Deck 19: Consumer Choice

Question 1

The marginal utility for a good is computed as

A)Total utility divided by quantity.
B)Quantity divided by total utility.
C)The change in quantity divided by total utility.
D)The change in total utility divided by the change in quantity.

Answer 1

D

Question 2

Marginal utility is

A)The sum of the total utility of consuming a certain amount of a good.
B)The change in total utility obtained by consuming one additional unit of a good or service.
C)The diminishing nature of total utility.
D)Always negative or zero.

Answer 2

B

Question 3

If an individual demands a good,it means that he or she

A)Has a strong desire for the good.
B)Is willing and able to purchase the good at some price.
C)Must need the good.
D)Prefers the good to all other choices.

Answer 3

B

Question 4

Josh is eating pizza at his favorite Italian restaurant.Below is his utility from this consumption: Table 19.1
$\begin{array}{|l|c|c|}\hline\text { Slice of Pizza } & \text { Total Utility } & \text { Marginal Utility } \\\hline \text { First slice } & 20 & 20 \\\hline \text { Second slice } & 39 & 19 \\\hline \text { Third slice } & - & 15 \\\hline \text { Fourth slice } & 59 & - \\\hline\end{array}$ Refer to Table 19.1.What is Josh's total utility from consuming the third slice of pizza?

A)20 utils.
B)54 utils.
C)5 utils.
D)0 utils.

Question 5

Josh is eating pizza at his favorite Italian restaurant.Below is his utility from this consumption: Table 19.1
$\begin{array}{|l|c|c|}\hline{\text { Slice of Pizza }} & \text { Total Utility } & \text { Marginal Utility } \\\hline \text { First slice } & 20 & 20 \\\hline \text { Second slice } & 39 & 19 \\\hline \text { Third slice } & - & 15 \\\hline \text { Fourth slice } & 59 & - \\\hline\end{array}$ Refer to Table 19.1.The marginal utility Josh enjoys from the fourth slice of pizza is

A)20 utils.
B)54 utils.
C)5 utils.
D)0 utils.

Question 6

As compared to sociologists and psychologists,economists accept consumer tastes as given and instead focus on

A)How price will affect actual consumer purchases.
B)How culture affects consumer preferences.
C)How advertising molds consumer desires.
D)What consumers desire.

Question 7

When economists refer to the determinants of demand,they are referring to factors that when changed,

A)Cause a movement down a demand curve.
B)Cause the demand curve to shift left or right.
C)Influence producer behavior.
D)Cause a movement up one demand curve.

Question 8

The additional pleasure or satisfaction from a good declines as more of it is consumed in a given period.This is the definition of the

A)Law of demand.
B)Law of diminishing marginal utility.
C)Law of diminishing total utility.
D)Total revenue rule.

Question 9

Which of the following is not a determinant of demand?

A)Desire for the good.
B)Income of the consumer.
C)The cost of the factor inputs.
D)The price of other goods.

Question 10

The law of diminishing marginal utility states that

A)The total utility of consuming the next unit of a good falls.
B)As a consumer enjoys successive units of a good,eventually marginal utility will fall.
C)Marginal utility always falls to zero after two or three units of a good consumed.
D)The total utility of a good rises at a fast rate as more units of a good are consumed.

Question 11

Total utility is

A)The additional utility from consuming one more unit of a good.
B)The sum of the marginal utilities from the consumption of good.
C)A function that always falls as a buyer enjoys more units of a good.
D)How much utility a seller gets from producing a good.

Question 12

Graphically,as a consumer buys more of a good,the marginal utility line will

A)Increase as more goods are consumed.
B)Increase steadily and then decline.
C)Continuously decline if diminishing returns are present.
D)Follow the same shape as the total utility line.

Question 13

Sociopsychiatric explanations of consumer behavior include the

A)Desire for ego and status.
B)Level of income.
C)Level of wealth.
D)Prices of other goods.

Question 14

If a product has a high marginal utility,then

A)Consumers will not purchase any more of the good.
B)The demand curve will be downward-sloping.
C)A consumer is willing to pay a high price for it.
D)Consumers will also have a low total utility.

