Deck 10: The Rational Consumer

Question 1

For economists,the satisfaction an individual derives from the consumption of goods and services is BEST described as:

A)happiness.
B)usefulness.
C)utility.
D)opportunity cost.

Answer 1

utility.

Question 2

Which good is MOST likely to display increasing marginal utility over some range?

A)chicken during the 1920s,when it was considered a luxury good
B)paint,because you need enough to paint at least one entire room
C)lobsters,which are so expensive that you must eat two to get your money's worth
D)peanut butter and jelly sandwiches

Answer 2

paint,because you need enough to paint at least one entire room

Question 3

Economists identify the satisfaction a person derives from the consumption of goods and services as:

A)happiness.
B)usefulness.
C)utility.
D)pleasure.

Answer 3

utility.

Question 4

The marginal utility of coffee consumption for Steve is the change in _____ generated by consuming an additional cup of coffee.

A)total utility
B)total consumption
C)total demand
D)price

Question 5

Utility is the:

A)difference between a firm's total revenue and its total economic cost.
B)good not adequately provided by a free market and usually provided by the government.
C)satisfaction consumers derive from their consumption of goods and services.
D)lowest price that buyers are willing to pay for a given quantity of a good.

Question 6

The amount by which an additional unit of a good or service changes a consumer's total satisfaction,all other things unchanged,is _____ utility.

A)marginal
B)maximum
C)average
D)expected

Question 7

Utility is MOST closely related to:

A)usefulness.
B)satisfaction.
C)requirement.
D)necessity.

Question 8

The utility of a good is determined by how much _____ a particular consumer obtains from it.

A)satisfaction
B)usefulness
C)cost
D)need fulfillment

Question 9

Which statement BEST describes the principle of diminishing marginal utility? As an individual consumes more of a good:

A)the total utility obtained will eventually fall.
B)the total utility obtained will eventually become negative.
C)the addition to total utility obtained from the nth unit of the good will be less than that obtained from the immediately preceding unit of the good.
D)the marginal utility will eventually become negative.

Question 10

The principle of diminishing marginal utility means that,when Sarah eats pizza,her satisfaction from the second slice of pizza is probably _____ that from the first.

A)greater than
B)equal to
C)less than
D)not comparable to

Question 11

Suppose bad weather and pollution dramatically reduce the supply of crawfish in Louisiana next year.This would MOST likely lead to _____ in the marginal utility of crawfish consumption.

A)an increase
B)a decrease
C)no change
D)substitution and income effects

Question 12

The relation between an individual's consumption bundle and her satisfaction is called a _____ function.

A)demand
B)production
C)consumption
D)utility

Question 13

On a sparsely populated island,an additional minute of high-speed Internet service would have a _____ marginal utility than in New York City,while in New York City,quiet evenings would carry a _____ marginal utility than on a deserted island.

A)lower;higher
B)higher;lower
C)lower;lower
D)higher;higher

Question 14

In economics,the ability of pumpkin pie to satisfy a want is referred to as its:

A)utility.
B)usefulness.
C)worthiness.
D)necessity.

Question 15

How much _____ Susan obtains from eating green beans is a measure of the utility of green beans for her.

A)efficiency
B)usefulness
C)cost
D)satisfaction

Question 16

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 _____ units of utility.

A)exactly 12
B)less than 13
C)less than 9
D)more than 14

Question 17

The law of diminishing marginal utility indicates that the slope of the marginal utility curve is generally:

A)negative.
B)vertical.
C)horizontal.
D)positive.

Question 18

The amount by which total utility changes when an additional unit of a good is consumed is called _____ utility.

A)average
B)additional
C)maximum
D)marginal

Question 19

Economists describe the satisfaction consumers receive from consuming goods and services as:

A)utility.
B)income effects.
C)budget constraints.
D)substitution effects.

Question 20

To say that you can't have too much of a good thing means that,for any good that you enjoy (for example,pizza):

A)higher consumption will always lead to higher utility.
B)higher consumption will cause utility to decrease at an increasing rate.
C)higher consumption will increase utility,but only up to a point;after that,utility will start to decrease.
D)it is valid to measure utility in utils.

Question 21

Freddy has eaten three corn dogs at the county fair,and 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,for the fourth corn dog,the:

A)total utility is less than zero.
B)marginal utility is less than zero.
C)total utility curve is still increasing.
D)marginal utility curve is still increasing.

Question 22

If total utility is at a maximum,marginal utility is:

A)rising.
B)at its average value.
C)at a maximum.
D)zero.

