Deck 7: Consumer Choice and Elasticity

Question 1

As a consumer consumes more and more of a product in a particular time period,eventually marginal utility

A)rises.
B)is constant.
C)declines.
D)fluctuates.

Answer 1

declines.

Question 2

If,as a person consumes more and more of a good,each additional unit adds less satisfaction than the previous unit consumed,we are seeing the workings of

A)the law of demand.
B)the law of supply.
C)the law of increasing marginal opportunity cost.
D)the law of diminishing marginal utility.

Answer 2

the law of diminishing marginal utility.

Question 3

The law of diminishing marginal utility states that

A)eventually total utility falls as more of a good is consumed, other things constant.
B)the extra satisfaction from consuming a good decreases as more of a good is consumed, other things constant.
C)the extra satisfaction from consuming a good increases slowly as more of a good is consumed, other things constant.
D)when the extra satisfaction from consuming a good becomes negative, total utility starts falling, other things constant.

Answer 3

the extra satisfaction from consuming a good decreases as more of a good is consumed, other things constant.

Question 4

If your total satisfaction increases when you consume another unit,your marginal utility must be

A)increasing.
B)decreasing.
C)negative.
D)positive.

Question 5

If a consumer receives 20 units of utility from consuming two candy bars,and 25 units of utility from consuming three candy bars,the marginal utility of the third candy bar is

A)25 utility units.
B)20 utility units.
C)5 utility units.
D)unknown as more information is needed to determine the answer.

Question 6

Total utility

A)cannot decrease as a person consumes more and more of a good.
B)has a constant rate of increase as a person consumes more and more of a good.
C)is equal to the sum of the marginal utilities of all units consumed.
D)is negative when marginal utility is declining.

Question 7

Consumers have to make tradeoffs in deciding what to consume because

A)not all goods give them the same amount of satisfaction.
B)the prices of goods vary.
C)they are limited by a budget constraint.
D)there are not enough of all goods produced.

Question 8

Utility is

A)easily measured in units called utils.
B)subjective and difficult to measure.
C)the consumption of a quasi-public good like electricity or natural gas.
D)the production of a quasi-public good like electricity or natural gas.

Question 9

Suppose your marginal utility from consuming the 3rd slice of cake is zero,then your total utility from consuming cake is

A)maximized.
B)decreasing.
C)negative.
D)increasing.

Question 10

Consumers maximize total utility within their budget constraint by

A)buying the cheapest goods they can find.
B)buying whatever they like the best.
C)buying the goods with the largest marginal utility per dollar spent.
D)spending the same dollar amount for each good.

Question 11

Marginal utility is the

A)total satisfaction received from consuming a given number of units of a product.
B)average satisfaction received from consuming a product.
C)extra satisfaction received from consuming one more unit of a product.
D)satisfaction achieved when a consumer has had enough of a product.

Question 12

If a consumer always buys goods rationally,then

A)the total utilities of the different goods consumed will be equal.
B)the average utilities of the different goods consumed will be equal.
C)the marginal utility per dollar spent on all goods will be equal.
D)the marginal utility of the different goods consumed will be equal.

Question 13

If a consumer receives 22 units of marginal utility for consuming the first can of soda,20 units from consuming the second,and 15 from the third,the total utility of consuming the three units is

A)57 utility units.
B)35 utility units.
C)15 utility units.
D)unknown as more information is needed to determine the answer.

Question 14

If a consumer receives 20 units of utility from consuming two candy bars,and 25 units of utility from consuming three candy bars,the marginal utility of the second candy bar is

A)25 utility units.
B)20 utility units.
C)5 utility units.
D)unknown as more information is needed to determine the answer.

Question 15

An item has utility for a consumer if it

A)is scarce.
B)has a high price.
C)is something everyone else wants.
D)generates enjoyment or satisfaction.

Question 16

Economists assume that the goal of consumers is to

A)do as little work as possible to survive.
B)make themselves as well off as possible.
C)expend all their income.
D)consume as much as possible.

Question 17

Marginal utility can be

A)negative.
B)zero.
C)positive.
D)positive, negative or zero.

Question 18

Which of the following is likely to occur as the result of the law of diminishing marginal utility?

A)Petra's utility from her second apple was less than her satisfaction from her first orange.
B)Hudson enjoyed his second slice of pizza more than his first.
C)Sabine's utility from her first granola bar is greater than Rachel's utility from her second granola bar.
D)Wesley enjoyed his second bottle of iced tea less than his first bottle, other things constant.

Question 19

If,when you consume another piece of candy,your marginal utility is zero,then

A)you want more candy.
B)you have maximized your total utility from consuming candy.
C)you have not yet reached the point of diminishing marginal utility.
D)you should consume less candy.