Question 15

The law of diminishing marginal utility suggests that

A)People are willing to buy additional quantities of a good only if its price falls.
B)People will substitute lower-priced goods for more expensive goods,ceteris paribus.
C)Price and quantity demanded are directly related.
D)As marginal utility decreases,the willingness to pay increases.

Question 16

Jose goes to an all-you-can-eat buffet at a Chinese restaurant and consumes three plates of food.He does not go back for a fourth plate of food because

A)The price of the fourth plate is too high.
B)He has reached the point of increasing marginal utility.
C)The marginal utility of the fourth plate would no longer be positive.
D)His total utility would increase with the fourth plate of food.

Question 17

Josh is eating pizza at his favorite Italian restaurant.Below is his utility from this consumption: Table 19.1
$\begin{array}{|l|c|c|}\hline{\text { Slice of Pizza }} & \text { Total Utility } & \text { Marginal Utility } \\\hline \text { First slice } & 20 & 20 \\\hline \text { Second slice } & 39 & 19 \\\hline \text { Third slice } & - & 15 \\\hline \text { Fourth slice } & 59 & - \\\hline\end{array}$ Refer to Table 19.1.For Josh,diminishing marginal utility begins

A)After the first slice of pizza.
B)After the third slice of pizza.
C)After the second slice of pizza.
D)To increase after the first slice of pizza.

Question 18

Economic explanations of consumer behavior take into consideration

A)Ego gratification.
B)Lack of self-confidence.
C)Social status.
D)Prices and income.

Question 19

Utility refers to the

A)Satisfaction obtained from a good or service.
B)Additional satisfaction obtained from one more unit of a good or service.
C)Willingness to buy specific quantities of a good or service at a particular price.
D)Decrease in satisfaction as more of a good or service is consumed.

Question 20

As more satisfaction is achieved from consuming a good with diminishing marginal utility,then total utility

A)Increases at a decreasing rate.
B)Decreases as long as marginal utility is negative.
C)Decreases as long as marginal utility is positive.
D)Is negative as long as marginal utility is decreasing.

Question 21

The total consumer surplus is shown on a graph as

A)The area under the demand curve and below the actual price.
B)The area under the demand curve and above the actual price.
C)The area above the demand curve and above the actual price.
D)The area above the demand curve and below the actual price.

Question 22

The four determinants of demand that are held constant when we consider a movement along a demand curve include all of the following except

A)Price.
B)Income.
C)Tastes.
D)Availability and price of substitute goods.

Question 23

Total utility is maximized when

A)Price is less than marginal utility.
B)Price is equal to marginal utility.
C)Marginal utility is zero.
D)Marginal utility is maximized.

Question 24

See Figure 19.1.Lu's consumer surplus is equal to

A)$100.
B)$200.
C)$300.
D)$500.

Question 25

Refer to Figure 19.1.The total consumer surplus in this market is equal to

A)$950.
B)$900.
C)$850.
D)$800.

Question 26

Consumer surplus measures

A)The difference between the maximum price a consumer is willing to pay and the price actually paid.
B)The difference between the minimum price a consumer is willing to pay and the price actually paid.
C)The difference between the amounts of a good a consumer is willing to pay,and how much of the good is available for sale.
D)The sum of all of the marginal utilities for that good

Question 27

Which of the following is not held constant when considering the demand for pizza?

A)Consumer incomes.
B)The price of pizza.
C)The price of spaghetti (a substitute).
D)Expectations of higher prices for pizzas.

Question 28

The law of diminishing marginal utility gives us a deeper understanding of the downward-sloping demand curve because

A)Consumers are willing to pay a higher price for a greater quantity.
B)Consumer tastes change due to advertising.
C)When marginal utility is high,we are willing to pay a higher price.
D)Consumers do not respond to a change in price.

Question 29

The ________ of the demand curve corresponds to the idea that the marginal utility for the first few goods is ________.

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

Question 30

If a good had a zero price (i.e. ,the good was free),a rational person would consume

A)An infinite amount of the good.
B)The good until total utility was zero.
C)The good until the marginal utility was maximized.
D)The good until the marginal utility of the last unit was zero.

