foo...

Question Abdul spends all of his income on food (F) and shelter (S). His budget line is given by the

equation 5F + 20S = 100. Which of the following consumption bundles is part of his

consumption possibilities?

74. Multiple Choice: Figure: Budget Lines for Tea and Scon...

Question

Points: 0

Figure: Budget Lines for Tea and Scones

Reference: Ref 10-4

(Figure: Budget Lines for Tea and Scones) Look at the figure Budget Lines for Tea and

Scones. For months now, Agnes has had $20 per month to spend on tea and scones. The

price of each cup of tea and each scone is $1. Which of the charts in the figure shows what

will happen to her budget line if her income increases to $25?

75. Multiple Choice: Figure: Budget Lines for Tea and Scon...

Question

Points: 0