Question 20

If total utility increases at a decreasing rate as a consumer consumes more coffee,then marginal utility must

A)remains constant.
B)increase also.
C)decrease.
D)be negative.

Question 21

Table 7-1
$$\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Pita Wraps }\end{array} & \text { Total Utility } & \begin{array} { c } \text { Quantity of } \\\text { Bubble Tea }\end{array} & \text { Total Utility } \\\hline 1 & 60 & 1 & 40 \\\hline 2 & 102 & 2 & 70 \\\hline 3 & 132 & 3 & 91 \\\hline 4 & 144 & 4 & 106 \\\hline 5 & 144 & 5 & 112 \\\hline 6 & 138 & 6 & 115 \\\hline 7 & 128 & 7 & 115 \\\hline\end{array}$$
Keegan has $30 to spend on Pita Wraps and Bubble Tea.The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. Table 7-1 shows his total utility from different quantities of the two items.

-Refer to Table 7-1.If Keegan can drink all the bubble tea he wants for free,how many glasses will he consume?

A)4 glasses
B)5 glasses
C)6 glasses
D)7 glasses

Question 22

Economists usually assume that people act in a rational,self-interested way.In explaining how consumers make choices this means that economists believe

A)consumers will always buy goods and services at the lowest possible prices.
B)consumers spend their incomes to order to accumulate the most goods and services.
C)consumers make choices that will leave them as satisfied as possible given their incomes, tastes and the prices of goods and services available to them.
D)consumers will spend their incomes and time on activities that benefit themselves as much as possible, without regard to the welfare of others.

Question 23

The economic model of consumer behavior predicts that

A)consumers will try to earn as much income as they can over their lifetimes.
B)consumers will choose to buy the combination of goods and services that make them as well off as possible from those combinations that their budgets allow them to buy.
C)consumers will try to accumulate as many goods and services as they can before they die.
D)consumers divide their time between consumption and leisure activities in order to maximize social welfare.

Question 24

Table 7-2
$$\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Soup (cups) }\end{array} & \text { Total Utility } & \begin{array} { c } \text { Quantity of } \\\text { Sandwiches }\end{array} & \text { Total Utility } \\\hline 1 & 40 & 1 & 45 \\\hline 2 & 60 & 2 & 75 \\\hline 3 & 72 & 3 & 102 \\\hline 4 & 82 & 4 & 120 \\\hline 5 & 88 & 5 & 135 \\\hline 6 & 90 & 6 & 145 \\\hline\end{array}$$
Table 7-2 above shows Keira's utility from soup and sandwiches.The price of soup is $2 per cup and the price of a sandwich is $3.Keira has $18 to spend on these two goods.

-Refer to Table 7-2.Holding prices constant,when Keira's income changed from $18 to $23,what happens to her total utility and to the marginal utilities of the last cup of soup and the last sandwich purchased?

A)Her total utility increases but the marginal utilities of the last cup of soup and the last sandwich consumed decrease.
B)Her total utility, the marginal utility of the last cup of soup consumed and the marginal utility of the last sandwich consumed, all increase.
C)Her total utility decreases but the marginal utilities of the last cup of soup and the last sandwich consumed increase.
D)Her total utility and the marginal utility of the last cup of soup consumed increase but marginal utility of the last sandwich consumed decreases.
E)Her total utility and the marginal utility of the last sandwich consumed increase but marginal utility of the last cup of soup consumed decreases.

Question 25

Avner is maximizing total utility by buying sports magazines and protein supplements.For him to buy more sports magazines

A)the price of protein supplements has to fall.
B)the price of sports magazines has to fall.
C)the price of sports magazines has to rise.
D)Since Avner is maximizing his utility, nothing can change the consumption of sports magazines.

Question 26

Table 7-1
$$\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Pita Wraps }\end{array} & \text { Total Utility } & \begin{array} { c } \text { Quantity of } \\\text { Bubble Tea }\end{array} & \text { Total Utility } \\\hline 1 & 60 & 1 & 40 \\\hline 2 & 102 & 2 & 70 \\\hline 3 & 132 & 3 & 91 \\\hline 4 & 144 & 4 & 106 \\\hline 5 & 144 & 5 & 112 \\\hline 6 & 138 & 6 & 115 \\\hline 7 & 128 & 7 & 115 \\\hline\end{array}$$
Keegan has $30 to spend on Pita Wraps and Bubble Tea.The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. Table 7-1 shows his total utility from different quantities of the two items.