Question 31

The ________ surplus will rise if the price of the good ________.

A)consumer;rises
B)consumer;falls
C)producer;falls
D)total;rises

Question 32

If marginal utility is negative,then

A)Total utility will increase with additional consumption.
B)Total utility will decrease with additional consumption.
C)The good or service being consumed is an inferior good.
D)Total utility is at a minimum.

Question 33

According to the law of demand,ceteris paribus,

A)The quantity demanded increases at lower prices.
B)A consumer will purchase more of a good at higher prices than at lower prices.
C)Price and quantity supplied are directly related.
D)The responsiveness of consumer demand to a change in the price of a good is measured by the price elasticity of demand.

Question 34

Evaluating a supply and a demand curve independently,if the equilibrium price rises,

A)The consumer surplus will fall.
B)The producer surplus will fall.
C)The consumer surplus will increase.
D)The producer surplus will increase.

Question 35

Most goods can yield

A)Only positive marginal utility.
B)Both positive and negative marginal utility.
C)Only negative marginal utility.
D)Only zero marginal utility.

Question 36

The market demand for a product is

A)The sum of all of the markets in the area.
B)The sum of all of the marginal utilities among consumers.
C)The total utility received for a good by all consumers in the market.
D)The sum of all of the individual demands for that product.

Question 37

Which of the following statements best captures the concept of consumer surplus?

A)"I saw a sale for flowers,so I bought four bundles."
B)"I was willing to pay $30 for a dozen roses,but I bought them for $20."
C)"I was willing to pay $30 for roses,but they are selling for $35,so I did not buy."
D)"I paid $35 for roses last week and just saw them for sale now at $25."

Question 38

Rosa is willing to pay $200 for the iPhone,but the actual price is $400.This means

A)Rosa will enjoy a consumer surplus of $200 if she buys the iPhone.
B)Rosa will not buy an iPhone.
C)Rosa will buy this product but will not receive any consumer surplus.
D)The iPhone is overpriced.

Question 39

Refer to Figure 19.1.Ben's consumer surplus is equal to

A)$50.
B)$100.
C)$200.
D)$0.

Question 40

The benefit that consumers get when they buy goods at the equilibrium price but were willing to pay more is called

A)Marginal utility.
B)The law of demand.
C)Consumer surplus.
D)Maximum price.

Question 41

Sellers can gain profits from price discrimination because

A)Charging different prices based on willingness to pay can increase revenues without increasing costs.
B)Total expenses are less with price discrimination.
C)Total revenues are maximized when all buyers pay the same price.
D)Different prices charged to different customers can lower total revenue.

Question 42

Car dealers can easily price discriminate because

A)Buyers do not know the car's price.
B)Sellers negotiate a separate price agreement with each individual buyer.
C)Each seller knows the price but the buyer does not.
D)Buyers get together to collectively negotiate a price.

Question 43

Suppose Caesar allocates his entire budget to the purchase of soft drinks and chips.The marginal utility of the last bottle of soft drink purchased is 12 utils,and each bottle costs $1.20.The marginal utility of the last bag of chips purchased is 8 utils,and each bag costs $1.In order to maximize his utility,Caesar should

A)Buy more soft drinks and fewer chips since he gets more marginal utility per dollar from soft drinks.
B)Buy more chips and fewer soft drinks because of the lower price for chips.
C)Buy more soft drinks and fewer chips because the soft drink has fewer calories.
D)Not change anything because he has made the choice that gives him the most total utility.

Question 44

A consumer maximizes total utility from a given amount of income when the

A)Marginal utility per dollar obtained from the last unit of each good is the same.
B)Marginal utility of the last unit of each good is the same.
C)Total utility obtained from each product is the same.
D)Amount spent for each product is the same.

