Question 1

Roberta spends all of her income on two items, staplers and paper clips. If the price of a stapler increases, there will be a ________ Roberta's demand curve for staplers and a ________ Roberta's demand curve for paper clips.
A) rightward shift of; leftward shift of
B) leftward shift of; movement along
C) movement along; rightward shift of
D) movement along; leftward shift of

Accepted Answer

The answer of Roberta spends all of her income on...

Question 2

The only goods you consume are pizza and soda. Both are normal goods. You consider pizza and soda to be substitutes. Which of the following will lead you to eat more pizza?
A) The price of a pizza falls.
B) The price of a soda falls.
C) The price of a soda rises.
D) Both answers A and C are correct.

Accepted Answer

The answer of The only goods you consume are pizza...

Question 3

Marginal utility theory concludes that a decrease in the price of a good increases the quantity demanded and
A) increases the demand for substitutes.
B) decreases the demand for complements.
C) increases the total expenditure on the good.
D) increases total utility.

Accepted Answer

The answer of Marginal utility theory concludes that a decrease...

Question 4

Katie finds that the marginal utility from a compact disc is 30 and the marginal utility from a pizza is 10. The price of a compact disc is $15 and the price of a pizza is $10. In order to increase her utility, Katie should
A) consume more compact discs and fewer pizzas.
B) consume fewer compact discs and more pizzas.
C) not change her consumption of pizza and compact discs.
D) consume fewer compact discs and fewer pizzas.

Accepted Answer

Katie should choose to consume more compact discs and fewer pizzas because the marginal utility per dollar spent is higher for compact discs (2 utility points per dollar) than for pizzas (1 utility point per dollar). By consuming more compact discs and fewer pizzas, Katie maximizes her overall utility.

Question 5

Ricardo buys cola and popcorn. Cola sells for $0.50 a can and popcorn sells for $1 per bag. He is in consumer equilibrium. The price of a cola jumps to $1 per can. In his new consumer equilibrium, Ricardo's
A) marginal utility of cola will be equal to his marginal utility of popcorn.
B) marginal utility per dollar spent will be 2.
C) total utility will be higher.
D) marginal utility of cola will decrease.

Accepted Answer

The answer of Ricardo buys cola and popcorn. Cola sells...

Question 6

Using marginal utility theory, when the price of a gallon of milk falls, a consumer will buy
A) the same amount of milk as before and buy more of all other goods.
B) more milk.
C) more milk only if its marginal utility is increasing.
D) more milk only if its marginal utility is constant.

Accepted Answer

According to the Law of Diminishing Marginal Utility, as a consumer consumes more of a good, the additional satisfaction from each additional unit of the good decreases. Therefore, when the price of a gallon of milk falls, the consumer's marginal utility from consuming milk increases. As a result, the consumer will be willing and able to purchase more milk at the lower price to continue maximizing their total utility.

Question 7

Bianca consumes apples and bananas and is in consumer equilibrium. The marginal utility of the last apple is 10 and the marginal utility of the last banana is 20. If the price of an apple is $0.50, then what is the price of a banana?
A) $0.10
B) $0.25
C) $0.50
D) $1.00

Accepted Answer

The answer of Bianca consumes apples and bananas and is...

Question 8

Marginal utility theory predicts that as the price of coffee rises, the ________ a substitute for coffee ________ and the ________ coffee ________.
A) supply of; increases; demand for; decreases
B) supply of; decreases; supply of; increases
C) demand for; increases; quantity demanded of; decreases
D) demand for; decreases; demand for; increases

Accepted Answer

The answer of Marginal utility theory predicts that as the...

Question 9

Shaniq buys only soda and pizza and is buying the amounts that maximize her utility. The marginal utility from a soda is 30 and the price of a soda is $2. The marginal utility from a slice of pizza is also 30. The price of a slice of pizza must be
A) $30.
B) $2.
C) $1.
D) some amount that cannot be calculated without more information.

Accepted Answer

The answer of Shaniq buys only soda and pizza and...

Question 10

Total utility from 
-The above table shows Sue's total utility from golf and tennis. If the price of each hour of golf is twice the price of each hour of tennis, and Sue plays four hours of tennis, then Sue plays
A) one hour of golf.
B) two hours of golf.
C) three hours of golf.
D) four hours of golf.

