68) The table above gives Jane’s total utility from magazines and CDs. The price of a magazine
is $4 and the price of a CD is $10. Which of the following CORRECTLY illustrates the principle
of diminishing marginal utility? The fact that
A) the sixth magazine has less marginal utility than the sixth CD.
B) Jane’s marginal utility per dollar from the second magazine is the same as her marginal utility
per dollar from the third CD.
C) the marginal utility per dollar from the sixth magazine is less than the total utility from six
magazines.
D) the marginal utility of the third CD is less than the marginal utility of second CD.
69) Economists using marginal utility theory assume that consumers’ objectives are to
A) maximize their total utility.
B) maximize their marginal utility.
C) maximize their income.
D) none of the above.
70) Which of the following is NOT an assumption of marginal utility theory?
A) People derive utility from their consumption.
B) More consumption yields more total utility.
C) Marginal utility diminishes with more consumption.
D) Utility can be measured and the units of utility are precisely defined.
71) As more of a good is consumed, its marginal utility ________ and its total utility ________.
A) rises; rises
B) rises; falls
C) falls; rises
D) falls; falls
72) Jeannie’s marginal utility from her 4th book in a month is 50. Her marginal utility from her
5th book
A) is greater than 50.
B) equals 50.
C) is less than 50.
D) might be more than, less than, or equal to 50 but more information is needed.
73) When Alex eats 1 slice of pizza, his total utility is 80; when Alex eats 2 slices of pizza, his
total utility is 120. Alex’s marginal utility from the second pizza is
A) 200.
B) 80.
C) 60.
D) 40.
Quantity
(boxes)
Total
utility
Marginal
utility
0
0
X
1
30
30
2
50
20
3
66
16
4
?
12
74) The table above gives Andy’s utility from popcorn. Andy’s total utility from four boxes of
popcorn is
A) 66.
B) 70.
C) 78.
D) 82.
2 Utility-Maximizing Choice
1) When Ramona is in consumer equilibrium
A) her total utilities of all goods are equal.
B) she is maximizing her utility, given her income and the prices of goods and services.
C) her total utility per dollar spent is equal for all goods.
D) any change in prices would make her worse off.
2) With a given income and prices of goods, Marcus will be in a consumer equilibrium if
________.
A) his marginal utility from all goods is the same
B) he purchases the same amounts of all goods
C) he maximizes his total utility
D) his marginal utility from all goods is at its maximum
3) When a consumer spends all of his or her income and consumes a bundle of goods such that
the marginal utility per dollar from all goods is equal, then the
A) consumer’s total utility is maximized.
B) consumer is in his or her consumption equilibrium.
C) marginal utilities for each good are maximized.
D) Both answers A and B are correct.
4) Ricky is in a consumer equilibrium. Given the prices of goods, Ricky has allocated all his
income such that his marginal utility per dollar spent is ________ for ________ goods.
A) as small as possible; all
B) equal; all
C) equal; normal
D) maximized; all
5) If the price of a good increases, all else the same, then the consumer’s total utility will
A) increase.
B) decrease.
C) remain the same as consumption shifts to cheaper goods.
D) decrease if there are no substitutes for the good and remain the same if there are substitutes
for the good.
6) Which of the following occur when a person maximizes utility?
I. The marginal utility of each good bought is equal.
II. The highest level of utility is attained.
III. All of a person’s budget is spent.
A) I and II
B) I and III
C) II and III
D) I, II and III
7) Total utility is maximized when a consumer has spent all of his or her income and
A) spent equal amounts on all goods.
B) marginal utility is maximized.
C) the total utility per dollar from all goods is equal.
D) the marginal utility per dollar from all goods is equal.
8) At the utility maximizing equilibrium for two goods, X and Y, which of the following must be
TRUE?
A) The marginal utility per dollar spent on X will exceed the marginal utility per dollar spent on
Y.
B) The total expenditure will be the same for each good.
C) The marginal utility per dollar from X equals the marginal utility per dollar from Y.
D) The marginal utility will be the same for each good.
9) Liane maximizes her total utility when she allocates all of her available income such that the
marginal utility per dollar spent on each good ________.
A) is diminishing
B) is maximized
C) is the same
D) is increasing
10) Danny has $12 to spend on two goods: pies and soda. The price of a pie is $4, and the price
of a can of soda is $2. To maximize his utility, Danny buys ________.