Question 45

Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. Table 19.3
Michael's Utility Schedule
$\begin{array} { | c | r | c | c | c | c | } \hline \begin{array} { c } \text { Units of } \\\text { Cola }\end{array} & \text { TU of Cola } & \begin{array} { c } \text { MU of } \\\text { Cola }\end{array} & \begin{array} { c } \text { Units of } \\\text { Pretzels }\end{array} & \begin{array} { c } \text { TU of } \\\text { Pretzels }\end{array} & \begin{array} { c } \text { MU of } \\\text { Pretzels }\end{array} \\\hline 1 & 46 & 40 & 1 & 30 & 30 \\\hline 2 & & 32 & 2 & & 20 \\\hline 3 & 96 & 24 & 3 & 66 & 16 \\\hline 4 & 112 & & 4 & 78 & \\\hline 5 & 124 & & 5 & 84 & \\\hline\end{array}$ In Table 19.3,what is the total utility of two units of cola?

A)32.
B)40.
C)72.
D)96.

Question 46

Airline companies engage in price discrimination by

A)Charging unrestricted fares.
B)Giving a temporary price cut.
C)Charging higher prices to customers who must travel on short notice.
D)Engaging in price-fixing.

Question 47

Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. Table 19.3
Michael's Utility Schedule
$\begin{array} { | c | r | c | c | c | c | } \hline \begin{array} { c } \text { Units of } \\\text { Cola }\end{array} & \text { TU of Cola } & \begin{array} { c } \text { MU of } \\\text { Cola }\end{array} & \begin{array} { c } \text { Units of } \\\text { Pretzels }\end{array} & \begin{array} { c } \text { TU of } \\\text { Pretzels }\end{array} & \begin{array} { c } \text { MU of } \\\text { Pretzels }\end{array} \\\hline 1 & 46 & 40 & 1 & 30 & 30 \\\hline 2 & & 32 & 2 & & 20 \\\hline 3 & 96 & 24 & 3 & 66 & 16 \\\hline 4 & 112 & & 4 & 78 & \\\hline 5 & 124 & & 5 & 84 & \\\hline\end{array}$ In Table 19.3,what is the marginal utility of the fifth unit of cola?

A)6.
B)12.
C)16.
D)24.

Question 48

Table 19.2 $\begin{array}{c}\begin{array}{|c|}\hline\text { Quantity Consumed }\\\hline1 \\\hline 2 \\\hline 3 \\\hline 4\\\hline\end{array}\begin{array}{c|}\hline\text { Total Utility}\\\hline15\\\hline\\\hline30\\\hline\\\hline\end{array}\begin{array}{c|}\hline\text { Marginal Utility}\\\hline15\\\hline9\\\hline\\\hline3\\\hline\end{array}\end{array}$

In Table 19.2,the total utility when two units are consumed is

A)6.
B)9.
C)15.
D)24.

Question 49

When sellers price discriminate,

A)They are attempting to charge a price that is the maximum price each individual is willing to pay.
B)They are trying to pit one group of buyers against another.
C)They are trying to find a minimum price the individual is willing to pay.
D)They are taking an illegal action.

Question 50

Table 19.2 $\begin{array}{c}\begin{array}{|c|}\hline\text { Quantity Consumed }\\\hline1 \\\hline 2 \\\hline 3 \\\hline 4\\\hline\end{array}\begin{array}{c|}\hline\text { Total Utility}\\\hline15\\\hline\\\hline30\\\hline\\\hline\end{array}\begin{array}{c|}\hline\text { Marginal Utility}\\\hline15\\\hline9\\\hline\\\hline3\\\hline\end{array}\end{array}$

In Table 19.2,diminishing marginal utility occurs

A)With the second and fourth units only.
B)With the first and third units only.
C)Only with the second unit.
D)With all units after the first.

Question 51

Maximum utility is achieved when

A)Total revenue is the greatest.
B)The price elasticity of demand is 1.0.
C)Marginal utility is zero.
D)Total utility equals marginal utility.

Question 52

Price discrimination works best when

A)Sellers cannot meet collectively.
B)Buyers do not have perfect information about the price.
C)Buyers have information about prices charged to different customers.
D)A product is purchased frequently by consumers.

