Question 1

Bags of Popcorn Bottles of soda -Sarah consumes pizzas and hamburgers. The price of a hamburger is $1 and the marginal utility from her last hamburger is 5. Let P_p be the price of a pizza and MU_p be the marginal utility of pizzas. In consumer equilibrium, the ratio MU_p/P_p for Sarah's last pizza must equal A) 0.2. B) 1.0. C) 5.0. D) infinity.

Accepted Answer

Since Sarah's marginal utility from her last hamburger is 5, she is willing to pay up to $5 for it. Therefore, the price she is willing to pay for a pizza must be such that the marginal utility she gets from it divided by its price is also 5. So, MU_p/P_p = 5. Therefore, the answer is C.

Question 2

-Given the data in the above table, if income is $16, and the price is $1 for a bottle of water and $2 for a hamburger, what is the quantity of water and the quantity of hamburgers that will maximize the consumer's total utility?
A) 5 bottles of water and 5 hamburgers
B) 4 bottles of water and 6 hamburgers
C) 6 bottles of water and 5 hamburgers
D) 6 bottles of water and 6 hamburgers

Accepted Answer

The answer of 
-Given the data in the above table,...

Question 3

Bags of Popcorn Bottles of soda 
-Shaniq has seen two movies this week and two baseball games. Her marginal utility of one more movie is 20 and her marginal utility of one more baseball game is 30. Shaniq will go to a baseball game tonight, rather than to another movie,
A) no matter how much more the baseball game costs compared to the movie.
B) if the baseball game costs $10.00 and the movie costs $7.00.
C) if the baseball game costs $10.00 and the movie costs $5.00.
D) Both answers B and C are correct.

Accepted Answer

Shaniq will choose to go to the baseball game if the marginal utility per dollar spent on the game is higher than the marginal utility per dollar spent on the movie. We can calculate this as follows:

For the baseball game:
Marginal utility per dollar spent = 30/10 = 3

For the movie:
Marginal utility per dollar spent = 20/7 = 2.86 (rounded to 2 decimal places)

Therefore, the marginal utility per dollar spent on the baseball game is higher than the movie. So, Shaniq will go to the baseball game even if it costs $10.00 compared to the movie which costs $7.00.

Hence, option B is the best choice.

Question 4

-Given the data in the above table, income of $13, a price of $1 for a bottle of water and $2 for a hamburger, what is the marginal utility per dollar spent on water and on hamburgers when the consumer is in consumer equilibrium?
A) 20 units of utility per dollar spent
B) 10 units of utility per dollar spent
C) 5 units of utility per dollar spent
D) 1 unit of utility per dollar spent

Accepted Answer

The answer of 
-Given the data in the above table,...

Question 5

Bags of Popcorn Bottles of soda 
-In the table above, if Brent maximizes his utility by consuming 3 bags of popcorn and 3 bottles of soda, then the ratio of the price of popcorn to the price of soda is expected to be
A) 1/2.
B) 5/6.
C) 6/5.
D) 2.

Accepted Answer

The answer of Bags of Popcorn Bottles of soda 
-In...

Question 6

-Given the data in the above table, income of $13, a price of $1 for a bottle of water and $2.00 for a hamburger, what is the marginal utility per dollar spent on the fifth hamburger?
A) 10 units of utility
B) 8 units of utility
C) 6 units of utility
D) 4 units of utility

Accepted Answer

The answer of 
-Given the data in the above table,...

Question 7

-Given the data in the above table, income of $13, a price of $1 for a bottle of water and $2 for a hamburger, what is the quantity of water and the quantity of hamburgers that will maximize the consumer's total utility?
A) 5 bottles of water and 4 hamburgers
B) 4 bottles of water and 4 hamburgers
C) 1 bottle of water and 6 hamburgers
D) 6 bottles of water and 6 hamburgers

Accepted Answer

The answer of 
-Given the data in the above table,...

Question 8

-Suppose that you consume only pizza, which costs $4 per slice, and Diet Pepsi, which costs $2 each. The table above gives your utility from consuming these two goods. If your income is $14, which of the following consumption combinations will you choose?
A) 3 slices of pizza and 1 Diet Pepsi
B) 2 slices of pizza and 3 Diet Pepsis
C) 1 slice of pizza and 5 Diet Pepsis
D) 0 slices of pizza and 7 Diet Pepsis

Accepted Answer

The answer of 
-Suppose that you consume only pizza, which...

Question 9

Bags of Popcorn Bottles of soda 
-Sarah consumes only strawberries and cream, and she is spending all of her income. Her marginal utility of her last dish of strawberries is 200 and her marginal utility of her last pint of cream is 200. The price of strawberries is $1.00 per dish and the price of cream is $2.00 per pint. To maximize her utility, Sarah should
A) buy more strawberries and less cream.
B) buy more cream and less strawberries.
C) not change her purchases of strawberries and cream.
D) definitely buy no cream at her consumer equilibrium.

