Deck 20: Consumer Choice

Question 1

In economics, another term for satisfaction is

A) income elasticity.
B) price elasticity.
C) utility.
D) marginal productivity.

Answer 1

C

Question 2

In economic utility analysis, consumer tastes and preferences are assumed

A) to be determined by income.
B) to be influenced by the prices of goods.
C) given and stable for an individual.
D) given but rapidly changeable.

Answer 2

C

Question 3

Suppose that Usher derives 45 utils of total utility from eating 6 hotdogs and 55 utils of total utility from eating 7 hotdogs. What is Usher's marginal utility from eating the 7th hotdog?

A) 10
B) 45
C) 55
D) 100

Answer 3

A

Question 4

Marginal utility is

A) the utility received from consuming one unit of a good.
B) the change in total utility due to a one-unit change in the quantity of a good consumed.
C) the total utility received from consuming a certain quantity of a good divided by the quantity.
D) the utility received by the last consumer of a good.

Question 5

A representative unit that measures the want-satisfying power of a good is

A) a margin.
B) purchasing power.
C) income.
D) a util.

Question 6

When economists refer to people making decisions at the margin, they mean that we compare ________ benefits with ________ costs.

A) total; total
B) total; incremental
C) additional; additional
D) additional; marginal

Question 7

The amount of pleasure or satisfaction derived from consumption of a good is called

A) elasticity.
B) utility.
C) consumer surplus.
D) demand.

Question 8

If total utility is decreasing, then marginal utility is

A) negative.
B) positive.
C) zero.
D) increasing.

Question 9

Which English philosopher set out to develop an arithmetic formula for measuring happiness and along the way invented the util?

A) John Maynard Keynes
B) Milton Friedman
C) Jeremy Bentham
D) Adam Smith

Question 10

Economists use what term to describe the want-satisfying power of a good?

A) Demand
B) Utility
C) Marginal propensity to consume
D) Income elasticity

Question 11

The utility that people experience from the consumption of a good depends on

A) their income level.
B) their tastes and preferences.
C) total sales of the good.
D) how much shopping time they spent obtaining the good.

Question 12

Marginal utility is measured as

A) utility per unit of production.
B) extra output divided by extra utility.
C) output of a good or service divided by price.
D) extra utility from each additional good consumed.

Question 13

Which of the following is NOT true of utility?

A) It represents the want-satisfying power of a good.
B) It is measured using a representative unit called a util.
C) The utility that a good provides depends on a consumer's preferences.
D) Utility can be measured objectively.

Question 14

The term marginal means

A) total.
B) cumulative.
C) subjective.
D) additional.

Question 15

To calculate marginal utility, divide the change in total utility by

A) the number of units consumed.
B) the price of the product.
C) the change in the number of units consumed.
D) the consumer's subjective level of preference.

Question 16

Utility analysis helps economists understand

A) how people make decisions about what they buy and how much.
B) how to eliminate opportunity costs.
C) how to eliminate scarcity.
D) none of the above.

Question 17

In economics, utility is defined as

A) the want-satisfying power of a good or service.
B) the usefulness of a good or service.
C) the utilitarian value of a good or service.
D) the objective measure of the desirability of a good or service.

Question 18

The concept of marginality is important in economics because

A) individuals make decisions at the margin.
B) marginal decisions indicate a lack of importance.
C) individuals make decisions based on tastes only.
D) large expenditures are the only factor influencing consumption.

Question 19

If total utility is increasing, then marginal utility is

A) negative.
B) positive.
C) zero.
D) decreasing.

Question 20

Marginal utility can be thought of as

A) the incremental change in a person's total satisfaction level from the buying of a good.
B) the total change in satisfaction from buying a good.
C) the additional cost of that next good purchased.
D) the opportunity cost of buying the next good.

Question 21

The concept of utility is

A) subjective so that there can be no true measurement of someone's utility.
B) subjective so measurement of someone's utility must be done scientifically.
C) objective so that devices can be developed that would measure a person's utility.
D) objective so that psychologists can measure utility and compare one person's utility with that of another person.

