Deck 19: Theory of Consumer Behavior

Question 1

Statement I: As we consume more and more of a product, our marginal utility declines. Statement II: A person's marginal utility can never be negative.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Answer 1

Statement I is true and statement II is false.

Question 2

Which statement is true?

A)Total utility is maximized when marginal utility is zero.
B)The utility of a Big Mac is greater than the utility of a Whopper.
C)As one consumes more and more of a service, one's marginal utility rises.
D)None of these are true.

Answer 2

Total utility is maximized when marginal utility is zero.

Question 3

According to the figure above ,Assume the demand curve is line AC. If price is OD, the consumer surplus is bounded by letters

A)OABD.
B)OAC.
C)DBC.
D)None of these are true.

Answer 3

DBC.

Question 4

When you are maximizing your utility for product A,

A)marginal utility of A = 0.
B)marginal utility of A = 1.
C)marginal utility of A = price of A
D)None of these are true.

Question 5

When Karen buys eight units of a particular good or service, ______________.

A)she has no consumer surplus
B)she has a consumer surplus
C)there is no way of knowing whether she has a consumer surplus

Question 6

As you consume more and more of a service,

A)your consumer surplus is increasing.
B)your consumer surplus is remaining constant.
C)your consumer surplus is decreasing.

Question 7

If total utility is decreasing, then

A)marginal utility is zero.
B)marginal utility is decreasing but still greater than zero.
C)marginal utility is equal to one.
D)marginal utility is increasing.
E)marginal utility is less than zero.

Question 8

Jason's cooking is so terrible that Melissa says she will have to be paid in order to even try it. Thus, her marginal utility for Jason's cooking is

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

Question 9

As a person buys increasing amounts of a good, their marginal utility ______ and their consumer surplus _____.

A)decreases; increases
B)decreases; decreases
C)increases; increases
D)increases; decreases

Question 10

If a person wishes to maximize their satisfaction from the consumption of a free product, they should consume until

A)marginal utility is maximized.
B)marginal utility is equal to total utility.
C)total utility is equal to zero.
D)marginal utility is equal to zero.
E)total utility begins to increase.

Question 11

As long as total utility is increasing, we know that marginal utility is

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

Question 12

If marginal utility is declining but still greater than zero, then total utility is

A)unrelated to the changes in marginal utility.
B)declining as well.
C)increasing.
D)declining for a while but increasing as it approaches zero.
E)staying the same.

Question 13

A person will be maximizing their utility when

A)the marginal utility of product A is greater than the price of product A.
B)the price of product A is greater than the marginal utility of product A.
C)the price of product A = the marginal utility of product A.

Question 14

If a restaurant served free steaks, people would consume more and more steaks until their ________ fell to zero.

A)marginal utility
B)total utility
C)consumer surplus
D)None of the choices are correct.

Question 15

Statement I: If you knew a person's demand schedule, you could figure out her marginal utility schedule. Statement II: As a person consumes more and more of a service, her total utility rises and her marginal utility declines.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 16

The economist most closely associated with consumer surplus is

A)Karl Marx.
B)Adam Smith.
C)Milton Friedman.
D)John Maynard Keynes.
E)Alfred Marshall.

Question 17

According to the general utility formula, the marginal utility of a good divided by the price of that good is _______.

A)less that negative one
B)equal to one
C)greater than one
D)equal to zero

Question 18

Statement I: Consumer surplus is the difference between what you have to pay and what you would have been willing to pay. Statement II: A person's total utility reaches a maximum when that person's marginal utility falls to zero.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 19

Mr. Fefferberg had determined that the marginal utility of the last dollar he spent on cowboy boots is greater than the marginal utility of the last dollar that he spent on Nikes. Since he is a rational fellow, he will

A)buy equal quantities of Nikes and cowboy boots.
B)buy more cowboy boots and fewer Nikes.
C)buy more Nikes and fewer cowboy boots.
D)give up cowboy boots entirely.
E)give up Nikes entirely.

Question 20

Statement I: Utility is measured by how much a person is willing to pay for a good or service. Statement II: If you buy four units of a good, your total utility is higher than if you purchased only three units.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 21

Statement I: The more piano lessons you take, the greater the consumer surplus you enjoy. Statement II: Utility is measured by how useful a good or service is.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 22

Kelly eats five slices of pizza on a Friday night but admits each slice of pizza doesn't taste as good as the previous one. This suggests that for Kelly

A)the marginal utility of a slice of pizza is negative.
B)the total utility of slices of pizza is increasing by larger and larger increments.
C)the total utility of slices of pizza is declining.
D)the marginal utility of a slice of pizza is positive but decreasing.

