Question 1

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Quantity of } \
\text { Magazines/Wk }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Utility }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Paperback Books/Wk }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Utility }
\end{array} \
\hline 0 & 0 & 0 & 0 \
1 & 50 & 1 & 300 \
2 & 90 & 2 & 500 \
3 & 120 & 3 & 600 \
4 & 130 & 4 & 650 \
5 & 132 & 5 & 675 \
6 & 132 & 6 & 680
\end{array}$$
-Refer to the above table.If a consumer's optimum consists of 3 magazines and 6 books,then

Accepted Answer

The answer of \[\begin{array} { c c c c }...

Question 2

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Quantity of } \
\text { Hamburgers/Wk }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Utility }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Movies/Wk }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Utility }
\end{array} \
\hline 0 & 0 & 0 & 0 \
1 & 25 & 1 & 200 \
2 & 45 & 2 & 260 \
3 & 55 & 3 & 300 \
4 & 60 & 4 & 320 \
5 & 61 & 5 & 325 \
\hline
\end{array}$$
-Refer to the above table.Assume the consumer spends his entire income.If the consumer's optimum at the current price of a movie is at 4 hamburgers and 4 movies,and the price of a hamburger is $1,what is the consumer's income?

Accepted Answer

The answer of \[\begin{array} { c c c c }...

Question 3

Using the utility-optimizing model,which of the following would induce a consumer to increase consumption of good x,a normal good?

Accepted Answer

According to the utility-optimizing model, a consumer will increase consumption of a normal good when the marginal utility of the good increases. Therefore, an increase in the marginal utility of good x would induce the consumer to increase consumption of good x. None of the other options would induce the consumer to increase consumption of good x.

Question 4

When the marginal utility per dollar of good x exceeds the marginal utility per dollar of good y,

Accepted Answer

When the marginal utility per dollar of good x exceeds the marginal utility per dollar of good y, it means that the consumer gets more satisfaction per dollar spent on good x compared to good y. Therefore, the consumer should consume more of good x to maximize their overall satisfaction.

Question 5

A consumer with unlimited income will continue consuming goods until

Accepted Answer

A consumer with unlimited income will continue consuming goods until the marginal utility of each is equal to zero because their income is not a limiting factor in their consumption choices. However, once the marginal utility of each good reaches zero, any additional consumption of that good will result in negative marginal utility, meaning that the consumer will no longer see any benefit from consuming more of that good. Therefore, the rational consumer will stop consuming once the marginal utility of each good reaches zero.

Question 6

The marginal utility of good A is 6 and the marginal utility of good B is 15.The price of good A is $2.The price of good B must be ________ if the consumer is optimizing her utility.

Accepted Answer

To optimize utility, the consumer must allocate their spending in such a way that the marginal utility per dollar spent on each good is equal. In this case, the marginal utility per dollar of good A is 3 (6/2) and the marginal utility per dollar of good B is also 3 (15/x). Solving for x, we get x = $5. Therefore, the price of good B must be $5 for the consumer to optimize their utility.

Question 7

According to utility theory,consumer purchase decisions are made such that

Accepted Answer

Utility theory posits that consumers allocate their spending so that the last unit of currency spent on each good provides the same marginal utility per unit of currency, hence the ratio of marginal utility to price is equalized across goods.

Question 8

The consumer optimum (for two goods,a and b)is reached when

Accepted Answer

The consumer optimum is reached when the consumer allocates their budget in such a way that the marginal utility per dollar spent on each good is equal. In other words, they should allocate their budget in a way that the MUa/Pa = MUb/Pb. Therefore, the correct choice is D.

Question 9

A consumer has spent all of his funds on hamburgers and movies.The price of a hamburger is $1 and the price of a movie is $5.The marginal utility of the last hamburger is 5 and the marginal utility of the last movie is 40.This consumer has

Accepted Answer

The answer of A consumer has spent all of his...

Question 10

When Stephanie increases the consumption of pizza and decrease the consumption of soda,her marginal utility of

Accepted Answer

The Law of Diminishing Marginal Utility states that as an individual consumes more of a good, the marginal utility they receive from each additional unit will eventually decrease. Therefore, as Stephanie increases her consumption of pizza, her marginal utility of pizza will eventually fall. On the other hand, as she decreases her consumption of soda, her marginal utility of soda will increase because she is now consuming less of it and therefore values each unit more.

Question 11

Assume that the marginal utility from good x is 10 units and that the price of good x is $5 per unit.The marginal utility from good y is 15 units and its unit price is $7.In this situation,a utility-maximizing consumer should

Accepted Answer

The consumer should choose the good with the higher marginal utility per dollar spent. In this case, the marginal utility per dollar for good y is 15/7, which is greater than the marginal utility per dollar for good x, which is 10/5. Therefore, the utility-maximizing consumer should consume more of good y.

Question 12

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Quantity of } \
\text { Magazines/Wk }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Utility }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Paperback Books/Wk }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Utility }
\end{array} \
\hline 0 & 0 & 0 & 0 \
1 & 50 & 1 & 300 \
2 & 90 & 2 & 500 \
3 & 120 & 3 & 600 \
4 & 130 & 4 & 650 \
5 & 132 & 5 & 675 \
6 & 132 & 6 & 680
\end{array}$$
-The price of a magazine is $2,the price of a paperback book is $5,and the consumer has $33.According to the above table,the rational consumer will purchase

Accepted Answer

The answer of \[\begin{array} { c c c c }...