A) the combination that gives him equal total utility from pies and soda
B) 2 pies and 2 cans of soda
C) only sodas because they are less expensive
D) the combination that gives him the same marginal utility per dollar spent on pies as on soda
Quantity of coffee
(cups per day)
Total utility
1
50
2
80
3
90
4
92
11) Betsy’s utility depending from her consumption of coffee is shown in the table above. Betsy’s
marginal utility from the 3rd cup of coffee per day is
A) 30.
B) 85.
C) 90.
D) 10.
12) As Betsy’s consumption of coffee increases, her marginal utility from coffee
A) increases.
B) decreases.
C) remains unchanged.
D) increases first and then decreases.
13) Betsy’s utility depending from her consumption of coffee is shown in the table above. If the
price of a cup of coffee is $2, Betsy’s marginal utility per dollar from the 2nd cup of coffee per
day is
A) 15.
B) 40.
C) 20.
D) 32.5.
Quantity
of DVDs
Marginal utility
from DVDs
Quantity
of pizza
Marginal utility
from pizza
1
150
1
200
2
120
2
180
3
100
3
150
4
90
4
120
5
60
5
100
6
40
6
60
14) Lisa spends all her income on pizzas and DVDs. The above table shows Lisa’s marginal
utility for pizza and marginal utility for DVDs. If the price of a pizza is $10, the price of a DVD
is $5, and Lisa has $40 to spend on the two goods, what combination of pizza and DVDs will
maximize her utility?
A) 6 DVDs and 1 pizza
B) 4 DVDs and 2 pizzas
C) 2 DVDs and 3 pizzas
D) 5 DVDs and 4 pizzas
15) Lisa spends all her income on pizzas and DVDs. The above table shows Lisa’s marginal
utility for pizza and marginal utility for DVDs. If the price of a pizza is $10 and the price of a
DVD is $10 and Lisa has $40 to spend on the two goods, what combination of pizza and DVDs
will maximize her utility?
A) 1 DVD and 3 pizzas
B) 2 DVDs and 2 pizzas
C) 2 DVDs and 4 pizzas
D) 3 DVDs and 5 pizzas
16) Lisa spends all her income on pizzas and DVDs. The above table shows Lisa’s marginal
utility for pizza and marginal utility for DVDs. If the price of a pizza is $10 and the price of a
DVD is $10 and Lisa has $60 to spend on the two goods, what combination of pizza and DVDs
will maximize her utility?
A) 2 DVDs and 4 pizzas
B) 3 DVDs and 5 pizzas
C) 4 DVDs and 2 pizzas
D) 3 DVDs and 3 pizzas
17) Lisa spends all her income on pizzas and DVDs. The above table shows Lisa’s marginal
utility for pizza and marginal utility for DVDs. Suppose the price of a pizza is $10 and the price
of a DVD is $10 and Lisa initially has $40 to spend on the two goods. Lisa gets a raise at work
and so she now has $60 to spend on DVDs and pizza. With her increase in income, her
consumption of DVDs ________ and hence DVDs are ________ good for Lisa.
A) rises; a normal
B) rises; an inferior
C) falls; a normal
D) falls; an inferior
Quantity
of steak
Marginal utility
from steak
Quantity
of chicken
Marginal utility
from chicken
1
100
1
40
2
80
2
35
3
35
3
25
4
25
4
20
5
10
5
15
6
5
6
10
18) John either buys a steak or chicken when dining out. John’s marginal utility for steak and
chicken is given in the above table. If the price of a steak is $10 and the price of a chicken is $5
and John has $25 to spend on the two goods, what combination of steak and chicken will John
consume to maximize his utility?
A) 0 steak and 5 chickens
B) 1 steak and 3 chickens
C) 2 steaks and 1 chicken
D) 3 steaks and 2 chickens
19) John either buys a steak or chicken when dining out. John’s marginal utility for steak and
chicken is given in the above table. If the price of a steak is $5 and the price of a chicken is $5
and John has $25 to spend on the two goods, what combination of steak and chicken will John
consume to maximize his utility?
A) 1 steak and 4 chickens
B) 3 steaks and 2 chickens
C) 4 steaks and 3 chickens
D) 5 steaks and 6 chickens
Marginal Utility
Servings per
week
Chicken
Fish
1
70
45
2
60
40
3
50
35
4
40
30
5
30
25
20) Lily has $10 to spend each week on fish and chicken. Fish costs $2 a serving and chicken
costs $3 a serving. The table shows Lily’s marginal utilities of fish and chicken. Lily will
consume ________ servings of chicken and ________ of fish each week.