-Refer to Table 7-1.What is Keegan's optimal consumption bundle?

A)3 pita wraps and 3 bubble teas
B)3 pita wraps and 4 bubble teas
C)4 pita wraps and 2 bubble teas
D)5 pita wraps and 0 bubble teas

Question 27

Table 7-2
$$\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Soup (cups) }\end{array} & \text { Total Utility } & \begin{array} { c } \text { Quantity of } \\\text { Sandwiches }\end{array} & \text { Total Utility } \\\hline 1 & 40 & 1 & 45 \\\hline 2 & 60 & 2 & 75 \\\hline 3 & 72 & 3 & 102 \\\hline 4 & 82 & 4 & 120 \\\hline 5 & 88 & 5 & 135 \\\hline 6 & 90 & 6 & 145 \\\hline\end{array}$$
Table 7-2 above shows Keira's utility from soup and sandwiches.The price of soup is $2 per cup and the price of a sandwich is $3.Keira has $18 to spend on these two goods.

-Refer to Table 7-2.Holding prices constant,when Keira's income changed from $18 to $23,her utility maximizing bundle changed.Based on your answers to her optimal choices at the two income levels,what type of goods are soup and sandwiches?

A)Soup is an inferior good and sandwiches are a normal good.
B)Soup is a normal good and sandwiches are an inferior good.
C)Both soup and sandwiches are normal goods.
D)Both soup and sandwiches are inferior goods.

Question 28

Table 7-2
$$\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Soup (cups) }\end{array} & \text { Total Utility } & \begin{array} { c } \text { Quantity of } \\\text { Sandwiches }\end{array} & \text { Total Utility } \\\hline 1 & 40 & 1 & 45 \\\hline 2 & 60 & 2 & 75 \\\hline 3 & 72 & 3 & 102 \\\hline 4 & 82 & 4 & 120 \\\hline 5 & 88 & 5 & 135 \\\hline 6 & 90 & 6 & 145 \\\hline\end{array}$$
Table 7-2 above shows Keira's utility from soup and sandwiches.The price of soup is $2 per cup and the price of a sandwich is $3.Keira has $18 to spend on these two goods.

-Refer to Table 7-2.What is Keira's marginal utility per dollar spent on the third cup of soup?

A)72 units of utility
B)36 units of utility
C)12 units of utility
D)6 units of utility

Question 29

If Valerie purchases ankle socks at $5 and gets 25 units of marginal utility from the last unit,and bandanas at $3 and gets 12 units of marginal utility from the last bandana purchased,she

A)is maximizing total utility and does not want to change their consumption of ankle socks or bandanas.
B)wants to consume more ankle socks and fewer bandanas.
C)wants to consume more of bandanas and fewer ankle socks.
D)wants to consume less of both ankle sock and bandanas.

Question 30

If Callum is consuming his utility maximizing bundle and the price of one good rises,what happens to the marginal utility per dollar spent on this good (MU/P),and what should Callum do?

A)MU/P has increased and Callum should buy more of this good.
B)MU/P has increased and Callum should buy less of this good.
C)MU/P has decreased and Callum should buy more of this good.
D)MU/P has decreased and Callum should buy less of this good.

Question 31

Carolyn spends her income on popular magazines and music CDs.If the price of a CD is four times the price of a magazine and if Carolyn is maximizing her utility,she buys

A)both goods until the marginal utility of the last CD purchased is four times the marginal utility of the last magazine purchased.
B)both goods until the marginal utility of the last magazine purchased is four times the marginal utility of the last CD purchased.
C)four times as much magazines as CDs.
D)four times as much CDs as magazines.

Question 32

Table 7-2
$$\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Soup (cups) }\end{array} & \text { Total Utility } & \begin{array} { c } \text { Quantity of } \\\text { Sandwiches }\end{array} & \text { Total Utility } \\\hline 1 & 40 & 1 & 45 \\\hline 2 & 60 & 2 & 75 \\\hline 3 & 72 & 3 & 102 \\\hline 4 & 82 & 4 & 120 \\\hline 5 & 88 & 5 & 135 \\\hline 6 & 90 & 6 & 145 \\\hline\end{array}$$
Table 7-2 above shows Keira's utility from soup and sandwiches.The price of soup is $2 per cup and the price of a sandwich is $3.Keira has $18 to spend on these two goods.

-Refer to Table 7-2.Suppose Keira's income increases from $18 to $23 but prices have not changed.What is her utility maximizing bundle now?