Accepted Answer

The answer of Total utility from 
-The above table shows...

Question 11

Marginal utility theory predicts that when the price of one good rises, the demand for another good is a substitute increases. This change occurs because of
A) an increase in the marginal utility per dollar from the substitute good.
B) an increase in the marginal utility of the substitute good.
C) a decrease in the marginal utility per dollar from the good whose price has risen.
D) a decrease in the marginal utility of the good whose price has risen.

Accepted Answer

The answer of Marginal utility theory predicts that when the...

Question 12

The predictions of marginal utility theory
A) contradict the idea that the demand curve slopes downward.
B) support the idea that the demand curve slopes downward.
C) support the idea that the supply curve slopes upward.
D) contradict the idea that the supply curve slopes upward.

Accepted Answer

Marginal utility theory predicts that as a consumer purchases more of a good, the marginal utility (additional satisfaction) they gain from each additional unit will decrease. This supports the idea that the demand curve slopes downward, as consumers will only be willing to buy additional units of a good at a lower price (reflecting the decreased satisfaction gained from each unit). Therefore, choice B is the correct answer. Choices A, C, and D are incorrect because marginal utility theory does not contradict or support the idea that the supply curve slopes upward.

Question 13

Bianca consumes pizza. Marginal utility theory predicts that when the price of pizza increases
A) Bianca's total utility from pizza will increase.
B) Bianca will buy less pizza.
C) Bianca's marginal utility from pizza will increase.
D) Bianca's demand curve for pizza will shift leftward.

Accepted Answer

According to the law of demand, as the price of a good increases, consumers will demand less of that good. Therefore, Bianca will buy less pizza when the price increases.

Question 14

When the price of popcorn falls, before there is any change in consumption, the
A) marginal utility of popcorn definitely increases.
B) marginal utility per dollar from popcorn definitely increases.
C) total expenditure on popcorn definitely rises.
D) entire total utility of popcorn curve definitely shifts rightward.

Accepted Answer

When the price of popcorn falls and consumption remains constant, consumers will experience an increase in the marginal utility per dollar spent on popcorn. This means that they will be able to purchase more popcorn for the same amount of money, resulting in a higher overall satisfaction from their popcorn purchases. However, there is no guarantee that the marginal utility of popcorn or the total expenditure on popcorn will definitely increase, and the entire total utility of popcorn curve may or may not shift rightward depending on other factors such as changes in income or preferences.

Question 15

Total utility from 
-Marginal utility theory is used in the derivation of the
A) negative slope of demand curves.
B) negative slope of supply curves.
C) positive slope of demand curves.
D) positive slope of supply curves.

Accepted Answer

Marginal utility theory states that as a consumer consumes more units of a good, the additional satisfaction gained from each additional unit (marginal utility) decreases. This leads to a negative slope of the demand curve, as the consumer is willing to pay less for each additional unit consumed.

Question 16

Teddy buys only chocolate chip cookies and hot chocolate and spends all of his income on the two items. Suppose the price of a cookie rises. According to marginal utility theory, Teddy buys
A) more cookies.
B) fewer cookies.
C) more hot chocolate.
D) an equal amount of cookies and hot chocolate.

Accepted Answer

According to the law of diminishing marginal utility, as the price of cookies increases while the price of hot chocolate remains constant, the marginal utility of cookies decreases and the marginal utility of hot chocolate increases. Therefore, Teddy will shift his consumption towards hot chocolate and buy fewer cookies.

Question 17

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. David maximizes his utility by buying only sodas and pizza. He buys 5 sodas and 10 slices of pizza. If the price of a soda increases to $3 each, David will
A) decrease the number of sodas bought and the demand curve for sodas will shift leftward.
B) decrease the number of sodas bought and move along the demand curve for soda.
C) buy more pizza and move along the demand curve for pizza.
D) buy less pizza and the demand curve for pizza will shift leftward.