Question 13

Consumers do not buy as many units of each good as they want because

Accepted Answer

Consumers have limited incomes, which means that they cannot afford to buy as many units of each good as they want. This is due to budget constraints, and consumers must make choices about what goods to purchase based on their preferences and budget constraints. The law of diminishing marginal utility and zero marginal utility also play a role in consumer behavior, but the primary reason for not buying as many units as desired is limited income.

Question 14

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Quantity of } \
\text { Hamburgers/Wk }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Utility }
\end{array} & \begin{array} { c } 
\text { Quantity of } \
\text { Movies/Wk }
\end{array} & \begin{array} { c } 
\text { Total } \
\text { Utility }
\end{array} \
\hline 0 & 0 & 0 & 0 \
1 & 25 & 1 & 200 \
2 & 45 & 2 & 260 \
3 & 55 & 3 & 300 \
4 & 60 & 4 & 320 \
5 & 61 & 5 & 325 \
\hline
\end{array}$$
-Refer to the above table.Assume the consumer spends his entire income.The price of a hamburger is $1,the price of a movie is $6,and the consumer has $15.What is the consumer's optimum?

Accepted Answer

The answer of \[\begin{array} { c c c c }...

Question 15

Consumers usually buy fewer units of a good than the quantity that would maximize total utility from consuming the good because

Accepted Answer

Consumers have limited incomes, which means they have to make choices about what goods to buy and how much of each to buy. In order to maximize their total utility (satisfaction), they must make trade-offs between different goods and decide how much of each to consume. This means that they will typically buy fewer units of a good than the quantity that would maximize total utility, because they cannot afford to buy an unlimited amount of the good.

Question 16

The price of a hamburger is $1,the price of a movie is $5,and the consumer has $13.A consumer has purchased 3 hamburgers and two movies,receiving 10 units of utility for the last hamburger and 10 units of utility for the last movie.The set of goods

Accepted Answer

The answer of The price of a hamburger is $1,the...

Question 17

In a restaurant we can observe people consuming coffee,tea,and soft drinks.All are priced the same.If Sally consumes coffee and Ali consumes soft drinks,we can conclude that

Accepted Answer

Since all three drinks are priced the same, we can assume that the decision to choose one over the other is based on personal preferences or utility. Therefore, we can conclude that Sally derives more utility from coffee than from tea or soft drinks, and Ali derives more utility from soft drinks than from tea or coffee. Option A cannot be determined from the given information. Option B may or may not be true, as we don't know whether Sally likes coffee more than Ali or vice versa. Option D is not necessarily true, as the utility derived from consuming two different drinks cannot be assumed to be equal.

Question 18

The consumer optimum is defined as

Accepted Answer

The consumer optimum is the set of goods and services that maximizes the total utility of the consumer while taking into account their limited income. This means that the consumer is trying to get the most satisfaction or benefit for the amount of money they have available to spend. Therefore, the correct answer is D.

Question 19

The price of good "a" is $5 and the price of good "b" is $15.If the marginal utility of good "a" is 20 then the marginal utility of good "b" must be ________ to have an optimum combination of goods purchased.

Accepted Answer

The answer of The price of good "a" is $5...

Question 20

The consumer optimum is the set of goods and services,subject to the limited income of the consumer,that

Accepted Answer

The consumer optimum refers to the combination of goods and services that maximize the level of satisfaction for the consumer, given their limited income. It is not just the set of goods and services the consumer can afford to buy (choice A), nor is it characterized by zero marginal utility (choice B) or increasing marginal utility (choice D). The consumer optimum is determined by the consumer's preferences and budget constraints and is achieved when the marginal utility per dollar spent is equal for all goods and services purchased. Therefore, the best choice is C.

Quiz 7: Consumer Choice

Using the utility-optimizing model,which of the following would induce a consumer to increase consumption of good x,a normal good?

When the marginal utility per dollar of good x exceeds the marginal utility per dollar of good y,

A consumer with unlimited income will continue consuming goods until

The marginal utility of good A is 6 and the marginal utility of good B is 15.The price of good A is $2.The price of good B must be ________ if the consumer is optimizing her utility.

According to utility theory,consumer purchase decisions are made such that

The consumer optimum (for two goods,a and b) is reached when

A consumer has spent all of his funds on hamburgers and movies.The price of a hamburger is $1 and the price of a movie is $5.The marginal utility of the last hamburger is 5 and the marginal utility of the last movie is 40.This consumer has

When Stephanie increases the consumption of pizza and decrease the consumption of soda,her marginal utility of

Assume that the marginal utility from good x is 10 units and that the price of good x is $5 per unit.The marginal utility from good y is 15 units and its unit price is $7.In this situation,a utility-maximizing consumer should

Consumers do not buy as many units of each good as they want because

Consumers usually buy fewer units of a good than the quantity that would maximize total utility from consuming the good because

The price of a hamburger is $1,the price of a movie is $5,and the consumer has $13.A consumer has purchased 3 hamburgers and two movies,receiving 10 units of utility for the last hamburger and 10 units of utility for the last movie.The set of goods

In a restaurant we can observe people consuming coffee,tea,and soft drinks.All are priced the same.If Sally consumes coffee and Ali consumes soft drinks,we can conclude that

The consumer optimum is defined as

The price of good "a" is $5 and the price of good "b" is $15.If the marginal utility of good "a" is 20 then the marginal utility of good "b" must be ________ to have an optimum combination of goods purchased.

The consumer optimum is the set of goods and services,subject to the limited income of the consumer,that