Question 23

Statement I: Utility is measured by a product's usefulness. Statement II: If you purchased eight ballpoint pens at 75 cents each, you would be enjoying a consumer surplus.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 24

Suppose you buy eight pairs of shoes every spring. This year, your shoe store has a huge sale and you end up buying 12 pairs. How does your consumer surplus now compare to how much it would have been had there been no sale?

A)It is higher.
B)It remains the same.
C)It is lower.

Question 25

According to the figure above ,Assume the demand curve is line AD. If price is CB, then in the graph above, consumer surplus is bounded by

A)CAD.
B)CBED.
C)BAE.
D)None of these are correct.

Question 26

We are maximizing our utility when the ______ of each good and service we purchase is equal to ______.

A)total utility; its price
B)marginal utility; its price
C)marginal utility; one
D)total utility; one

Question 27

Mr. Noriega paid $700 for each of three suits. Since all of the suits were pleasing to his taste, he would have been willing to pay according to this schedule: $950 for the first suit, $800 for the second suit, and $700 for the third suit. How much was his consumer surplus?

A)$100
B)$150
C)$250
D)$350
E)$700

Question 28

Alfred Marshall discovered the concept of

A)utility.
B)consumer surplus.
C)diminishing marginal utility.
D)the diamond-water paradox.

Question 29

As people buy more and more of a service, their consumer surplus

A)increases.
B)decreases.
C)falls to zero.
D)becomes negative.

Question 30

If your marginal utility from your last session with your personal trainer is equal to the price they charged you, then

A)you have had exactly the right number of sessions.
B)you have had too many sessions.
C)you have not had enough sessions.
D)there is no way to determine whether you have had enough sessions.

Question 31

If Mrs. T.F. Baker buys 29 pairs of false eye lashes at the local drug store,

A)she is definitely enjoying a consumer surplus.
B)she may or may not be enjoying a consumer surplus.
C)she is definitely not enjoying a consumer surplus.

Question 32

The water-diamond paradox is resolved once we realize that the marginal utility of the last gallon of water consumed is very ____ and the marginal utility of the last diamond carat purchased is very ___.

A)low; low
B)high; high
C)high; low
D)low; high

Question 33

If a person consumes excessive amounts of a good or service, to the point that their total utility actually begins declining, then that person's marginal utility of the last unit consumed is _________.

A)positive
B)negative
C)zero
D)None of these choices are correct.

Question 34

We will keep buying digital music downloads from the Internet until the marginal utility of the music downloads

A)rises to the price of the download.
B)falls to the price of the download.
C)is greater than the price of the download.
D)is less than the price of the download.

Question 35

If water became very scarce and diamonds became very plentiful

A)the marginal utility of diamonds and water would both rise.
B)the marginal utility of both water and diamonds would both fall.
C)the marginal utility of diamonds would rise and the marginal utility of water would fall.
D)the marginal utility of water would rise and the marginal utility of diamonds would fall.

Question 36

When marginal utility is _________, total utility is _________.

A)positive; increasing
B)zero; maximized
C)negative; decreasing
D)All of the choices are correct.

Question 37

According to the Figure above ,Assume the demand curve is line AD. If price is OF, the consumer surplus is bounded by letters

A)OAFB.
B)OACE.
C)OAD.
D)ECD.
E)FBD.

Question 38

Statement I: The water-diamond paradox is partially explained by the law of diminishing marginal utility. Statement II: The marginal utility of the water we consume is quite low.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 39

If you were in the middle of the desert, came upon a lemonade stand, and paid $20 for a glass of lemonade,

A)you would definitely be overpaying.
B)you would have gotten at least $20 of utility from the lemonade.
C)there is no way to determine whether or not you overpaid.

Question 40

Statement I: If you know a person's demand schedule for product J, you can derive her marginal utility schedule for product J. Statement II: If Bob buys 10 Sidney Sheldon novels, he is enjoying a consumer surplus.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 41

A product's utility

A)is measured by its usefulness.
B)determines the price charged by the seller.
C)has no effect on a person's consumption decision.
D)None of these choices are correct.

Question 42

Use the following figure to answer the question :
Given the demand curve in this graph, if price were $1.00, how much is consumer surplus?

A)$0
B)$1.50
C)$5.00
D)$10.50

Question 43

The price of a drink at the juice bar is $7. Melody Miller buys six carrot juices over the course of the afternoon.