Accepted Answer

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

Question 18

Teddy buys only chocolate chip cookies and hot chocolate and spends all of his income on the two items. Suppose the price of a cookie rises. According to marginal utility theory, Teddy will buy
A) more cookies and less hot chocolate, which decreases his marginal utility from cookies and increases his marginal utility from hot chocolate.
B) more cookies and less hot chocolate, which increases his marginal utility from cookies and decrease his marginal utility from hot chocolate.
C) fewer cookies and more hot chocolate, which decreases his marginal utility from cookies and increases his marginal utility from hot chocolate.
D) fewer cookies and more hot chocolate, which increases his marginal utility from cookies and decreases his marginal utility from hot chocolate.

Accepted Answer

The answer of Teddy buys only chocolate chip cookies and...

Question 19

In consumer equilibrium, Harold consumes pizza, sodas, and other goods. Pizza and soda are complements for Harold. The price of a pizza rises while his income remains the same. Harold then consumes
A) more pizza and less soda.
B) more pizza and more soda.
C) less pizza and less soda.
D) less pizza and more soda.

Accepted Answer

The answer of In consumer equilibrium, Harold consumes pizza, sodas,...

Question 20

Joe consumes pizza and movies. Pizza and movies are substitutes. According to marginal utility theory, if the price of a pizza rises then
A) the demand curve for pizza shifts leftward.
B) the demand curve for pizza shifts leftward and the demand curve for movies shifts rightward.
C) there is an upward movement along the demand curve for pizza.
D) there is an upward movement along the demand curve for pizza and the demand curve for movies shifts rightward.

Accepted Answer

The answer of Joe consumes pizza and movies. Pizza and...

Quiz 8: Utility and Demand

Roberta spends all of her income on two items, staplers and paper clips. If the price of a stapler increases, there will be a Roberta's demand curve for staplers and a Roberta's demand curve for paper clips.

The only goods you consume are pizza and soda. Both are normal goods. You consider pizza and soda to be substitutes. Which of the following will lead you to eat more pizza?

Marginal utility theory concludes that a decrease in the price of a good increases the quantity demanded and

Katie finds that the marginal utility from a compact disc is 30 and the marginal utility from a pizza is 10. The price of a compact disc is $15 and the price of a pizza is $10. In order to increase her utility, Katie should

Ricardo buys cola and popcorn. Cola sells for $0.50 a can and popcorn sells for $1 per bag. He is in consumer equilibrium. The price of a cola jumps to $1 per can. In his new consumer equilibrium, Ricardo's

Using marginal utility theory, when the price of a gallon of milk falls, a consumer will buy

Bianca consumes apples and bananas and is in consumer equilibrium. The marginal utility of the last apple is 10 and the marginal utility of the last banana is 20. If the price of an apple is $0.50, then what is the price of a banana?

Marginal utility theory predicts that as the price of coffee rises, the a substitute for coffee and the coffee .

Shaniq buys only soda and pizza and is buying the amounts that maximize her utility. The marginal utility from a soda is 30 and the price of a soda is $2. The marginal utility from a slice of pizza is also 30. The price of a slice of pizza must be

Total utility from -The above table shows Sue's total utility from golf and tennis. If the price of each hour of golf is twice the price of each hour of tennis, and Sue plays four hours of tennis, then Sue plays

Marginal utility theory predicts that when the price of one good rises, the demand for another good is a substitute increases. This change occurs because of

The predictions of marginal utility theory

Bianca consumes pizza. Marginal utility theory predicts that when the price of pizza increases

When the price of popcorn falls, before there is any change in consumption, the

Total utility from -Marginal utility theory is used in the derivation of the

Teddy buys only chocolate chip cookies and hot chocolate and spends all of his income on the two items. Suppose the price of a cookie rises. According to marginal utility theory, Teddy buys

Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. David maximizes his utility by buying only sodas and pizza. He buys 5 sodas and 10 slices of pizza. If the price of a soda increases to $3 each, David will

Teddy buys only chocolate chip cookies and hot chocolate and spends all of his income on the two items. Suppose the price of a cookie rises. According to marginal utility theory, Teddy will buy

In consumer equilibrium, Harold consumes pizza, sodas, and other goods. Pizza and soda are complements for Harold. The price of a pizza rises while his income remains the same. Harold then consumes

Joe consumes pizza and movies. Pizza and movies are substitutes. According to marginal utility theory, if the price of a pizza rises then