Question 22

According to the above table, what is Robert's marginal utility of the 5th unit?

A) 60
B) 4500
C) 600
D) 500

Question 23

A good synonym for "utility" is

A) marginal.
B) need.
C) practical.
D) satisfaction.

Question 24

Consumers are most satisfied when

A) all of their income has been saved.
B) the total level of utility is as high as possible.
C) goods are bought "on sale."
D) they save more than they spend.

Question 25

According to the above table, what is David's marginal utility of the 7th unit?

A) 420
B) 400
C) 120
D) 60

Question 26

Utility refers to

A) the usefulness of a good or service.
B) the value of a good or service.
C) the want-satisfying power of a good or service.
D) the degree to which a good or service is needed.

Question 27

According to the above table, John's marginal utility from watching the 9th movie is

A) 405 units of utility.
B) 0 units of utility.
C) 15 units of utility.
D) 10 units of utility.

Question 28

Economists infer that a consumer receives more utility from one good than another by

A) giving consumers surveys about the utility they receive from the goods.
B) observing the consumer's behavior.
C) the logic of the models used.
D) means of introspection and speculation.

Question 29

If total utility is unchanged, then marginal utility is

A) negative.
B) positive.
C) zero.
D) increasing.

Question 30

When the total utility from consuming one good is maximized, marginal utility is

A) maximized.
B) minimized.
C) zero.
D) positive.

Question 31

The want-satisfying power of a good or service is known as

A) purchasing power.
B) utility.
C) consumer optimum.
D) principle of substitution.

Question 32

According to the above table, what is Michelle's marginal utility of the 8th unit?

A) 372
B) 43
C) 42
D) 44

Question 33

Refer to the above table. What is the marginal utility for the 10th unit for Mary and for John?

A) Mary: -10; John: 10
B) Mary: 10; John 10
C) Mary: 220; John 450
D) Mary: 0; John: 0

Question 34

The total utility from consuming 8 units of a good is 155. The marginal utility of the 8th unit is 7 and the marginal utility of the 7th unit is 11. The total utility from consuming 6 units of the good is

A) 173.
B) 144.
C) 137.
D) 130.

Question 35

If two units of a good provide 7 utils and the marginal utility of the third unit of the good is 2 utils, what is the total utility from consuming three units of the good?

A) 3 utils
B) 7 utils
C) 9 utils
D) 10 utils

Question 36

According to the above table, what is Lauren's marginal utility of the 4th unit?

A) 90
B) 220
C) 310
D) 115

Question 37

According to the above table, Mary's marginal utility from watching the 6th movie is

A) 190 units of utility.
B) 40 units of utility.
C) 10 units of utility.
D) 20 units of utility.

Question 38

Marginal utility is defined as

A) the increase in utility divided by the total number of units consumed.
B) the total utility divided by the total number of units consumed.
C) the change in total utility divided by the change in number of units consumed.
D) the number of units consumed divided by the total utility.

Question 39

Utility analysis is the analysis of

A) how consumers decide how to spend their money.
B) the formation of tastes and preferences.
C) the psychology of decision making.
D) consumer decision making based on utility maximization.

Question 40

According to the above table, Mary's marginal utility from watching the 4th movie is

A) 140 units of utility.
B) 40 units of utility.
C) 60 units of utility.
D) 30 units of utility.

Question 41

Refer to the above table. The marginal utility of the 5th movie for Robert is

A) 400 units of utility.
B) 50 units of utility.
C) 60 units of utility.
D) 70 units of utility.

Question 42

Sam loves cookies. She receives 200 utils for one cookie, 360 for two cookies, 480 for the third, 560 for four cookies, and 600 for five cookies. The marginal utility of the third cookie is

A) 120
B) 480
C) 80
D) unable to determine

Question 43

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 ________.

A) 40; 80
B) 80; 600
C) 80; 560
D) 40; 40

Question 44

In cardinal utility analysis

A) numbers can be assigned to utility.
B) it is recognized that numbers can not be assigned to utility.
C) the concept of marginal utility exists while in ordinal utility analysis marginal utility does not exist.
D) marginal utility always increases as more of a good is consumed.