Question 23

Use the following to answer question:
(Table: Exercise and Total Utility)Use Table: Exercise and Total Utility.The principle of diminishing marginal utility is seen:

A)nowhere,as marginal utility is always increasing.
B)immediately,from the first hour and beyond.
C)between the third and fourth hours.
D)after the second hour of exercise.

Question 24

The principle of diminishing marginal utility:

A)refers to the tendency of total utility to increase until an individual's budget is no longer constrained.
B)refers to the tendency of marginal utility to decline as the amount of consumption of a good or service increases.
C)indicates that,if a good is inferior,less of it will be purchased when income falls.
D)assumes all goods are normal.

Question 25

Use the following to answer question:
(Table: The Utility of Macaroni and Cheese)Use Table: The Utility of Macaroni and Cheese.Carmen loves eating macaroni and cheese on Thanksgiving.The marginal utility she derives from the sixth serving she eats is _____ units.

A)-25
B)0
C)25
D)-15

Question 26

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

A)falling.
B)constant.
C)rising.
D)greater than zero.

Question 27

Use the following to answer question:
(Table: The Utility of Macaroni and Cheese)Use Table: The Utility of Macaroni and Cheese.Carmen loves eating macaroni and cheese on Thanksgiving.Carmen's marginal utility from eating macaroni becomes negative at the _____ serving.

A)first
B)second
C)fifth
D)sixth

Question 28

Which statement is TRUE if the principle of diminishing marginal utility applies?

A)When a customer at the Pie Palace continues to eat more pie,each additional piece of pie gives the same marginal utility.
B)When a customer at the Pie Palace continues to eat more pie,each additional piece of pie gives less marginal utility.
C)When a customer at the Pie Palace continues to eat more pie,each additional piece of pie lowers total utility.
D)The total utility of pie is at a maximum,while the marginal utility of pie is still increasing.

Question 29

Use the following to answer question:
(Table: The Utility of Macaroni and Cheese)Use Table: The Utility of Macaroni and Cheese.Carmen loves eating macaroni and cheese on Thanksgiving.Carmen's total utility is maximized after she eats the _____ serving.

A)first
B)second
C)forth
D)sixth

Question 30

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

A)average utility.
B)the law of diminishing returns.
C)incremental utility.
D)marginal utility.

Question 31

Use the following to answer question:
(Table: The Utility of Macaroni and Cheese)Use Table: The Utility of Macaroni and Cheese.Carmen loves eating macaroni and cheese on Thanksgiving.Carmen's marginal utility from eating macaroni and cheese is 0 for the _____ serving.

A)first
B)second
C)third
D)fifth

Question 32

Use the following to answer question:
(Table: The Utility of Macaroni and Cheese)Use Table: The Utility of Macaroni and Cheese.Carmen loves eating macaroni and cheese on Thanksgiving.The marginal utility she derives from the second serving she eats is _____ units.

A)35
B)15
C)10
D)5

Question 33

Use the following to answer question:
(Table: The Utility of Macaroni and Cheese)Use Table: The Utility of Macaroni and Cheese.Carmen loves eating macaroni and cheese on Thanksgiving.The marginal utility she derives from the fifth serving she eats is _____ units.

A)15
B)10
C)5
D)0

Question 34

Assuming that diminishing marginal utility applies to both pomegranates and bananas,if Vanessa buys more pomegranates and fewer bananas,the _____ utility of pomegranates will _____,and the _____ utility of bananas will _____.

A)marginal;fall;marginal;rise
B)marginal;rise;marginal;fall
C)total;fall;marginal;rise
D)marginal;rise;total;rise

Question 35

When an individual continues to eat more turkey,if the principle of diminishing marginal utility applies,each additional serving yields:

A)more marginal utility.
B)less marginal utility.
C)the same amount of marginal utility.
D)less total utility.

Question 36

The marginal utility of eating sweet potatoes is the:

A)change in total utility from consuming an additional serving.
B)total utility divided by the number of servings consumed.
C)change in total utility divided by the number of servings consumed.
D)total utility divided by the change in the number of servings consumed.

Question 37

The amount by which total utility _____ when an additional unit of a good is consumed is _____.

A)changes;average utility
B)increases;the income effect
C)decreases;maximum utility
D)changes;marginal utility

Question 38

Assuming that diminishing marginal utility applies to both goods,if a consumer buys more plastic bins and fewer door hooks,the _____ utility of plastic bins will _____,and the _____ utility of door hooks will _____.