Accepted Answer

The answer of Bags of Popcorn Bottles of soda 
-Sarah...

Question 10

Bags of Popcorn Bottles of soda 
-Jenny buys sodas and popcorn. Sodas sell for $1 and popcorn sells for $2 a bag. Currently she is in consumer equilibrium, with the marginal utility from her last dollar spent on popcorn equal to 100 units of utility. The marginal utility from her last dollar spent on sodas is
A) 20 units of utility.
B) 30 units of utility.
C) 50 units of utility.
D) 100 units of utility.

Accepted Answer

Consumer equilibrium is achieved when the marginal utility per dollar spent on each good is equal. If Jenny is currently at equilibrium with the marginal utility from her last dollar spent on popcorn equal to 100 units of utility, and popcorn costs $2 per bag, then the marginal utility per dollar spent on popcorn is 50 units of utility ($2/100 units). Therefore, the marginal utility per dollar spent on sodas must also be 50 units of utility in order to maintain equilibrium. Since sodas cost $1 per bottle, the marginal utility from her last dollar spent on sodas is 50 units of utility, which is answer choice C.

Question 11

Bags of Popcorn Bottles of soda 
-Suppose Hanna spends her entire budget buying bagels and cups of coffee each day. Also, suppose the marginal utility of her last bagel is 100 and the marginal utility of her last cup of coffee is 200. If the price of a bagel is $4 and the price of a cup of coffee is $2, then
A) Hanna needs to decrease her consumption of bagels to maximize her utility.
B) Hanna needs to increase her consumption of bagels to maximize her utility.
C) Hanna should buy half as many bagels as coffee in order to maximize her utility.
D) bagels must provide more total utility than coffee.

Accepted Answer

The answer of Bags of Popcorn Bottles of soda 
-Suppose...

Question 12

Sam spends all of his income on textbooks and hot dogs. The price of a textbook is $40 and the price of a hot dog is $0.50. If Sam is maximizing his utility and the marginal utility he derives from the last textbook he purchases is 400, then the marginal utility he derives from his last hot dog purchased must be
A) 400.
B) 10.
C) 5.
D) 20.

Accepted Answer

The answer of Sam spends all of his income on...

Question 13

-The table above gives the utility from pens and pencils. If pens and pencils both cost $.25 each and the consumer has an income of $2.25, which of the following combinations maximizes the consumer's utility?
A) 3 pens and 6 pencils
B) 4 pens and 5 pencils
C) 5 pens and 4 pencils
D) 6 pens and 3 pencils

Accepted Answer

The answer of 
-The table above gives the utility from...

Question 14

-The table above gives the utility from pens and pencils. The marginal utility derived from the third pen is
A) 200.
B) 155.
C) 445.
D) 45.

Accepted Answer

The answer of 
-The table above gives the utility from...

Question 15

Bags of Popcorn Bottles of soda 
-Usharani consumes 35 apples a week and 14 loaves of bread. Apples cost $1 each and bread costs $2 per loaf. Usharani is maximizing his utility and finds that the marginal utility from his 35th apple
A) equals his marginal utility from his 14th loaf of bread.
B) is twice his marginal utility from his 14th loaf of bread.
C) is half his marginal utility from his 14th loaf of bread.
D) is such that his total utility from apples equals his total utility from bread.

Accepted Answer

According to the principle of diminishing marginal utility, as we consume more of a good, the marginal utility of each additional unit consumed decreases. Therefore, as Usharani consumes more apples, the marginal utility he gets from each additional apple will decrease while the marginal utility he gets from each additional loaf of bread will remain constant. Hence, to maximize his total utility, he should consume apples and bread in such a way that the ratio of their marginal utilities is equal to the ratio of their prices. Since the price of an apple is $1 and the price of a loaf of bread is $2, the ratio of their prices is 1:2. Therefore, Usharani should consume apples and bread in a ratio where the marginal utility he gets from the last apple is half the marginal utility he gets from the last loaf of bread. Hence, the answer is C.

Question 16

-Suppose that you consume only pizza, which costs $4 per slice, and Diet Pepsi, which costs $2 each. The table above gives your utility from consuming these two goods. If your income is $20, which of the following consumption combinations will you choose?
A) 5 slices of pizza and no Diet Pepsi
B) 4 slices of pizza and 2 Diet Pepsis
C) 3 slices of pizza and 4 Diet Pepsis
D) 2 slice of pizza and 6 Diet Pepsis

Accepted Answer

The answer of 
-Suppose that you consume only pizza, which...