A)6 cups of soup and 5 sandwiches
B)4 cups of soup and 5 sandwiches
C)5 cups of soup and 4 sandwiches
D)5 cups of soup and 5 sandwiches

Question 33

An economist observes two consumers in a supermarket.One of the consumers buys a case of Coca-Cola and the other buys a case of Pepsi-Cola.Both colas sell for the same price and the ages and incomes of the consumers are also the same.Based on this information,how would the economist explain the consumers' choices?

A)One of the consumers made the wrong choice, but it is impossible to say which one.
B)Both consumers should have considered buying other colas that had lower prices.
C)Both consumers should have purchased less than a case because they would be able to buy more later.
D)Apparently, the consumers had different tastes.

Question 34

If Marlowe obtains 9 units of utility per dollar spent on apples and 6 units of utility per dollar spent on oranges,then Marlowe

A)is maximizing total utility.
B)should buy more apples and fewer oranges.
C)should buy more oranges and fewer apples.
D)should buy fewer oranges and fewer apples.

Question 35

Table 7-2
$$\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Soup (cups) }\end{array} & \text { Total Utility } & \begin{array} { c } \text { Quantity of } \\\text { Sandwiches }\end{array} & \text { Total Utility } \\\hline 1 & 40 & 1 & 45 \\\hline 2 & 60 & 2 & 75 \\\hline 3 & 72 & 3 & 102 \\\hline 4 & 82 & 4 & 120 \\\hline 5 & 88 & 5 & 135 \\\hline 6 & 90 & 6 & 145 \\\hline\end{array}$$
Table 7-2 above shows Keira's utility from soup and sandwiches.The price of soup is $2 per cup and the price of a sandwich is $3.Keira has $18 to spend on these two goods.

-Refer to Table 7-2.If Keira maximizes her utility,how many units of each good should she buy?

A)1 cup of soup and 5 sandwiches
B)3 cups of soup and 4 sandwiches
C)6 cups of soup and 2 sandwiches
D)4 cups of soup and 3.5 sandwiches

Question 36

Suppose Joe is maximizing total utility within his budget constraint.If the price of the last pair of jeans purchased is $25 and it yields 100 units of extra satisfaction and the price of the last shirt purchased is $20,then,using the rule of equal marginal utility per dollar spent,the extra satisfaction received from the last shirt must be

A)2,000 units of utility.
B)500 units of utility.
C)100 units of utility.
D)80 units of utility.

Question 37

Most people would prefer to drive a luxury car that has all the options,but more people buy less expensive cars even though they could afford the luxury car because

A)car buyers are irrational.
B)the total utility of less expensive cars is greater than that of luxury cars.
C)the marginal utility per dollar spent on the less expensive car is higher than that spent on luxury cars.
D)luxury cars cost a lot more than non-luxury cars.

Question 38

Adhira buys chocolates and almonds.She has 3 bars of chocolates and 4 bags of almonds.The marginal utility of the third chocolate bar is 18 units of utility and the marginal utility from the fourth bag of almonds is also 18.Is Adhira maximizing her utility?

A)Yes, the marginal utility from the last unit of each good is equal.
B)No, she must buy 1 more chocolate bar to equate her quantities of the two goods.
C)No, she must buy cut back to 3 bags of almonds to equate her quantities of the two goods.
D)No, without information on her income and the prices of the two goods, we cannot answer the question.

Question 39

The satisfaction a person receives from consuming goods and services is called

A)contentment.
B)psychic income.
C)wealth.
D)utility.

Question 40

If Ewan is consuming his utility maximizing bundle and the price of one good falls,what happens to the marginal utility per dollar spent on this good (MU/P),and what should Ewan do?

A)MU/P has increased and Ewan should buy more of this good.
B)MU/P has increased and Ewan should buy less of this good.
C)MU/P has decreased and Ewan should buy more of this good.
D)MU/P has decreased and Ewan should buy less of this good.

Question 41

Table 7-3
$$\begin{array} { | c | c | c | } \hline & \text { Ice Cream Cones } & \text { Lime Fizz Soda } \\\hline \text { Quantity } & \boldsymbol { M U } & \boldsymbol { M U } \\\hline 1 & 30 & 40 \\\hline 2 & 25 & 35 \\\hline 3 & 20 & 26 \\\hline 4 & 15 & 18 \\\hline 5 & 10 & 15 \\\hline 6 & 5 & 7 \\\hline\end{array}$$

-Refer to Table 7-3.The table above shows Lee's marginal utility from consuming ice cream cones and cans of Lime Fizz Soda.Select the phrase that completes the following statement."We can determine the number of ice cream cones and cans of Lime Fizz Soda Lee should consume to maximize his utility

A)if we know what Lee's income is."
B)if we know what Lee's income is and the price of an ice cream cone and the price of a can Lime Fizz Soda."
C)by adding up the marginal utilities for ice cream cones and Lime Fizz Soda."
D)if we know the values of the marginal utility per dollar for ice cream cones and Lime Fizz Soda."