Question 53

Price discrimination occurs when

A)Minorities pay a higher price for a product than everyone else.
B)Sellers charge a higher price than is reasonable.
C)Sellers charge two separate prices for the same product to separate consumers.
D)Sellers charge one price to all consumers but not wholesalers.

Question 54

Price discrimination is ________ in the United States and ________ practiced.

A)legal;rarely
B)illegal;widely
C)legal;often
D)illegal;rarely

Question 55

Table 19.2 $\begin{array}{c}\begin{array}{|c|}\hline\text { Quantity Consumed }\\\hline1 \\\hline 2 \\\hline 3 \\\hline 4\\\hline\end{array}\begin{array}{c|}\hline\text { Total Utility}\\\hline15\\\hline\\\hline30\\\hline\\\hline\end{array}\begin{array}{c|}\hline\text { Marginal Utility}\\\hline15\\\hline9\\\hline\\\hline3\\\hline\end{array}\end{array}$

In Table 19.2,the total utility when four units are consumed is

A)33.
B)30.
C)6.
D)3.

Question 56

Price discrimination

A)Is illegal.
B)Rarely occurs in the airline industry.
C)Is a way for sellers to elicit the maximum willingness to pay from buyers.
D)Is a method used by sellers to pit one buyer against the other.

Question 57

Assume Amanda always maximizes her total utility given her budget constraint.Every morning for breakfast she has two eggs and three sausages.If the marginal utility of the last egg is 10 utils and the price of eggs is $1 each,what can we say about the marginal utility of the last sausage if the price of each sausage is $2?

A)It must be equal to 20 utils.
B)It must be equal to 10 utils.
C)It must be equal to 5 utils.
D)It must be equal to 1 utils.

Question 58

Which industry here is unlikely to exhibit price discrimination?

A)Airlines.
B)New cars.
C)Supermarkets.
D)Colleges.

Question 59

Table 19.2 $\begin{array}{c}\begin{array}{|c|}\hline\text { Quantity Consumed }\\\hline1 \\\hline 2 \\\hline 3 \\\hline 4\\\hline\end{array}\begin{array}{c|}\hline\text { Total Utility}\\\hline15\\\hline\\\hline30\\\hline\\\hline\end{array}\begin{array}{c|}\hline\text { Marginal Utility}\\\hline15\\\hline9\\\hline\\\hline3\\\hline\end{array}\end{array}$
In Table 19.2,the marginal utility of the third unit is

A)3.
B)5.
C)6.
D)30.

Question 60

Which of these examples is an example of price discrimination?

A)Goods are marked down on sale.
B)Wholesale prices differ from retail prices.
C)Seniors pay one price at the movie theater and adults pay more.
D)Cereal manufacturers put discount coupons inside their cereal boxes.

Question 61

Refer to Figure 19.2.The total utility of two apples is

A)2 utils.
B)5 utils.
C)6 utils.
D)11 utils.

Question 62

Refer to Figure 19.2.The total utility of five apples is

A)1 utils.
B)17 utils.
C)18 utils.
D)20 utils.

Question 63

Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. Table 19.3
Michael's Utility Schedule
$\begin{array} { | c | r | c | c | c | c | } \hline \begin{array} { c } \text { Units of } \\\text { Cola }\end{array} & \text { TU of Cola } & \begin{array} { c } \text { MU of } \\\text { Cola }\end{array} & \begin{array} { c } \text { Units of } \\\text { Pretzels }\end{array} & \begin{array} { c } \text { TU of } \\\text { Pretzels }\end{array} & \begin{array} { c } \text { MU of } \\\text { Pretzels }\end{array} \\\hline 1 & 46 & 40 & 1 & 30 & 30 \\\hline 2 & & 32 & 2 & & 20 \\\hline 3 & 96 & 24 & 3 & 66 & 16 \\\hline 4 & 112 & & 4 & 78 & \\\hline 5 & 124 & & 5 & 84 & \\\hline\end{array}$ Refer to Table 19.3.If Michael has $28 dollars to spend,why will three colas and four pretzels not be optimal?

A)This combination has less total utility.
B)This combination is affordable but does not maximize utility.
C)This combination is not affordable.
D)This combination has less marginal utility per dollar.