A) 4; 0
B) 1; 3
C) 0; 5
D) 2; 2
Pizza Pepsi
Slices per
week
Total utility
Quantity per
week
Total utility
0
0
0
0
1
100
1
70
2
150
2
130
3
175
3
180
4
190
4
220
5
195
5
250
21) Elaine spends $10 a week on pizza and Pepsi. The price of pizza is $2 a slice and the price of
a Pepsi is $2. The table shows Elaine’s total utility from pizza and Pepsi. Elaine maximizes her
total utility by buying ________ slices of pizza and ________ Pepsis a week.
A) 5; 0
B) 0; 5
C) 3; 2
D) 2; 3
Quantity
of skiing
Marginal utility
from skiing
Quantity
of skating
Marginal utility
from skating
0
0
1
50
1
70
2
40
2
40
3
30
3
30
4
20
4
20
5
10
5
5
22) Steve has two goods he can spend his income on, skiing and skating, and his marginal
utilities from each are in the table above. The price of each unit of skiing is $10 and the price of
each unit of skating is $5. Steve has $40 to spend. What quantities of skiing and skating should
Steve consume to maximize his utility?
A) 4 units of skiing and 4 units of skating
B) 2 units of skiing and 4 units of skating
C) 1 unit of skiing and 2 units of skating
D) 5 units of skiing and 5 units of skating
23) Steve has two goods he can spend his income on, skiing and skating, and his marginal
utilities from each are in the table above. The price of each unit of skiing is $10 and the price of
each unit of skating is $5. Steve has $40 to spend. If Steve consumes the quantities of skiing and
skating to maximize his utility, what is his total utility?
A) 40
B) 60
C) 250
D) 300
24) Steve has two goods he can spend his income on, skiing and skating, and his marginal
utilities from each are in the table above. The price of each unit of skiing is $10 and the price of
each unit of skating is $10. Steve has $40 to spend. What quantities of skiing and ice skating will
Steve consume to maximize his utility?
A) 0 units of skiing and 4 units of skating
B) 2 units of skiing and 2 units of skating
C) 4 units of skiing and 0 units of skating
D) 2 units of skiing and 4 units of skating
Chips Sodas
Quantity
Total utility
Quantity
Total utility
0
0
0
0
1
60
1
200
2
100
2
300
3
120
3
390
4
135
4
470
5
145
5
530
6
150
6
580
7
153
7
620
8
155
8
650
25) The table above shows Mary’s utility from chips and soda. Mary receives ________ units of
utility from the third chip.
A) 30
B) 20
C) 55
D) 40
26) The table above shows Mary’s utility from chips and soda. The table shows that
A) Mary prefers sodas to chips.
B) Mary will consume no soda and only chips.
C) Mary’s marginal utility decreases as she consumes more chips.
D) Mary’s total utility decreases as she consumes more chips.
27) The table above shows Mary’s utility from chips and soda. The table shows that Mary has
diminishing marginal utility for
A) both chips and soda.
B) neither chips nor soda.
C) soda, but not chips.
D) chips, but not soda.
28) The table above shows Mary’s utility from chips and soda. Mary buys only chips and soda.
Chips cost $2 per bag and soda costs $4 per six-pack. She has $20 to spend per week. To
maximize her utility, Mary will buy
A) 5 sodas and 5 bags of chips.
B) 3 sodas and 3 bags of chips.
C) 8 sodas and 8 bags of chips.
D) 6 sodas and 2 bags of chips.
Quantity of
Mt. Dew
(per day)
Total utility
(units)
1
30
2
55
3
75
4
90
5
100
29) The table above gives Cathy’s total utility from Mt. Dew. Cathy’s marginal utility from the
4th Mt. Dew is ________ units.
A) 75
B) 90
C) 15
D) 82.5
30) The table above gives Cathy’s total utility from Mt. Dew. Cathy’s marginal utility from the
3rd Mt. Dew is ________ units.
A) 75
B) 65
C) 25
D) 20
31) The table above gives Cathy’s total utility from Mt. Dew. Cathy’s marginal utility from
additional Mt. Dews is
A) diminishing.
B) increasing.
C) constant.
D) negative.
32) The table above gives Cathy’s total utility from Mt. Dew. If the price of a Mt. Dew is $2,
Cathy’s marginal utility per dollar from the 3rd Mt. Dew is ________ units per dollar
A) 20
B) 10
C) 32.5
D) 40
33) The table above gives Cathy’s total utility from Mt. Dew. If the price of a Mt. Dew is $1.50,
Cathy’s marginal utility per dollar from the 4th Mt. Dew is ________ units per dollar.