A)marginal;fall;marginal;rise
B)marginal;fall;marginal;fall
C)total;fall;marginal;rise
D)marginal;rise;total;rise

Question 39

As you consume more turkey relative to mashed potatoes,the _____ of turkey eventually decreases.

A)price
B)usefulness
C)marginal utility
D)demand

Question 40

Use the following to answer question:
(Table: Exercise and Total Utility)Use Table: Exercise and Total Utility.Marginal utility:

A)initially decreases but eventually increases as more exercise is consumed.
B)always decreases as more exercise is consumed.
C)initially increases but eventually decreases as more exercise is consumed.
D)initially increases but eventually stays constant as more exercise is consumed.

Question 41

Use the following to answer question:
(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A(n)_____ in the price of potatoes would rotate the budget line,changing the intercept on the _____ axis and moving it _____ the origin.

A)increase;horizontal;away from
B)decrease;horizontal;toward
C)increase;vertical;toward
D)decrease;vertical;toward

Question 42

Use the following to answer question:
(Figure: Budget Lines for Tea and Scones)Use 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 has been $1.Which chart shows what will happen to her budget line if her income decreases to $10?

A)A
B)B
C)C
D)D

Question 43

Use the following to answer question:
(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.An increase in income would:

A)rotate the budget line,changing the intercept on the horizontal axis.
B)shift the budget line to the left.
C)rotate the budget line,changing the intercept on the vertical axis.
D)shift the budget line to the right.

Question 44

Chuck spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.If the price of each good doubles and Chuck's income doubles:

A)Chuck's budget line will be unaffected.
B)Chuck's budget line will shift out.
C)Chuck's budget line will shift in.
D)Chuck will be able to buy more of both goods.

Question 45

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.If Faruq spends all of his income,the opportunity cost of one milkshake is equal to _____ tacos.

A)2
B)10
C)5
D)1/5

Question 46

Joe's budget line reflects the _____ available to Joe if he spends _____ of his income.

A)consumption bundles;all
B)consumption bundles;part
C)utility;all
D)utility;part

Question 47

Use the following to answer question:
(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A(n)_____ in the price of clams would rotate the budget line,changing the intercept on the _____ axis and moving it _____ the origin.

A)increase;horizontal;toward
B)decrease;horizontal;toward
C)increase;vertical;toward
D)decrease;vertical;away from

Question 48

Use the following to answer question:
(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A(n)_____ in the price of potatoes would rotate the budget line,changing the intercept on the _____ axis and moving it _____ the origin.

A)increase;horizontal;away from
B)decrease;horizontal;toward
C)increase;vertical;away from
D)decrease;vertical;away from

Question 49

Use the following to answer question:
(Figure: Budget Lines for Tea and Scones)Use 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 has been $1.Which chart shows what will happen to her budget line if the price of a cup of tea falls to $0.50?

A)A
B)B
C)C
D)D

Question 50

Abdul spends all of his income on food (F)and shelter (S).His budget line is given by the equation 5F + 20S = 100.Which consumption bundle is part of his consumption possibilities?

A)8 units of F and 3 units of S
B)14 units of F and 2 units of S
C)0 units of F and 6 units of S
D)20 units of F and 15 units of S

Question 51

Use the following to answer question:
(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A decrease in income would:

A)rotate the budget line,changing the intercept on the horizontal axis.
B)shift the budget line to the left.
C)rotate the budget line,changing the intercept on the vertical axis.
D)shift the budget line to the right.

Question 52

Use the following to answer question:
(Figure: Budget Lines for Tea and Scones)Use 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 has been $1.Which chart shows what will happen to her budget line if the price of a scone rises to $2?

A)A
B)B
C)C
D)D

Question 53

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.If Faruq spends all of his income,the opportunity cost of one taco equals _____ milkshakes.

A)2
B)10
C)5
D)1/5

Question 54

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.The slope of Faruq's budget line is equal to:

A)-1/5.
B)-5.
C)1/5.
D)5.

Question 55

Use the following to answer question:
(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A(n)_____ in the price of clams would rotate the budget line,changing the intercept on the _____ axis and moving it _____ the origin.

A)increase;horizontal;away from
B)decrease;horizontal;away from
C)increase;vertical;toward
D)decrease;vertical;away from

Question 56

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.If Faruq purchases 10 milkshakes,he can purchase _____ tacos.

A)10
B)50
C)8
D)18

Question 57

Chuck spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.The vertical intercept for Chuck's budget line is _____ milkshakes.