A)She is enjoying a consumer surplus.
B)She is not enjoying a consumer surplus.
C)There is no way to determine whether or not she is enjoying a consumer surplus.

Question 44

Which would be the most accurate statement?

A)No one enjoys a consumer surplus.
B)We enjoy a consumer surplus on many goods and services.
C)We enjoy a consumer surplus on all goods and services.

Question 45

If you received a free month's trial membership in a gym, you would keep going until your marginal utility reached

A)a maximum.
B)zero.
C)a positive number.
D)a negative number.

Question 46

According to utility theory you would consume more and more of a service until your marginal utility

A)fell to the level of price.
B)rose to the level of price.
C)was less than price.
D)was more than price.

Question 47

The Adonis Tanning Salon is running a special this month of $1 a session. Lothario Goodman goes there 15 times, instead of his customary 5.

A)His consumer surplus is larger.
B)His consumer surplus is smaller.
C)His consumer surplus is the same.
D)It cannot be determined if his consumer surplus is larger, smaller, or the same.

Question 48

Use the following figure to answer the question :
Given the demand curve in this graph, if price were $2.00, how much is consumer surplus?

A)$0
B)$1.50
C)$5.00
D)$10.50

Question 49

Use the following table to answer the question : Table 1 : Demand and Utility Table for Milk Shakes
Your total utility for 5 milk shakes would be

A)$2.
B)$4.
C)$7.50.
D)$13.
E)$15.

Question 50

If a bookstore were having a half-price sale, instead of buying three books, you bought six. Because of the sale, your consumer surplus

A)declined.
B)stayed the same.
C)rose.
D)doubled.

Question 51

Use the following figure to answer the question :
Given the demand curve in this graph, if price were $2.00, how much quantity would be purchased?

A)1 unit
B)2 units
C)3 units
D)4 units

Question 52

Daniel Zimiles will buy more and more baseball cards until

A)the total utility of cards begins to fall.
B)the total utility of the cards falls to zero.
C)the marginal utility of the cards starts to fall.
D)the marginal utility of the cards falls to the price of the cards.
E)the marginal utility of the cards falls to zero.

Question 53

As a young man, my great-uncle ate 13 banana splits on a Saturday afternoon and never ate another one for the rest of his life. Most likely the utility of his last banana split was

A)positive.
B)zero.
C)negative.
D)greater than the utility of his 12th banana split.

Question 54

Use the following figure to answer the question :
Given the demand curve in this graph, if this product or service were free, how much consumer surplus would the individual receive?

A)$0
B)$1.50
C)$5.00
D)$10.50

Question 55

When marginal utility is negative, total utility is

A)rising.
B)falling.
C)zero.
D)negative.

Question 56

Use the following figure to answer the question :
Given the demand curve in this graph, if price were $3.00, how much is consumer surplus?

A)$0
B)$1.50
C)$5.00
D)$10.50

Question 57

If Rachel bought too many hot dogs, her marginal utility would become negative and her total utility would

A)rise more slowly.
B)stop rising.
C)begin to fall.
D)become negative.

Question 58

Statement I: A person's marginal utility schedule can be derived from her demand schedule. Statement II: If you purchased six dance lessons, the total utility you derived from the six lessons would be greater than the total utility you would have derived from five lessons.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 59

If the Santiago family, which pays a charge of one cent a gallon, uses about 1,200 gallons of water a month, what is the most accurate statement we can make about their consumer surplus?

A)They definitely enjoy a consumer surplus.
B)They may or may not enjoy a consumer surplus.
C)They definitely do not enjoy a consumer surplus.

Question 60

When marginal utility is zero, total utility

A)is zero.
B)is maximized.
C)is falling.
D)is negative.

Question 61

Use the following table to answer the question : Table 2 :Demand and Utility Schedules for Packs of Star Wars Trading Cards
Her marginal utility of her fifth pack of trading cards would be

A)$40.
B)$34.
C)$30.
D)$6.
E)None of the choices are true.

Question 62

Use the following table to answer the question : Table 1 : Demand and Utility Table for Milk Shakes
If the price of milk shakes were $2.00 each, your consumer surplus would be

A)$15.00.
B)$11.00.
C)$10.00.
D)$5.00.
E)$2.00.

Question 63

Use the following table to answer the question : Table 2 :Demand and Utility Schedules for Packs of Star Wars Trading Cards
The additional utility from her purchase of a third pack of trading cards would be

A)$8.
B)$9.
C)$19.
D)$27.
E)None of the choices are true.