Question 45

Refer to the above table. The marginal utility of the 2nd movie for Robert is

A) 95 units of utility.
B) 90 units of utility.
C) 80 units of utility.
D) 190 units of utility.

Question 46

Karen has decided that she would enjoy eating another cookie. Which of the following statements is consistent with Karen's decision?

A) Karen's marginal utility has decreased with a corresponding decrease in total utility.
B) Karen's marginal and total utility remain unchanged.
C) Karen's marginal utility has decreased but it is unclear what has happened to total utility.
D) Karen's total utility has increased but it is unclear what has happened to her marginal utility.

Question 47

The rate of change in total utility equals

A) marginal utility.
B) the change in marginal utility associated with eating all the quantities a person can handle.
C) the change in marginal utility divided by the change in quantity.
D) the rate of change in marginal utility divided by the price.

Question 48

A representative unit by which utility is measured is

A) a util.
B) utility.
C) marginal utility.
D) ordinal utility.

Question 49

Refer to the above table. The marginal utility of the 8th movie for Robert is

A) 30 units of utility.
B) 20 units of utility.
C) 420 units of utility.
D) 5 units of utility.

Question 50

Refer to the above table. The marginal utility of the 5th movie for Michelle is

A) 40 units of utility.
B) 50 units of utility.
C) 60 units of utility.
D) 390 units of utility.

Question 51

At a ball game we can observe people eating hot dogs, chips, and burgers. If all are priced the same and we observe Michelle eating a hot dog and David eating a hamburger, we can conclude that

A) Robert will be eating chips.
B) Michelle likes hot dogs better than David does and David likes hamburgers better than Michelle does.
C) Michelle derives the same amount of utility from eating a hot dog as David derives from eating a hamburger.
D) at this time Michelle derives more utility from eating a hot dog than from eating either a hamburger or chips, while David derives more utility from eating a hamburger than from eating either a hot dog or chips.

Question 52

John has just eaten another potato chip and his total utility increased. This means that John's marginal utility for this additional potato chip is

A) positive.
B) negative.
C) zero.
D) not determinable without more information.

Question 53

Refer to the above table. The marginal utility of the 7th movie for Michelle is

A) 15 units of utility.
B) 20 units of utility.
C) 35 units of utility.
D) 435 units of utility.

Question 54

Marginal utility is

A) the utility received by the last consumer of a good.
B) the total utility received from consuming a given quantity of a good divided by the number of units consumed.
C) the change in total utility from consuming an additional unit of a good.
D) the utility received from consuming the first unit of a good.

Question 55

Juan and Sophia have decided to stop studying economics and get a bite to eat. Juan wants to go for a pizza and Sophia wants a hamburger. They decide to go for pizza. What can we conclude from this?

A) Juan always gets more utility from pizza than Sophia does.
B) Sophia gets less utility from pizza than she could from a hamburger.
C) Sophia will get negative utility from the pizza.
D) Utility analysis does not work here since Sophia did not eat a hamburger.

Question 56

John has just eaten another potato chip and his total utility decreased. This means that John's marginal utility for this additional potato chip is

A) positive.
B) negative.
C) zero.
D) not determinable without more information.

Question 57

The analysis of consumer decision making based on utility maximization is known as

A) specialization analysis.
B) consumption analysis.
C) utility analysis.
D) market analysis.

Question 58

Refer to the above table. What is the marginal utility for the 10th unit for Michelle and for Robert?

A) Michelle: 50; Robert: 50
B) Michelle: 15; Robert: 20
C) Michelle: 10; Robert: 10
D) Michelle: -10; Robert: 10

Question 59

Refer to the above table. The marginal utility of the 6th movie for Michelle is

A) 25 units of utility.
B) 30 units of utility.
C) 35 units of utility.
D) 40 units of utility.

Question 60

The change in the total utility as a result of increasing consumption by one unit is known as

A) marginal utility.
B) average utility.
C) proportional utility.
D) utils.