Question 64

The In the News article titled "Men vs.Women: How They Spend" differentiates the spending habits of women and men: "Men spend almost twice as much as women do on electronic equipment … young women spend twice as much money on clothing,personal care items,and their pets." Which determinant of demand is most likely involved?

A)Income.
B)Tastes.
C)Expectations.
D)Other goods (availability and prices).

Question 65

An indifference curve shows the

A)Maximum utility that can be achieved for a given consumer budget.
B)Maximum utility that can be achieved for different amounts of a good.
C)Combinations of goods giving equal utility to a consumer.
D)Optimal consumption combinations between two goods.

Question 66

All of the possible combinations of two goods that lie on one indifference curve

A)Give the consumer the highest possible utility.
B)Yield the same level of utility.
C)Are affordable.
D)Yield the same level of marginal utility.

Question 67

In the article "Men vs.Women: How They Spend,"

A)Both sexes spend more than they earn.
B)Both sexes make the same annual income.
C)Both sexes spend the same amount of money on clothing purchases.
D)Women earn more than men.

Question 68

Refer to Figure 19.2.With no budget constraint,a rational consumer will consume

A)0 apples.
B)1 apple.
C)6 apples.
D)an infinite number of apples.

Question 69

Refer to Figure 19.2.Diminishing marginal utility begins after

A)The fourth apple.
B)The fifth apple.
C)The third apple.
D)The first apple.

Question 70

A successful advertising campaign will

A)Increase the demand for the advertised good.
B)Increase the absolute value of the price elasticity of demand for the advertised good.
C)Cause the quantity supplied of the advertised good to increase.
D)Reduce the perceived utility of the good.

Question 71

If advertising is successful,

A)The demand becomes more elastic.
B)The demand curve shifts to the left.
C)The demand curve shifts to the right and becomes steeper.
D)The demand curve shifts to the left,and demand becomes more price-elastic.

Question 72

Refer to Figure 19.2.Total utility is maximized at

A)6 apples.
B)7 apples.
C)1 apple.
D)3 apples.

Question 73

Marginal utility is the

A)Change in total utility obtained by spending one extra dollar on a good or service.
B)Change in total utility obtained by consuming one extra unit of a good or service.
C)Change in total utility obtained by selling one extra unit of a good or service.
D)Utility received from consuming the optimal combination of goods and services.

Question 74

Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. Table 19.3
Michael's Utility Schedule
$\begin{array} { | c | r | c | c | c | c | } \hline \begin{array} { c } \text { Units of } \\\text { Cola }\end{array} & \text { TU of Cola } & \begin{array} { c } \text { MU of } \\\text { Cola }\end{array} & \begin{array} { c } \text { Units of } \\\text { Pretzels }\end{array} & \begin{array} { c } \text { TU of } \\\text { Pretzels }\end{array} & \begin{array} { c } \text { MU of } \\\text { Pretzels }\end{array} \\\hline 1 & 40 & 40 & 1 & 30 & 30 \\\hline 2 & & 32 & 2 & & 20 \\\hline 3 & 96 & 24 & 3 & 66 & 16 \\\hline 4 & 112 & & 4 & 78 & \\\hline 5 & 124 & & 5 & 84 & \\\hline\end{array}$ Refer to Table 19.3.If Michael has $48 to spend on cola and pretzels,what combination should he purchase in order to maximize his utility?

A)Four colas and four pretzels.
B)Five colas and two pretzels.
C)Three colas and five pretzels.
D)Five colas and five pretzels.

Question 75

When choosing among products,consumers look at

A)The marginal utility per dollar and their budget constraint.
B)The total utility that will be gained at the end of all consumption.
C)Only their budget.
D)The marginal utility of the good.