A) 15
B) 10
C) 82.5
D) 22.5
Apples Tacos
Quantity
Total utility
Quantity
Total utility
1
5
1
10
2
9
2
18
3
12
3
24
4
15
4
28
5
16
5
30
34) Sally derives utility from consuming apples and tacos as shown in the table above. Apples
cost $1 each and tacos cost $2 each. If Sally’s income is $9, she will consume
A) 5 apples and 2 tacos.
B) 3 apples and 3 tacos.
C) 1 apple and 4 tacos.
D) no apples and 4 1/2 tacos.
35) Sasha derives utility from consuming apples and tacos as shown in the table above. Apples
cost $1 each and tacos cost $2 each. If Sasha’s income is $8, he will consume
A) 4 apples and 2 tacos.
B) 2 apples and 3 tacos.
C) 0 apples and 4 tacos.
D) 3 apples and 3 tacos.
36) A consumer has maximized his or her utility by consuming
A) at the midpoint of the budget constraint line.
B) at the midpoint of the demand curve.
C) so that the total utility of all goods consumed is the same.
D) so that the ratio of marginal utility to price is the same for all goods consumed.
37) Total utility is maximized when the ________ for all goods.
A) marginal utility per dollar spent is equal
B) marginal utilities are zero
C) marginal utilities are maximized
D) marginal utilities are negative
38) As long as the marginal utility per dollar from pizza is greater than the marginal utility per
dollar from soda, then to maximize utility a consumer will buy
A) more soda to equalize the marginal utility per dollar between soda and pizza.
B) less pizza and less soda.
C) more pizza and less soda.
D) equal amounts of pizza and soda.
39) To maximize her utility, Pat should spend all of her money and buy goods in a way that
A) the marginal utility of the last unit of each good is the same.
B) the marginal utility per dollar from each good is the same.
C) her total expenditure on each good is the same.
D) her price elasticity of demand for each good is the same.
40) When Frankie spends all his money in such a way that the marginal utility per dollar is the
same for all final purchases of products he consumes, Frankie has maximized
A) his marginal utility.
B) his total utility.
C) the number of products he consumes.
D) his total expenditure on all products.
41) When you chose to buy the second cup of coffee instead of the third bagel, which of the
following is necessarily CORRECT?
A) The second coffee will give you higher marginal utility.
B) The second coffee is cheaper than the third bagel.
C) The marginal utility per dollar from the third bagel is less than the marginal utility per dollar
from the second coffee.
D) Both answers A and C are correct.
42) If the price of a good falls, before the amount consumed changes the marginal utility per
dollar from that good
A) decreases.
B) increases.
C) might either increase or decrease depending on whether the good is a substitute or a
complement.
D) More information is needed to determine the answer.
43) Keesha consumes only milkshakes and burgers. At her consumer equilibrium, which of the
following is TRUE when Keesha can buy any portion of a unit of a milkshake or burger?
A) The marginal utility per dollar from a milkshake will exceed the marginal utility per dollar
from a burger if she likes burgers more than milkshakes.
B) The marginal utility per dollar from a burger will exceed the marginal utility per dollar from a
milkshake if she likes burgers more than milkshakes.
C) The marginal utility per dollar will be the same for each good.
D) The marginal utility will be the same for each good.
44) Keesha consumes only milkshakes and burgers. Once at her consumer equilibrium, what
would happen if she changed her consumption by purchasing one more milkshake and one fewer
burger?
A) The marginal utility of a burger would decrease.
B) The marginal utility of a milkshake would increase.
C) The total utility from the consumption of both goods would decrease.
D) all of the above
45) If Katie purchases two slices of pizza and six breadsticks to maximize her total utility, then
A) a slice of pizza costs three times as much as a breadstick.
B) a breadstick costs three times as much as a slice of pizza.
C) her marginal utility from the second slice of pizza divided by the price of a slice of pizza is
equal to her marginal utility from the sixth breadstick divided by the price of a breadstick.
D) Both answers A and C are correct.
46) Emma consumes only hot dogs and hamburgers. She is at her consumer equilibrium. Hot
dogs and hamburgers have the same marginal utility. Thus
A) her total utility from all the hot dogs eaten must be the same as her total utility from all the
hamburgers eaten.
B) the price of a hot dog and the price of a hamburger must be the same.
C) she must be eating the same number of hot dogs and hamburgers.
D) Both answers B and C are correct.