Question 42

Which of the following is explained by the law of diminishing marginal utility?

A)The marginal utility of Isabel's second bottle of Coca-Cola is greater than the marginal utility of her third bottle of Coca-Cola.
B)The marginal utility of Isabel's second bottle of Coca-Cola is greater than the marginal utility of her third pretzel.
C)The marginal utility of Isabel's second bottle of Coca-Cola is greater than the marginal utility of her friend Margie's third pretzel.
D)The total utility of one bottle of Coca-Cola is greater than the total utility of two bottles of Coca-Cola.

Question 43

If marginal utility of apples is diminishing and is a positive amount,consuming one more apple will cause

A)total utility to decrease.
B)a consumer to get no satisfaction from consuming apples.
C)a consumer's total utility to increase.
D)a consumer to go beyond her optimal consumption of apples.

Question 44

A budget constraint

A)represents the bundles of consumption that make a consumer equally happy.
B)refers to the limited amount of income available to consumers to spend on good and services.
C)reflects the desire by consumers to increase their income.
D)shows the prices that a consumer chooses to pay for products he consumes.

Question 45

Optimal decisions are made

A)in the marketplace.
B)if information about prices and marginal utilities is known.
C)when marginal utility is minimized.
D)at the margin.

Question 46

If the marginal utility Ida Mae receives from eating chicken wings is negative then

A)her total utility from eating chicken wings has fallen.
B)her total utility from eating chicken wings is negative as well.
C)Ida Mae definitely does not like chicken wings.
D)her total utility has risen, but by less from the last chicken wing than from the next to last chicken wing.

Question 47

Suppose the marginal utilities for the first three cans of soda are 100,80 and 60,respectively.The total utility received from consuming 2 cans is

A)20.
B)80.
C)90.
D)180.

Question 48

The word "util" has been used by economists in the past as an objective measure of utility.Today economists believe that

A)utility cannot be measured objectively.
B)utility can be measured objectively because people can use prices of different goods to measure utility.
C)all of the important conclusions of the economic model of consumer behavior depend on utility being measured objectively.
D)the util truly is an objective, rather than a subjective, measure of utility.

Question 49

Marginal utility is

A)the change in total utility divided by the price of the last unit of a good or service consumed.
B)the change in total utility a person receives from consuming an additional unit of a good or service.
C)the utility from consuming a given quantity of a good or service.
D)the decrease in total utility from consuming more and more units of a good or service.

Question 50

The restriction that a consumer's total expenditure on goods and services purchased cannot exceed the income available is referred to as

A)maximizing behavior.
B)economizing behavior.
C)the price constraint.
D)the budget constraint.

Question 51

Table 7-3
$$\begin{array} { | c | c | c | } \hline & \text { Ice Cream Cones } & \text { Lime Fizz Soda } \\\hline \text { Quantity } & \boldsymbol { M U } & \boldsymbol { M U } \\\hline 1 & 30 & 40 \\\hline 2 & 25 & 35 \\\hline 3 & 20 & 26 \\\hline 4 & 15 & 18 \\\hline 5 & 10 & 15 \\\hline 6 & 5 & 7 \\\hline\end{array}$$

-Refer to Table 7-3.The table above shows Lee's marginal utility per dollar from consuming ice cream cones and cans of Lime Fizz Soda.The price of an ice cream cone is $2 and the price of Lime Fizz Soda is $1.Use this information to select the correct statement.

A)We cannot determine how many ice cream cones and cans of Lime Fizz Soda Lee will consume without knowing what his income is.
B)To maximize his utility Lee should consume 1 ice cream cone and 5 cans of Lime Fizz Soda.
C)We cannot determine how many ice cream cones and cans of Lime Fizz Soda will maximize Lee's utility because we are given only the marginal utility per dollar values.We also need to know the marginal utility for each quantity.
D)If Lee has an unlimited budget he will maximize his utility by buying only Lime Fizz Soda.

Question 52

Total utility is maximized in the consumption of two goods by

A)equating the marginal utility for each good consumed.
B)equating the marginal utility per dollar for each good consumed.
C)equating the total utility of each good divided by its price.
D)maximizing expenditure on each good.

Question 53

In making decisions about what to consume,a person's goal is to

A)allocate her limited income among all the products she wishes to buy so that she receives the highest total utility.
B)buy low-priced goods rather than high-priced goods.
C)maximize her marginal utility from the goods and services she wishes to buy using her limited income.
D)consume as many necessities as possible and then, if there is money left over, to buy luxuries.