Question 61

Refer to the above table. What is the marginal utility for the 3rd unit for Michelle and for Robert?

A) Michelle: -10; Robert: 20
B) Michelle: 75; Robert: 75
C) Michelle: 75; Robert: 80
D) Michelle: 270; Robert: 270

Question 62

As more of a product is consumed, total utility increases up to a point at which

A) marginal utility increases at an increasing rate.
B) marginal utility increases at a constant rate.
C) marginal utility decreases.
D) marginal utility will initially decrease, then increase.

Question 63

Marginal utility

A) at first rises and then declines as a person consumes more of a good or service.
B) can be thought of as being the equivalent to total utility.
C) equals the total satisfaction from consumption of goods and services.
D) is stable, but then as a person consumes more of a good or service, has a propensity to increase.

Question 64

Total satisfaction is maximized when

A) marginal utility is positive.
B) marginal utility is negative.
C) marginal utility is zero.
D) marginal utility is equal to total utility.

Question 65

Utility analysis assumes that the consumer's tastes and preferences are

A) dependent on income and education.
B) predetermined and stable.
C) dependent on national origin.
D) dependent on geographic location.

Question 66

Refer to the above table. In examining the utility schedules for Michelle and Robert, we can conclude that

A) they like movies the same.
B) they like the third movie the same.
C) Michelle likes movies more than Robert does.
D) they both received the same satisfaction from watching the fourth movie.

Question 67

At the point at which total utility is at a maximum,

A) marginal utility is at a minimum.
B) marginal utility is negative.
C) marginal utility is zero.
D) marginal utility is equal to total utility.

Question 68

In economics, the term "marginal" refers to

A) total.
B) a change in the total.
C) negative.
D) inverse.

Question 69

The additional utility or satisfaction that one derives from consuming one more unit of any good or service is referred to as

A) total utility.
B) substantive utility.
C) average utility.
D) marginal utility.

Question 70

When you buy something, you do so because of the satisfaction you expect to receive from having and using that good. Another term that can be used for satisfaction is

A) need.
B) purchasing power.
C) utility.
D) price elasticity.

Question 71

When marginal utility is zero, total utility is

A) increasing.
B) at its maximum.
C) at its minimum.
D) decreasing.

Question 72

The change in total utility derived when a customer consumes one more unit of a good or service is called

A) total utility.
B) marginal utility.
C) average utility.
D) final utility.

Question 73

The marginal utility derived from viewing the next movie DVD is the

A) average utility per minute of viewing.
B) additional utility from viewing the DVD.
C) average utility per hour of viewing.
D) additional utility from viewing the first minute of the DVD.

Question 74

The total utility of consuming 6 units of a good is 255. The marginal utility of the 6th unit is 45 and the marginal utility of the 5th unit is 60. The total utility of consuming 5 units of the good is

A) 300.
B) 150.
C) 210.
D) 195.

Question 75

When marginal utility is positive, total utility is

A) increasing.
B) zero.
C) at its minimum.
D) decreasing.

Question 76

When marginal utility is negative, total utility is

A) increasing at a decreasing rate.
B) zero.
C) at its maximum.
D) decreasing.

Question 77

Economists once believed utility could be measured. The philosophical school based on the thought known as utilitarianism was developed by the English philosopher

A) Jeremy Bentham.
B) Henri Leconte.
C) John Lennon.
D) Bernard Mandeville.

Question 78

The equation for the calculation of marginal utility is

A) total utility/number of units consumed.
B) change in total utility/number of units consumed.
C) change in total utility/change in number of units consumed.
D) total utility/change in number of units consumed.

Question 79

A rational consumer will NEVER purchase a product when its

A) marginal utility is negative.
B) total utility is increasing at a decreasing rate.
C) marginal utility is decreasing.
D) total utility is decreasing at an increasing rate.

Question 80

Kathleen eats three TV dinners. The third TV dinner makes Kathleen sick. This means that for Kathleen

A) the third TV dinner has little utility.
B) the third TV dinner has negative utility.
C) the opportunity cost of TV dinners is high.
D) TV dinners must be inexpensive.