Question 1

A consumer who has chosen the right mix of goods and services to maximize his or her utility is said to have achieved

Accepted Answer

The answer of A consumer who has chosen the right...

Question 2

Peter consumes bags of potato chips and cans of soft drink. The marginal utility of bags of potato chips is 10 utils per bag and the marginal utility of cans of soft drink is 50 utils per can. Potato chips cost $0.50 a bag, and a can of soft drink costs $1.00. What should Peter do?

Accepted Answer

To maximize utility, Peter should equalize the marginal utility per dollar spent on each good. The marginal utility per dollar for potato chips is 20 utils per dollar (10 utils/$0.50), and for soft drinks, it is 50 utils per dollar (50 utils/$1.00). Since the marginal utility per dollar is higher for soft drinks, Peter should buy more soft drink and fewer potato chips.

Question 3

When a consumer is at the consumer optimum,

Accepted Answer

The answer of When a consumer is at the consumer...

Question 4

Based on the material presented in the chapter, can we conclude that people will consume goods until the marginal utility of each good is zero?

Accepted Answer

The concept of rational consumer behavior suggests that people will consume goods until the marginal utility per unit of money spent (i.e. the marginal utility/price ratio) is equal across all goods. At this point, further consumption of one good would result in a decrease in overall satisfaction as the marginal utility of that good would be lower than the marginal utility of other goods that could be purchased with the same amount of money. Therefore, people do not consume goods until the marginal utility of each good is zero, and so choices A and B are incorrect. Choice C is also incorrect because total utility alone does not determine consumption behavior, rather it is the marginal utility/price ratio that determines optimal consumption choices.

Question 5

-Refer to the above table. If the price of a magazine is $2 and the price of a paperback book is $5 and the consumer has $19, the rational consumer will purchase

Accepted Answer

The answer of 
-Refer to the above table. If the...

Question 6

A consumer is buying the optimal amount of goods when

Accepted Answer

The consumer is buying the optimal amount of goods when the marginal utility per last dollar spent on all of the goods purchased is the same. This is because the consumer will allocate their spending in such a way that the marginal utility per last dollar spent is the highest possible. When this is equal across all goods, the consumer has reached their optimal spending level.

Question 7

-Use the above table. Adam has 3 apples and 3 oranges. Eve has 2 apples and 2 oranges. Eve asks Adam to give her an apple in exchange for an orange. Should Eve go through with this exchange?

Accepted Answer

Eve would lose more satisfaction from giving up an orange than she would gain from receiving an apple, making the exchange not beneficial for her.

Question 8

-The price of product A is $3, the price of product B is $2, and you have $18 to spend. What combination of product A and product B will give you the most satisfaction?

Accepted Answer

The answer of 
-The price of product A is $3,...

Question 9

-Based on the information in the above table, what is the total satisfaction Mary can achieve if she is a wise consumer?

Accepted Answer

The answer of 
-Based on the information in the above...

Question 10

-Refer to the above table. If the consumer's equilibrium consists of 4 magazines and 4 books, then we know that

Accepted Answer

The answer of 
-Refer to the above table. If the...

Question 11

-Refer to the above table. If the consumer's equilibrium consists of 3 magazines and 6 books, then we know that

Accepted Answer

The answer of 
-Refer to the above table. If the...

Question 12

-Refer to the above table If the price of a magazine is $2 and the price of a paperback book is $5 and the consumer has $40, the rational consumer will purchase

Accepted Answer

The answer of 
-Refer to the above table If the...

Question 13

The idea that consumers continue to adjust their purchases until the marginal utility per last dollar spent on all items is equal is called the

Accepted Answer

The idea described in the question is known as the consumer optimum. This occurs when the consumer has allocated their income in such a way that the marginal utility per last dollar spent is equal across all items purchased. This ensures that the consumer is making the most efficient use of their income and maximizing their satisfaction. The other options mentioned in the question, such as the law of increasing costs and the rule of 72, are unrelated to this concept. The law of diminishing marginal utility is related to the concept of consumer optimum but only explains why the marginal utility of a good decreases as more of it is consumed, not how consumers optimize their spending.

Question 14

Which of the following best describes the consumer optimum?

Accepted Answer

The answer of Which of the following best describes the...

Question 15

-Based on the information in the above table, the price of A is $3, the price of B is $2, and the price of C is $5. If Mary has $22 to spend, what combination of products A, B, and C should she buy in order to maximize her satisfaction?

Accepted Answer

The answer of 
-Based on the information in the above...

