Deck 19: Theory of Consumer Behavior

Question 1

Statement I: Consumer surplus is the difference between what you have to pay and what you would have been willing to pay.
Statement II: A person's total utility reaches a maximum when that person's marginal utility falls to zero.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Answer 1

C

Question 2

Assume the demand curve is line AC.If price is OD,the consumer surplus is bounded by letters

A)OABD.
B)OAC.
C)DBC.
D)None of these are true.

Answer 2

C

Question 3

The economist most closely associated with consumer surplus is

A)Karl Marx.
B)Adam Smith.
C)Milton Friedman.
D)John Maynard Keynes.
E)Alfred Marshall.

Answer 3

E

Question 4

As you consume more and more of a service,

A)your consumer surplus is increasing.
B)your consumer surplus is remaining constant.
C)your consumer surplus is decreasing.

Question 5

If a restaurant served free steaks,people would consume more and more steaks until their ________ fell to zero.

A)marginal utility
B)total utility
C)consumer surplus
D)None of the choices are correct.

Question 6

When you are maximizing your utility for product A,
A)

A)marginal utility of A = 0.
B)marginal utility of A = 1.
C)marginal utility of A = price of
D)None of these are true.

Question 7

As long as total utility is increasing,we know that marginal utility is

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

Question 8

Mr.Fefferberg had determined that the marginal utility of the last dollar he spent on cowboy boots is greater than the marginal utility of the last dollar that he spent on Nikes.Since he is a rational fellow,he will

A)buy equal quantities of Nikes and cowboy boots.
B)buy more cowboy boots and fewer Nikes.
C)buy more Nikes and fewer cowboy boots.
D)give up cowboy boots entirely.
E)give up Nikes entirely.

Question 9

If marginal utility is declining but still greater than zero,then total utility is

A)unrelated to the changes in marginal utility.
B)declining as well.
C)increasing.
D)declining for a while but increasing as it approaches zero.
E)staying the same.

Question 10

If total utility is decreasing,then

A)marginal utility is zero.
B)marginal utility is decreasing but still greater than zero.
C)marginal utility is equal to one.
D)marginal utility is increasing.
E)marginal utility is less than zero.

Question 11

Jason's cooking is so terrible that Melissa says she will have to be paid in order to even try it.Thus,her marginal utility for Jason's cooking is

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

Question 12

As a person buys increasing amounts of a good,their marginal utility ______ and their consumer surplus _____.

A)decreases;increases
B)decreases;decreases
C)increases;increases
D)increases;decreases

Question 13

Statement I: The water-diamond paradox is partially explained by the law of diminishing marginal utility.
Statement II: The marginal utility of the water we consume is quite low.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 14

Statement I: Utility is measured by how much a person is willing to pay for a good or service.
Statement II: If you buy four units of a good,your total utility is higher than if you purchased only three units.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 15

According to the general utility formula,the marginal utility of a good divided by the price of that good is _______.

A)less that negative one
B)equal to one
C)greater than one
D)equal to zero

Question 16

If a person wishes to maximize their satisfaction from the consumption of a free product,they should consume until

A)marginal utility is maximized.
B)marginal utility is equal to total utility.
C)total utility is equal to zero.
D)marginal utility is equal to zero.
E)total utility begins to increase.

Question 17

Which statement is true?

A)Total utility is maximized when marginal utility is zero.
B)The utility of a Big Mac is greater than the utility of a Whopper.
C)As one consumes more and more of a service,one's marginal utility rises.
D)None of these are true.

Question 18

When Karen buys eight units of a particular good or service,______________.

A)she has no consumer surplus
B)she has a consumer surplus
C)there is no way of knowing whether she has a consumer surplus

Question 19

Statement I: As we consume more and more of a product,our marginal utility declines.
Statement II: A person's marginal utility can never be negative.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 20

Statement I: If you knew a person's demand schedule,you could figure out her marginal utility schedule.
Statement II: As a person consumes more and more of a service,her total utility rises and her marginal utility declines.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 21

We are maximizing our utility when the ______ of each good and service we purchase is equal to ______.

A)total utility;its price
B)marginal utility;its price
C)marginal utility;one
D)total utility;one

Question 22

Suppose you buy eight pairs of shoes every spring.This year,your shoe store has a huge sale and you end up buying 12 pairs.How does your consumer surplus now compare to how much it would have been had there been no sale?

A)It is higher.
B)It remains the same.
C)It is lower.

Question 23

We will keep buying digital music downloads from the Internet until the marginal utility of the music downloads

A)rises to the price of the download.
B)falls to the price of the download.
C)is greater than the price of the download.
D)is less than the price of the downloaD.

Question 24

Mr.Noriega paid $700 for each of three suits.Since all of the suits were pleasing to his taste,he would have been willing to pay according to this schedule: $950 for the first suit,$800 for the second suit,and $700 for the third suit.How much was his consumer surplus?

A)$100
B)$150
C)$250
D)$350
E)$700

Question 25

Alfred Marshall discovered the concept of

A)utility.
B)consumer surplus.
C)diminishing marginal utility.
D)the diamond-water paradox.

Question 26

The water-diamond paradox is resolved once we realize that the marginal utility of the last gallon of water consumed is very ____ and the marginal utility of the last diamond carat purchased is very ___.

A)low;low
B)high;high
C)high;low
D)low;high

Question 27

Statement I: The more piano lessons you take,the greater the consumer surplus you enjoy.
Statement II: Utility is measured by how useful a good or service is.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 28

Statement I: If you know a person's demand schedule for product J,you can derive her marginal utility schedule for product J.
Statement II: If Bob buys 10 Sidney Sheldon novels,he is enjoying a consumer surplus.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 29

If you were in the middle of the desert,came upon a lemonade stand,and paid $20 for a glass of lemonade,

A)you would definitely be overpaying.
B)you would have gotten at least $20 of utility from the lemonade.
C)there is no way to determine whether or not you overpaid.