A)50
B)10
C)5
D)100

Question 58

Use the following to answer question:
(Figure: Budget Lines for Tea and Scones)Use 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 has been $1.Which chart shows what will happen to her budget line if the price of both a cup of tea and a scone increase to $2?

A)A
B)B
C)C
D)D

Question 59

Faruq spends all of his income on tacos and milkshakes.His income is $100,the price of tacos is $10,and the price of milkshakes is $2.Put tacos on the horizontal axis and milkshakes on the vertical axis.The horizontal intercept for Faruq's budget line is _____ tacos.

A)50
B)10
C)5
D)100

Question 60

Use the following to answer question:
(Figure: Budget Lines for Tea and Scones)Use 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 chart shows what will happen to her budget line if her income increases to $25?

A)A
B)B
C)C
D)D

Question 61

Assume that diminishing marginal utility applies to both coffee and football tickets and that the consumer is spending all of her income.If a consumer purchases a combination of coffee and football tickets such that MU_Coffee/ /P_Coffee = 20 and MU_{Football tickets}/ /P_{Football tickets} = 10,to maximize utility,the consumer should buy _____ coffee and _____ football tickets.

A)less;more
B)more;fewer
C)more;more
D)less;fewer

Question 62

Assume that Siri is consuming the utility-maximizing quantities of pork and chicken.We can conclude that:

A)the price of pork equals the price of chicken.
B)the marginal utility of pork equals the marginal utility of chicken.
C)the ratio of the marginal utility to price is the same for pork as it is for chicken.
D)Siri is consuming the same amount of pork and chicken.

Question 63

At the optimal consumption bundle:

A)the marginal utility of all goods consumed is equal.
B)the marginal utility per dollar spent is equalized across all goods consumed.
C)the price of all goods consumed is equal.
D)total utility from all goods consumed is equal.

Question 64

Diego spends all of his income on milkshakes and french fries.At his current consumption levels,the marginal utility of one milkshake and the marginal utility of one order of french fries are equal.According to the optimal consumption rule,Diego:

A)is maximizing his utility.
B)is maximizing his utility only if one milkshake and one order of french fries have the same price.
C)should buy more milkshakes and fewer fries if a milkshake costs more than an order of fries.
D)will maximize his utility by specializing in consumption and buying either milkshakes or fries but not both.

Question 65

If a consumer derives more utility by spending an additional $1 on good X,rather than on good Y:

A)MU_x/P_x > MU_y/P_y.
B)MU_x/P_x = MU_y/P_y.
C)MU_x/P_x < MU_y/P_y.
D)P_x/MU_x > P_y/MU_y.

Question 66

Sally devotes all of her income to the consumption of apples and Reese's Peanut Butter Cups.At her current level of consumption,the marginal utility of an apple is 6 and the marginal utility of a Reese's Peanut Butter Cup is 8.Assume that diminishing marginal utility applies to both apples and Reese's Peanut Butter Cups.Suppose the price of an apple is $0.20 and the price of a Reese's Peanut Butter Cup is $0.25.To maximize her total utility,assuming that the goods are divisible,she would:

A)consume more Reese's Peanut Butter Cups and fewer apples.
B)consume less of both goods.
C)consume more apples and fewer Reese's Peanut Butter Cups.
D)There is not enough information to justify a change in her current level of consumption.

Question 67

Assume that diminishing marginal utility applies to both dish soap and floor wax and that Minh is spending all of her income.If Minh purchases a combination of dish soap and floor wax such that MU_{Dish soap}/ /P_{Dish soap} = 50 and MU_{Floor wax}/ /P_{Floor wax} = 30,to maximize utility,Minh should buy _____ soap and _____ floor wax.

A)less;less
B)more;more
C)more;less
D)less;more

Question 68

Sally devotes all of her income to the consumption of apples and Reese's Peanut Butter Cups.At her current level of consumption,the marginal utility of an apple is 6 and the marginal utility of a Reese's Peanut Butter Cup is 8.Assume that diminishing marginal utility applies to both apples and Reese's Peanut Butter Cups.Suppose the price of an apple is $0.10,while the price of a Reese's Peanut Butter Cup is $0.25.To maximize her total utility,assuming that the goods are divisible,she would:

A)consume more Reese's Peanut Butter Cups and fewer apples.
B)consume less of both goods.
C)consume more apples and fewer Reese's Peanut Butter Cups.
D)There is not enough information to justify a change in her current level of consumption.