Question 54

If Paul decides to buy a $60 ticket to a Cirque du Soleil show rather than a $45 ticket for a Blue Man Group performance,we can conclude that

A)the marginal utility per dollar spent on Cirque du Soleil is lower than the marginal utility per dollar spent on Blue Man Group.
B)Paul's demand for a ticket to see Cirque du Soleil is more elastic than his demand for a ticket to see Blue Man Group.
C)Paul is not making a rational choice.
D)the marginal utility per dollar spent on Cirque du Soleil is higher than the marginal utility per dollar spent on Blue Man Group.

Question 55

During a study session for an economics exam with three other students,Peter Daltry commented on an example of a consumer who had to decide the on number of slices of pizza and cups of Coca-Cola he would consume.Peter explained that "To maximize his utility this consumer must equate the marginal utility per dollar for pizza and Coca-Cola." Was Peter's analysis correct?

A)Peter described one of the conditions necessary for utility maximization.The consumer also must equate the marginal utility of pizza and the marginal utility of cups of Coca-Cola.
B)Peter's statement is correct.
C)Peter's statement is correct but we must also assume that the consumer is rational.
D)Peter describes one of the conditions necessary for utility maximization.The second condition is that total spending on both goods must equal the amount available to be spent.

Question 56

The additional utility that George receives from consuming one more slice of pizza is called

A)average utility.
B)marginal utility.
C)total utility.
D)diminishing utility.

Question 57

If Joey Kobayashi experiences diminishing marginal utility from eating hot dogs then

A)his total utility from eating hot dogs is negative.
B)the marginal utility from the next hot dog Joey eats will be negative.
C)the additional satisfaction he receives from eating another hot dog will be less then the satisfaction he received from his eating his last hot dog.
D)Joey is maximizing the marginal utility per dollar he receives from eating hot dogs.

Question 58

Marv Pilson has $50 worth of groceries in a shopping cart at his local Shop 'n Save.Assume that the marginal utility per dollar of the liter bottles of soft drink in Marv's cart equals 50.The marginal utility per dollar of the boxes of cereal in Marv's cart equals 20.Marv has only $50 to spend,but has not yet paid for his groceries.How can Marv increase his total utility without spending more than $50?

A)Marv should substitute his favorite soft drink or the cereal in his cart for generic brands that have lower prices.
B)Marv should buy more boxes of cereal and fewer bottles of soft drink.
C)Marv should buy fewer boxes of cereal and more bottles of soft drink.
D)Marv should buy fewer boxes of cereal and fewer bottles of soft drink.He can then spend more on other items.

Question 59

The amount of income a consumer has to spend on goods and services is known as

A)purchasing power.
B)effective demand.
C)a budget constraint.
D)wealth.

Question 60

Table 7-4
$$\begin{array} { | c | c | c | c | c | } \hline & \text { Steak \& Cheese } & \text { Steak \& Cheese } & \text { Grilled Chicken } & \text { Grilled Chicken } \\\hline \text { Quantity } & \boldsymbol { M U } & \boldsymbol { M U / \boldsymbol { P } } & \boldsymbol { M U } & \boldsymbol { M U / P } \\\hline 1 & 40 & 10 & 30 & 15 \\\hline 2 & 32 & 8 & 24 & 12 \\\hline 3 & 20 & 5 & 16 & 8 \\\hline 4 & 12 & 3 & 12 & 6 \\\hline 5 & 6 & 1.5 & 8 & 4 \\\hline 6 & 2 & 0.5 & 4 & 2 \\\hline\end{array}$$

-Refer to Table 7-4.For steak and cheese and grilled chicken sandwiches,the table contains the values of the marginal utility (MU)and marginal utility per dollar (MU/P)for Mabel Jarvis.Mabel has $14 to spend on steak and cheese and grilled chicken sandwiches.Which of the following statements is false?

A)The price of steak and cheese sandwiches is $4.The price of grilled chicken sandwiches is $2.
B)If Mabel maximizes her utility she will buy three grilled chicken sandwiches.
C)If Mabel maximizes her utility she will buy two steak and cheese sandwiches.
D)We do not have enough information to determine how many sandwiches Mabel will buy to maximize her utility.

Question 61

Table 7-6
$$\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Beer (glasses) }\end{array} & \text { Total Utility } & \begin{array} { c } \text { Quantity of } \\\text { Pizza (slices) }\end{array} & \text { Total Utility } \\\hline 1 & 25 & 1 & 20 \\\hline 2 & 45 & 2 & 35 \\\hline 3 & 60 & 3 & 45 \\\hline 4 & 65 & 4 & 50 \\\hline 5 & 69 & 5 & 52 \\\hline 6 & 70 & 6 & 52 \\\hline\end{array}$$
Table 7-6 shows Antonio's utility from beer and pizza.