47) Suppose the price of a soda is $2 each, the price of a hot dog is $3 each and the budget is
$20. If the marginal utility of the fourth soda is 100 and the marginal utility of the fourth hot dog
is 150, to maximize utility, a person will buy
A) 4 sodas and 4 hot dogs.
B) more hotdogs than 4 and fewer sodas than 4 because hot dogs provide more utility.
C) more sodas than 4 to increase their utility.
D) fewer sodas than 4 and more hot dogs than 4.
48) If a consumer spends all of his or her income and the marginal utility per dollar is equal for
all goods, then
A) marginal utility is maximized.
B) total utility is maximized.
C) a consumer could not be better off even with greater income.
D) the proportion of income spent on each good must be equal.
49) A consumer maximizes total utility when all available income is spent and the
A) marginal utility from each good is equal for all goods.
B) marginal utility per dollar from each good is equal for all goods.
C) dollars spent on the last unit of each good are equal for all goods.
D) total utility from all goods purchased is equal.
50) George spends all his income on sandwiches and juice. George’s utility is maximized when
he is consuming sandwiches and juice so that the
A) marginal utility from sandwiches equals the marginal utility from juice.
B) total utility from sandwiches equals the total utility from juice.
C) marginal utility per dollar spent on sandwiches equals the marginal utility per dollar spent on
juice.
D) marginal utility from sandwiches is at a maximum.
51) Let MUa and MUb stand for the marginal utilities of apples and bagels. Let Pa and Pb stand
for their prices. The general necessary condition for consumer equilibrium is
A) MUa = MUb.
B) MUa = MUb and Pa = Pb.
C) MUa/Pa = MUb/Pb.
D) MUa/MUb = Pb/Pa.
52) Jennifer consumes both apples and bread. Let Pa be the price of an apple and Pb the price of
a loaf of bread. TUa is her total utility from apples and TUb is her total utility from bread. MUa
is her marginal utility from apples and MUb is her marginal utility from bread. When Jennifer is
in consumer equilibrium
A) MUa/TUa = MUb/TUb.
B) MUa/Pb = MUb/Pa.
C) MUa/Pa = MUb/Pb.
D) TUa/Pb = TUb/Pb.
53) Pam buys only thread and fabric, and she buys the quantities that maximize her utility. Her
marginal utility from a spool of thread is 30 units and her marginal utility from a yard of fabric is
60 units. If the price of a spool of thread is $4, then you are sure that the price of a yard of fabric
is ________.
A) $4
B) $2
C) $8
D) $12
54) Bobby consumes only chocolate ice cream and vanilla ice cream. He is spending all of his
income. His marginal utility of chocolate is 100 and his marginal utility of vanilla is 200, and the
price of chocolate is $1.00 per scoop and the price of vanilla is $2.00 per scoop. To maximize his
utility, Bobby should
A) buy more chocolate ice cream and less vanilla ice cream.
B) buy more vanilla ice cream and less chocolate ice cream.
C) not change his purchases between chocolate ice cream and vanilla ice cream.
D) buy no chocolate ice cream.
55) Bobby consumes only chocolate ice cream and vanilla ice cream. He is spending all of his
income. His marginal utility of chocolate is 200 and his marginal utility of vanilla is 200, and the
price of chocolate is $1.00 per scoop and the price of vanilla is $2.00 per scoop. To maximize his
utility, Bobby should
A) buy more chocolate ice cream and less vanilla ice cream.
B) buy more vanilla ice cream and less chocolate ice cream.
C) not change his purchases between chocolate ice cream and vanilla ice cream.
D) buy no vanilla ice cream.
56) Bobby consumes only chocolate ice cream and vanilla ice cream. He is spending all of his
income. His marginal utility of chocolate is 200 and his marginal utility of vanilla is 100, and the
price of chocolate is $2.00 per scoop and the price of vanilla is $1.00 per scoop. Bobby has
maximized his
A) marginal utility of chocolate ice cream.
B) marginal utility of vanilla ice cream.
C) marginal utilities of chocolate ice cream and vanilla ice cream.
D) total utility.
57) Fred spends all of his income on two goods: DVDs and downloaded music. If Fred’s
marginal utility per dollar from DVDs is greater than his marginal utility per dollar from
downloaded music, Fred can ________ his total utility by buying ________.
A) maximize; more DVDs and more downloaded music
B) increase; more downloaded music and fewer DVDs
C) increase; more DVDs and less downloaded music
D) maximize; fewer DVDs and less downloaded music