Question 17

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. Jean maximizes utility and buys only sodas and slices of pizza. If the price of a soda increases to $3 each, Jean's marginal utility per soda
A) will increase and she'll buy more soda.
B) will decrease and she'll buy fewer sodas.
C) will decrease and she'll buy more pizza.
D) Both B and C are correct.

Accepted Answer

The answer of Suppose the price of soda is $2...

Question 18

Brian consumes only pizza and soda. When the price of a soda is $2 and the price of a slice of pizza is $4, Brian maximizes his utility by buying 5 sodas and 10 slices of pizza. If the marginal utility of the 5th soda is 100, then the marginal utility from the 10th slice of pizza must be ________.
A) 200
B) 100
C) 50
D) More information is needed to determine the marginal utility of the 10th slice of pizza.

Accepted Answer

The answer of Brian consumes only pizza and soda. When...

Question 19

Bags of Popcorn Bottles of soda 
-Suppose Hank spends his entire budget buying 2 bagels and 3 cups of coffee each day. Also, suppose the marginal utility of the second bagel is 100 and the marginal utility of the third cup of coffee is 200. Which of the following statements is true?
A) Hank is not maximizing his utility.
B) Hank will be maximizing his utility as long as the price of a cup of coffee is twice the price of a bagel.
C) Hank might be maximizing utility only if the price of a cup of coffee is less than the price of a bagel.
D) Hank is not maximizing utility because he is not buying equal amounts of each good.

Accepted Answer

Hank will be maximizing his utility if the marginal utility per dollar spent is equal for both goods. If the marginal utility of the third cup of coffee is twice that of the second bagel, then the price of coffee should be twice that of a bagel for utility maximization.

Question 20

-Suppose that you consume only pizza and Diet Pepsi. The table above gives your utility from consuming these two goods. What is the marginal utility you get from the fourth slice of pizza?
A) 36
B) 18
C) 12
D) 4

Accepted Answer

The answer of 
-Suppose that you consume only pizza and...

Quiz 8: Utility and Demand

-Given the data in the above table, if income is $16, and the price is $1 for a bottle of water and $2 for a hamburger, what is the quantity of water and the quantity of hamburgers that will maximize the consumer's total utility?

Bags of Popcorn Bottles of soda -Shaniq has seen two movies this week and two baseball games. Her marginal utility of one more movie is 20 and her marginal utility of one more baseball game is 30. Shaniq will go to a baseball game tonight, rather than to another movie,

-Given the data in the above table, income of $13, a price of $1 for a bottle of water and $2 for a hamburger, what is the marginal utility per dollar spent on water and on hamburgers when the consumer is in consumer equilibrium?

Bags of Popcorn Bottles of soda -In the table above, if Brent maximizes his utility by consuming 3 bags of popcorn and 3 bottles of soda, then the ratio of the price of popcorn to the price of soda is expected to be

-Given the data in the above table, income of $13, a price of $1 for a bottle of water and $2.00 for a hamburger, what is the marginal utility per dollar spent on the fifth hamburger?

-Given the data in the above table, income of $13, a price of $1 for a bottle of water and $2 for a hamburger, what is the quantity of water and the quantity of hamburgers that will maximize the consumer's total utility?

-Suppose that you consume only pizza, which costs $4 per slice, and Diet Pepsi, which costs $2 each. The table above gives your utility from consuming these two goods. If your income is $14, which of the following consumption combinations will you choose?

-The table above gives the utility from pens and pencils. If pens and pencils both cost $.25 each and the consumer has an income of $2.25, which of the following combinations maximizes the consumer's utility?

-The table above gives the utility from pens and pencils. The marginal utility derived from the third pen is

Bags of Popcorn Bottles of soda -Usharani consumes 35 apples a week and 14 loaves of bread. Apples cost $1 each and bread costs $2 per loaf. Usharani is maximizing his utility and finds that the marginal utility from his 35th apple

-Suppose that you consume only pizza, which costs $4 per slice, and Diet Pepsi, which costs $2 each. The table above gives your utility from consuming these two goods. If your income is $20, which of the following consumption combinations will you choose?

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. Jean maximizes utility and buys only sodas and slices of pizza. If the price of a soda increases to $3 each, Jean's marginal utility per soda

Brian consumes only pizza and soda. When the price of a soda is $2 and the price of a slice of pizza is $4, Brian maximizes his utility by buying 5 sodas and 10 slices of pizza. If the marginal utility of the 5th soda is 100, then the marginal utility from the 10th slice of pizza must be ________.

Bags of Popcorn Bottles of soda -Suppose Hank spends his entire budget buying 2 bagels and 3 cups of coffee each day. Also, suppose the marginal utility of the second bagel is 100 and the marginal utility of the third cup of coffee is 200. Which of the following statements is true?

-Suppose that you consume only pizza and Diet Pepsi. The table above gives your utility from consuming these two goods. What is the marginal utility you get from the fourth slice of pizza?