Question 64

Which statement is true?

A)If you know a person's demand schedule, you can find his total utility, but not his marginal utility.
B)If a good is free, you will consume more and more of it until your marginal utility is zero.
C)If a good is free, you will consume more and more of it until your total utility is zero.
D)If you know a person's demand schedule you can find her marginal utility, but not her total utility.

Question 65

Use the following table to answer the question : Table 2 :Demand and Utility Schedules for Packs of Star Wars Trading Cards
Which philosopher-economist observed: "Individuals make choices in order to promote pleasure and to avoid pain"?

A)Thomas Malthus
B)Jeremy Bentham
C)Publilius Syrus
D)Stanley Jevons
E)Samuel Taylor Coleridge

Question 66

Marginal utility

A)is the usefulness a consumer derives from a certain good or service.
B)is the utility a consumer derives from a certain good or service.
C)increases as more of a good or service is consumed.
D)is the additional utility derived from consuming one more unit of a good or service.

Question 67

As people buy more of the same product,

A)their consumer surplus rises.
B)their consumer surplus falls.
C)their consumer surplus will fall to zero to maximize their total utility.
D)the additional purchases do not affect their consumer surplus.

Question 68

Use the following table to answer the question : Table 2 :Demand and Utility Schedules for Packs of Star Wars Trading Cards
The concept based on the assumption that we get bargains on each unit we purchase until the last one is called

A)total utility.
B)consumer surplus.
C)marginal utility.
D)the law of diminishing marginal utility.

Question 69

Use the following table to answer the question : Table 1 : Demand and Utility Table for Milk Shakes
If the price of milk shakes was $2.50 each, your total utility would be ______ and your marginal utility would be ______.

A)$13.00 and $4.00
B)$15.00 and $4.00
C)$13.00 and $2.50
D)$15.00 and $2.50

Question 70

Use the following table to answer the question : Table 2 :Demand and Utility Schedules for Packs of Star Wars Trading Cards
If the price was $6, her consumer surplus would be

A)$40.
B)$30.
C)$10.
D)$6.
E)None of the choices are true.

Question 71

Use the following table to answer the question : Table 2 :Demand and Utility Schedules for Packs of Star Wars Trading Cards
Katie's total utility for 4 packs of Star Wars trading cards would be

A)$24.
B)$27.
C)$28.
D)$34.
E)None of the choices are correct.

Question 72

Use the following table to answer the question : Table 1 : Demand and Utility Table for Milk Shakes
If the price of milk shakes was $3.00 each, your consumer surplus would be

A)$10.50.
B)$6.00.
C)$3.50.
D)$3.00.
E)$1.50.

Question 73

If you bought eight pairs of shoes, the marginal utility of the seventh pair was

A)greater than the price.
B)equal to the price.
C)less than the price.

Question 74

Use the following table to answer the question : Table 2 :Demand and Utility Schedules for Packs of Star Wars Trading Cards
If the price was $8, her consumer surplus would be

A)$27.
B)$19.
C)$8.
D)$3.
E)None of the choices are correct.

Question 75

Use the following table to answer the question : Table 2 :Demand and Utility Schedules for Packs of Star Wars Trading Cards
Statement I: The marginal utility of diamonds we purchase is quite high. Statement II: The marginal utility of water we consume is quite high.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 76

Use the following table to answer the question : Table 2 :Demand and Utility Schedules for Packs of Star Wars Trading Cards
Statement I: The water-diamond paradox can be resolved using utility theory. Statement II: If the price of water was high and the price of diamonds was low, there would be no water-diamond paradox.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 77

As the price of a good falls,

A)the consumer surplus rises.
B)the consumer surplus falls.
C)the consumer surplus may rise or fall.
D)a change in price will not affect consumer surplus.

Question 78

If the marginal utility you derived from the last video game you played was 50 cents and the game costs 50 cents to play,

A)you have been playing the game too long.
B)you haven't been playing the game long enough.
C)you have maximized your total utility.
D)there is no way to determine whether you have played the game long enough.

Question 79

The water-diamond paradox

A)occurs because goods essential to life such as water are cheap (and sometimes free).
B)occurs because nonessential goods such as diamonds are rare and therefore very expensive.
C)occurs because the price of a product is determined by its marginal utility, not its total utility.
D)All of the choices are correct.

Question 80

Use the following table to answer the question : Table 1 : Demand and Utility Table for Milk Shakes
The marginal utility of your fourth milk shake would be

A)$13.
B)$2.50.
C)$2.00.
D)$.50.