-Refer to Table 7-6.What is Antonio's marginal utility from consuming the fifth beer?

A)4 utils
B)13.6 utils
C)69 utils
D)134 utils

Question 62

If you received negative marginal utility from consuming the 4th slice of pizza,then your total utility from 4 slices of pizza must be less than your total utility from 3 slices of pizza.

Question 63

When diminishing marginal utility sets in,total utility must be negative.

Question 64

Terence has $50 per week to spend on Subway sandwiches and milkshakes.The price of a Subway sandwich is $5 and the price of a milkshake is $4.He buys 6 sandwiches and 5 milkshakes.The marginal utility of the 6th sandwich = 25 and the marginal utility of the 5th milkshake = 24.Which of the following is true?

A)He is not maximizing his utility and should buy more milkshakes.
B)He is maximizing his utility.
C)He is not maximizing his utility and should buy more Subway sandwiches.
D)He is not maximizing his utility because he is not spending all of his income.

Question 65

A consumer maximizes her total utility from a bundle of goods when her marginal utility from each good is equal.

Question 66

Table 7-6
$$\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Beer (glasses) }\end{array} & \text { Total Utility } & \begin{array} { c } \text { Quantity of } \\\text { Pizza (slices) }\end{array} & \text { Total Utility } \\\hline 1 & 25 & 1 & 20 \\\hline 2 & 45 & 2 & 35 \\\hline 3 & 60 & 3 & 45 \\\hline 4 & 65 & 4 & 50 \\\hline 5 & 69 & 5 & 52 \\\hline 6 & 70 & 6 & 52 \\\hline\end{array}$$
Table 7-6 shows Antonio's utility from beer and pizza.

-Refer to Table 7-6.Suppose Antonio has $10 to spend and the price of beer = $2 per glass and the price of pizza = $2 per slice.How many of each good will he consume when he maximizes his utility?

A)2 glasses of beer, 1 slice of pizza
B)2 glasses of beer, 3 slices of pizza
C)3 glasses of beer, 2 slices of pizza
D)4 glasses of beer, 5 slices of pizza

Question 67

Table 7-5
$$\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Burgers }\end{array} & \begin{array} { c } \text { Marginal } \\\text { Utility }\end{array} & \begin{array} { c } \text { Quantity of } \\\text { Pepsi }\end{array} & \begin{array} { c } \text { Marginal } \\\text { Utility }\end{array} \\\hline 1 & 20 & 1 & 30 \\\hline 2 & 14 & 2 & 10 \\\hline 3 & 10 & 3 & 7 \\\hline 4 & 3 & 4 & 5 \\\hline 5 & 1 & 5 & 1 \\\hline 6 & - 5 & 6 & 0 \\\hline 7 & - 10 & 7 & - 4 \\\hline\end{array}$$
Table 7-5 lists Jay's marginal utilities for burgers and Pepsi.Jay has $7 to spend on these two goods. The price of a burger is $2 and the price of a can of Pepsi is $1.

-Refer to Table 7-5.If Jay can eat all the burgers he wants for free,how many burgers will he consume?

A)7 burgers
B)6 burgers
C)5 burgers
D)3 burgers

Question 68

Economists assume people's tastes are identical.

Question 69

If by purchasing more apples and fewer oranges you increase your total utility,then apples must be cheaper than oranges.

Question 70

Suppose Renee can increase her total utility from consuming video rentals and books by buying one more book and renting one fewer video.Which of the following is true?

A)The marginal utility of video rentals is negative.
B)The marginal utility per dollar spent on books exceeds that of video rentals.
C)The marginal utility of the last book consumed exceeds the marginal utility of the last video rental consumed.
D)The marginal utility of the last video rental consumed exceeds the marginal utility of the last book consumed.

Question 71

The economic model of consumer behavior explains how consumers' tastes and preferences are formed.

Question 72

Marge buys 5 CDs and 7 DVDs.The marginal utility of the 5th CD and the marginal utility of the 7th DVD are both equal to 30 utils.Can we say that this is the optimal combination of CDs and DVDs for Marge?

A)No.We need to know her preferences for CDs and DVDs.
B)Yes.
C)No.We need to know the prices of the CDs and DVDs.
D)No.If this was the optimal combination, the marginal utility per dollar of the 5th CD and the 7th DVD would be equal.