Question 16

-Adam has 3 apples and 3 oranges. Eve has 2 apples and 2 oranges. The marginal utilities for Adam and Eve are summarized in the above table. Adam asks Eve to exchange one of her apples for an orange.

Accepted Answer

Eve's total satisfaction increases because by exchanging an apple for an orange, she moves to a combination of goods that provides her with a higher marginal utility for the exchanged goods, thus increasing her overall satisfaction.

Question 17

When DVDs and hamburgers were the same price, Mavis consumed 3 hamburgers and 5 DVDs, and Mavis received 10 utils from the last hamburger and 15 utils from the last DVD consumed. What should be Mavis' consumption strategy?

Accepted Answer

Mavis should consume more DVDs and fewer burgers because the marginal utility per dollar spent on DVDs is higher than that for hamburgers, indicating that DVDs provide more satisfaction per dollar spent.

Question 18

The price of a can of soft drink is $1.25 and the marginal utility of the second can consumed is 10 utils. The marginal utility of the third donut is 4 utils. You should only consume the third donut if the price of the donut is less than or equal to

Accepted Answer

The answer of The price of a can of soft...

Question 19

-Refer to the above table. If the price of a magazine is $2 and the price of a paperback book is $5 and the consumer has $33, the rational consumer will purchase

Accepted Answer

The answer of 
-Refer to the above table. If the...

Question 20

-Your allergies are bad this summer so your allergist writes you a prescription to relieve your symptoms. When you get to the pharmacy, you notice the name brand allergy medicine is more expensive than its generic equivalent. You purchase the generic equivalent and demonstrate all of the following EXCEPT

Accepted Answer

The principle of diminishing marginal utility refers to the decrease in satisfaction or usefulness as more units of a good or service are acquired. This principle is not demonstrated in this scenario, as the consumer is still seeking relief from their allergies and the generic equivalent is still fulfilling that need. The other options, A, C, and D, are demonstrated in this scenario.

Quiz 20: Consumer Choice

A consumer who has chosen the right mix of goods and services to maximize his or her utility is said to have achieved

Peter consumes bags of potato chips and cans of soft drink. The marginal utility of bags of potato chips is 10 utils per bag and the marginal utility of cans of soft drink is 50 utils per can. Potato chips cost $0.50 a bag, and a can of soft drink costs $1.00. What should Peter do?

When a consumer is at the consumer optimum,

Based on the material presented in the chapter, can we conclude that people will consume goods until the marginal utility of each good is zero?

-Refer to the above table. If the price of a magazine is $2 and the price of a paperback book is $5 and the consumer has $19, the rational consumer will purchase

A consumer is buying the optimal amount of goods when

-Use the above table. Adam has 3 apples and 3 oranges. Eve has 2 apples and 2 oranges. Eve asks Adam to give her an apple in exchange for an orange. Should Eve go through with this exchange?

-The price of product A is $3, the price of product B is $2, and you have $18 to spend. What combination of product A and product B will give you the most satisfaction?

-Based on the information in the above table, what is the total satisfaction Mary can achieve if she is a wise consumer?

-Refer to the above table. If the consumer's equilibrium consists of 4 magazines and 4 books, then we know that

-Refer to the above table. If the consumer's equilibrium consists of 3 magazines and 6 books, then we know that

-Refer to the above table If the price of a magazine is $2 and the price of a paperback book is $5 and the consumer has $40, the rational consumer will purchase

The idea that consumers continue to adjust their purchases until the marginal utility per last dollar spent on all items is equal is called the

Which of the following best describes the consumer optimum?

-Based on the information in the above table, the price of A is $3, the price of B is $2, and the price of C is $5. If Mary has $22 to spend, what combination of products A, B, and C should she buy in order to maximize her satisfaction?

-Adam has 3 apples and 3 oranges. Eve has 2 apples and 2 oranges. The marginal utilities for Adam and Eve are summarized in the above table. Adam asks Eve to exchange one of her apples for an orange.

When DVDs and hamburgers were the same price, Mavis consumed 3 hamburgers and 5 DVDs, and Mavis received 10 utils from the last hamburger and 15 utils from the last DVD consumed. What should be Mavis' consumption strategy?

The price of a can of soft drink is $1.25 and the marginal utility of the second can consumed is 10 utils. The marginal utility of the third donut is 4 utils. You should only consume the third donut if the price of the donut is less than or equal to

-Refer to the above table. If the price of a magazine is $2 and the price of a paperback book is $5 and the consumer has $33, the rational consumer will purchase