Question 76

Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. Table 19.3
Michael's Utility Schedule
$\begin{array} { | c | r | c | c | c | c | } \hline \begin{array} { c } \text { Units of } \\\text { Cola }\end{array} & \text { TU of Cola } & \begin{array} { c } \text { MU of } \\\text { Cola }\end{array} & \begin{array} { c } \text { Units of } \\\text { Pretzels }\end{array} & \begin{array} { c } \text { TU of } \\\text { Pretzels }\end{array} & \begin{array} { c } \text { MU of } \\\text { Pretzels }\end{array} \\\hline 1 & 40& 40 & 1 & 30 & 30 \\\hline 2 & & 32 & 2 & & 20 \\\hline 3 & 96 & 24 & 3 & 66 & 16 \\\hline 4 & 112 & & 4 & 78 & \\\hline 5 & 124 & & 5 & 84 & \\\hline\end{array}$ Refer to Table 19.3.If Michael has $40 to spend on cola and pretzels,what is his maximum utility possible?

A)40.
B)174.
C)190.
D)208.

Question 77

Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. Table 19.3
Michael's Utility Schedule
$\begin{array} { | c | r | c | c | c | c | } \hline \begin{array} { c } \text { Units of } \\\text { Cola }\end{array} & \text { TU of Cola } & \begin{array} { c } \text { MU of } \\\text { Cola }\end{array} & \begin{array} { c } \text { Units of } \\\text { Pretzels }\end{array} & \begin{array} { c } \text { TU of } \\\text { Pretzels }\end{array} & \begin{array} { c } \text { MU of } \\\text { Pretzels }\end{array} \\\hline 1 & 46 & 40 & 1 & 30 & 30 \\\hline 2 & & 32 & 2 & & 20 \\\hline 3 & 96 & 24 & 3 & 66 & 16 \\\hline 4 & 112 & & 4 & 78 & \\\hline 5 & 124 & & 5 & 84 & \\\hline\end{array}$ Refer to Table 19.3.Suppose Michael has $28 to spend on cola and pretzels.What combination should he purchase in order to maximize his utility?

A)Three colas and four pretzels.
B)One cola and five pretzels.
C)Three colas and one pretzel.
D)Two colas and three pretzels.

Question 78

Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. Table 19.3
Michael's Utility Schedule
$\begin{array} { | c | r | c | c | c | c | } \hline \begin{array} { c } \text { Units of } \\\text { Cola }\end{array} & \text { TU of Cola } & \begin{array} { c } \text { MU of } \\\text { Cola }\end{array} & \begin{array} { c } \text { Units of } \\\text { Pretzels }\end{array} & \begin{array} { c } \text { TU of } \\\text { Pretzels }\end{array} & \begin{array} { c } \text { MU of } \\\text { Pretzels }\end{array} \\\hline 1 & 46 & 40 & 1 & 30 & 30 \\\hline 2 & & 32 & 2 & & 20 \\\hline 3 & 96 & 24 & 3 & 66 & 16 \\\hline 4 & 112 & & 4 & 78 & \\\hline 5 & 124 & & 5 & 84 & \\\hline\end{array}$ In Table 19.3 the marginal utility per dollar of the second cola is

A)10.
B)6.
C)4.
D)12.

Question 79

An indifference map shows

A)A set of indifference curves.
B)One indifference curve.
C)A set of indifference curves and a set of budget constraints.
D)A set of budget constraints and one indifference curve.

Question 80

Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. Table 19.3
Michael's Utility Schedule
$\begin{array} { | c | r | c | c | c | c | } \hline \begin{array} { c } \text { Units of } \\\text { Cola }\end{array} & \text { TU of Cola } & \begin{array} { c } \text { MU of } \\\text { Cola }\end{array} & \begin{array} { c } \text { Units of } \\\text { Pretzels }\end{array} & \begin{array} { c } \text { TU of } \\\text { Pretzels }\end{array} & \begin{array} { c } \text { MU of } \\\text { Pretzels }\end{array} \\\hline 1 & 46 & 40 & 1 & 30 & 30 \\\hline 2 & & 32 & 2 & & 20 \\\hline 3 & 96 & 24 & 3 & 66 & 16 \\\hline 4 & 112 & & 4 & 78 & \\\hline 5 & 124 & & 5 & 84 & \\\hline\end{array}$ The marginal utility per dollar of the third pretzel is

A)4.
B)5.
C)6.
D)12.