Question 73

If Lisa spends her income on veggie burgers and pints of soy milk and the price of veggie burgers is three times the price of a pint of soy milk,then when Lisa maximizes her utility she will buy

A)both goods until the marginal utility of veggie burgers is three times the marginal utility of soy milk.
B)three times as many veggie burgers as pints of soy milk.
C)three times as many pints of soy milk as veggie burgers.
D)both goods until the marginal utility of a pint of soy milk is three times the marginal utility of veggie burgers.

Question 74

In explaining consumer behavior economists explain how consumer tastes and preferences are formed.

Question 75

Table 7-4
$$\begin{array} { | c | c | c | c | c | } \hline & \text { Steak \& Cheese } & \text { Steak \& Cheese } & \text { Grilled Chicken } & \text { Grilled Chicken } \\\hline \text { Quantity } & \boldsymbol { M U } & \boldsymbol { M U / \boldsymbol { P } } & \boldsymbol { M U } & \boldsymbol { M U / P } \\\hline 1 & 40 & 10 & 30 & 15 \\\hline 2 & 32 & 8 & 24 & 12 \\\hline 3 & 20 & 5 & 16 & 8 \\\hline 4 & 12 & 3 & 12 & 6 \\\hline 5 & 6 & 1.5 & 8 & 4 \\\hline 6 & 2 & 0.5 & 4 & 2 \\\hline\end{array}$$

-Refer to Table 7-4.For steak and cheese and grilled chicken sandwiches,the table contains the values of the marginal utility (MU)and marginal utility per dollar (MU/P)for Mabel Jarvis.Mabel has $14 to spend on steak and cheese and grilled chicken sandwiches.Which of the following statements is true?

A)If Mabel maximizes her utility she will buy three steak and cheese sandwiches and two grilled chicken sandwiches.
B)If Mabel was maximizing her utility when spending $14 and then received an additional $4, she would receive the most marginal utility per dollar if her next purchase was another grilled chicken sandwich.
C)Mabel will first buy two steak and cheese sandwiches; then with her remaining $6 she will buy three grilled chicken sandwiches.
D)To maximize her utility, Mabel will need a total of $36, the income needed to buy 6 steak and cheese sandwiches and 6 grilled chicken sandwiches.

Question 76

Table 7-5
$$\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Quantity of } \\\text { Burgers }\end{array} & \begin{array} { c } \text { Marginal } \\\text { Utility }\end{array} & \begin{array} { c } \text { Quantity of } \\\text { Pepsi }\end{array} & \begin{array} { c } \text { Marginal } \\\text { Utility }\end{array} \\\hline 1 & 20 & 1 & 30 \\\hline 2 & 14 & 2 & 10 \\\hline 3 & 10 & 3 & 7 \\\hline 4 & 3 & 4 & 5 \\\hline 5 & 1 & 5 & 1 \\\hline 6 & - 5 & 6 & 0 \\\hline 7 & - 10 & 7 & - 4 \\\hline\end{array}$$
Table 7-5 lists Jay's marginal utilities for burgers and Pepsi.Jay has $7 to spend on these two goods. The price of a burger is $2 and the price of a can of Pepsi is $1.

-Refer to Table 7-5.What is Jay's optimal consumption bundle?

A)1 burger and 2 Pepsis
B)2 burgers and 3 Pepsis
C)3 burgers and 1 Pepsi
D)3 burgers and 2 Pepsis

Question 77

There are two conditions necessary for a consumer to maximize her utility.One is that the marginal utilities per dollar spent on each good and service consumed are equal.What is the other condition?

A)Total spending on all goods and services must equal the amount available to be spent.
B)The consumer must be satisfied with the choices she makes.
C)The total spent on each good and service is the same.
D)The prices of each good and service consumed must not be too high.

Question 78

Suppose Barry is maximizing his utility from consuming used paperback novels and audio books.The price of a used novel = $4 and the price of an audio book = $8.If the marginal utility of the last novel was 32 units of utility (utils)what was the marginal utility of the last audio book purchased?

A)2 utils
B)12 utils
C)16 utils
D)64 utils

Question 79

The marginal utility per dollar that Harold Stratton receives from oranges is greater than the marginal utility per dollar Harold receives from pears.To maximize his utility,what should Harold do?

A)He should acquire more income so that he can afford to buy more oranges and pears.
B)He should reduce his consumption of both oranges and pears so that he can buy a greater variety of goods.
C)He should buy fewer pears and more oranges.
D)He should buy fewer oranges and more pears.

Question 80

To maximize utility consumers should buy goods and services to the point where the marginal utility of each item consumed is equal.