Question 69

A consumer's spending is restricted because of:

A)marginal utility.
B)total utility.
C)his or her budget constraint.
D)utility maximization.

Question 70

Smedley,a careful utility maximizer,consumes peanut butter and ice cream.Assume that both peanut butter and ice cream are normal goods.Right after he achieves the utility-maximizing level of consumption of the two goods,the price of ice cream increases.To adjust to this event,he consumes _____ peanut butter and _____ ice cream.

A)more;more
B)less;less
C)more;less
D)less;more

Question 71

(Scenario: Tom's Budget Constraint)Use Scenario: Tom's Budget Constraint.The combination of _____ music downloads and _____ movies lies INSIDE Tom's budget line (meaning Tom can afford this combination,but he will not be spending the entire $50). Scenario: Tom's Budget Constraint
Tom is trying to decide how to allocate his $50 budget for music downloads and online movie streaming when the price of a music download is $1 and the price of a movie is $5.

A)50;10
B)50;0
C)0;5
D)100;5

Question 72

Smedley,a careful utility maximizer,consumes peanut butter and broccoli.Assume that both peanut butter and broccoli are normal goods.Right after he achieves the utility-maximizing level of consumption of the two goods,the price of broccoli increases.To adjust to this event,he consumes _____ peanut butter and _____ broccoli.

A)more;less
B)less;less
C)more;more
D)less;more

Question 73

Assume that diminishing marginal utility applies to both textbooks and concert tickets and that Sun is spending all of his income.If Sun purchases a combination of textbooks and concert tickets such that MU_Textbooks/P_Textbooks = 100 and MU_Tickets/ /P_Tickets = 80,to maximize utility,Sun should buy _____ textbooks and _____ tickets.

A)fewer;fewer
B)more;fewer
C)fewer;more
D)more;more

Question 74

(Scenario: Tom's Budget Constraint)Use Scenario: Tom's Budget Constraint.The combination of _____ music downloads and _____ movies lies OUTSIDE Tom's budget line (meaning Tom cannot afford this combination). Scenario: Tom's Budget Constraint
Tom is trying to decide how to allocate his $50 budget for music downloads and online movie streaming when the price of a music download is $1 and the price of a movie is $5.

A)50;10
B)50;0
C)0;5
D)20;5

Question 75

Juan spends all of his income on packs of baseball cards and boxes of candy.At his current consumption bundle,the marginal utility of baseball card packs is 20 and the marginal utility of candy boxes is 10.Assuming that diminishing marginal utility applies to both goods,if the price of baseball card packs is $10 and the price of candy boxes is $2,Juan should:

A)consume more baseball card packs and fewer candy boxes.
B)consume more candy boxes and fewer baseball card packs.
C)continue to consume the current bundle.
D)consume equal numbers of baseball card packs and candy boxes.

Question 76

Assume that diminishing marginal utility applies to both ballet slippers and tutus and that Natasha is spending all of her income.If Natasha purchases a combination of ballet slippers and tutus such that MU_Slippers/ /P_Slippers = 20 and MU_Tutus/ /P_Tutus = 5,to maximize utility,Natasha should buy _____ slippers and _____ tutus.

A)more;fewer
B)fewer;more
C)more;more
D)fewer;fewer

Question 77

Jill,a careful utility maximizer,consumes peanut butter and ice cream.Assume that both peanut butter and ice cream are normal goods.Right after she achieves the utility-maximizing level of consumption of the two goods,the price of peanut butter increases.After she adjusts to this event,the marginal utility of peanut butter goes _____ and that of ice cream goes _____.

A)up;up
B)down;down
C)down;up
D)up;down

Question 78

If,for Adam,the marginal utility of ties is greater than the marginal utility of shirts,to maximize utility,Adam should:

A)buy more ties and fewer shirts.
B)buy more shirts and fewer ties.
C)buy the same number of each.
D)determine the price of ties and the price of shirts before he decides how many of each to buy.

Question 79

Whatever the time period in question,Molly's spending will be _____ by her _____.

A)unlimited;marginal utility
B)limited;marginal utility
C)limited;budget
D)unlimited;budget

Question 80

(Scenario: Tom's Budget Constraint)Use Scenario: Tom's Budget Constraint.The combination of _____ music downloads and _____ movies lies ON Tom's budget line. Scenario: Tom's Budget Constraint
Tom is trying to decide how to allocate his $50 budget for music downloads and online movie streaming when the price of a music download is $1 and the price of a movie is $5.

A)50;10
B)50;0
C)0;5
D)100;5