Question 30

Statement I: Utility is measured by a product's usefulness.
Statement II: If you purchased eight ballpoint pens at 75 cents each,you would be enjoying a consumer surplus.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 31

If a person consumes excessive amounts of a good or service,to the point that their total utility actually begins declining,then that person's marginal utility of the last unit consumed is _________.

A)positive
B)negative
C)zero
D)None of these choices are correct.

Question 32

When marginal utility is _________,total utility is _________.

A)positive;increasing
B)zero;maximized
C)negative;decreasing
D)All of the choices are correct.

Question 33

Assume the demand curve is line AD.If price is OF,the consumer surplus is bounded by letters

A)OAFB.
B)OACE.
C)OAD.
D)ECD.
E)FBD.

Question 34

Kelly eats five slices of pizza on a Friday night but admits each slice of pizza doesn't taste as good as the previous one.This suggests that for Kelly

A)the marginal utility of a slice of pizza is negative.
B)the total utility of slices of pizza is increasing by larger and larger increments.
C)the total utility of slices of pizza is declining.
D)the marginal utility of a slice of pizza is positive but decreasing.

Question 35

If Mrs.T.F.Baker buys 29 pairs of false eye lashes at the local drug store,

A)she is definitely enjoying a consumer surplus.
B)she may or may not be enjoying a consumer surplus.
C)she is definitely not enjoying a consumer surplus.

Question 36

If Rachel bought too many hot dogs,her marginal utility would become negative and her total utility would

A)rise more slowly.
B)stop rising.
C)begin to fall.
D)become negative.

Question 37

As people buy more and more of a service,their consumer surplus

A)increases.
B)decreases.
C)falls to zero.
D)becomes negative.

Question 38

If water became very scarce and diamonds became very plentiful

A)the marginal utility of diamonds and water would both rise.
B)the marginal utility of both water and diamonds would both fall.
C)the marginal utility of diamonds would rise and the marginal utility of water would fall.
D)the marginal utility of water would rise and the marginal utility of diamonds would fall.

Question 39

If your marginal utility from your last session with your personal trainer is equal to the price they charged you,then

A)you have had exactly the right number of sessions.
B)you have had too many sessions.
C)you have not had enough sessions.
D)there is no way to determine whether you have had enough sessions.

Question 40

Assume the demand curve is line AD.If price is CB,then in the graph above,consumer surplus is bounded by

A)CAD.
B)CBED.
C)BAE.
D)None of these are correct.

Question 41

The price of a drink at the juice bar is $7.Melody Miller buys six carrot juices over the course of the afternoon.

A)She is enjoying a consumer surplus.
B)She is not enjoying a consumer surplus.
C)There is no way to determine whether or not she is enjoying a consumer surplus.

Question 42

As a young man,my great-uncle ate 13 banana splits on a Saturday afternoon and never ate another one for the rest of his life.Most likely the utility of his last banana split was

A)positive.
B)zero.
C)negative.
D)greater than the utility of his 12th banana split.

Question 43

If the Santiago family,which pays a charge of one cent a gallon,uses about 1,200 gallons of water a month,what is the most accurate statement we can make about their consumer surplus?

A)They definitely enjoy a consumer surplus.
B)They may or may not enjoy a consumer surplus.
C)They definitely do not enjoy a consumer surplus.

Question 44

If a bookstore were having a half-price sale,instead of buying three books,you bought six.Because of the sale,your consumer surplus

A)declined.
B)stayed the same.
C)rose.
D)doubleD.

Question 45

Statement I: A person's marginal utility schedule can be derived from her demand schedule.
Statement II: If you purchased six dance lessons,the total utility you derived from the six lessons would be greater than the total utility you would have derived from five lessons.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 46

Given the demand curve in this graph,if price were $2.00,how much quantity would be purchased?

A)1 unit
B)2 units
C)3 units
D)4 units

Question 47

Given the demand curve in this graph,if price were $3.00,how much is consumer surplus?

A)$0
B)$1.50
C)$5.00
D)$10.50

Question 48

Given the demand curve in this graph,if price were $2.00,how much is consumer surplus?

A)$0
B)$1.50
C)$5.00
D)$10.50

Question 49

Given the demand curve in this graph,if this product or service were free,how much consumer surplus would the individual receive?

A)$0
B)$1.50
C)$5.00
D)$10.50

Question 50

When marginal utility is negative,total utility is

A)rising.
B)falling.
C)zero.
D)negative.

Question 51

Demand and Utility Table for Milk Shakes $$\begin{array} { | c | c | c | c | } \hline \text { Price } & \text { Quantity Demanded } & \text { Marginal Utility } & \text { Total Utility } \\\hline \$ 4 & 1 & & \\\hline \$ 3.50 & 2 & & \\\hline \$ 3.00 & 3 & & \\\hline \$ 2.50 & 4 & & \\\hline \$ 2.00 & 5 & & \\\hline\end{array}$$

-Your total utility for 5 milk shakes would be

A)$2.
B)$4.
C)$7.50.
D)$13.
E)$15.

Question 52

Demand and Utility Table for Milk Shakes $$\begin{array} { | c | c | c | c | } \hline \text { Price } & \text { Quantity Demanded } & \text { Marginal Utility } & \text { Total Utility } \\\hline \$ 4 & 1 & & \\\hline \$ 3.50 & 2 & & \\\hline \$ 3.00 & 3 & & \\\hline \$ 2.50 & 4 & & \\\hline \$ 2.00 & 5 & & \\\hline\end{array}$$

-The marginal utility of your fourth milk shake would be

A)$13.
B)$2.50.
C)$2.00.
D)$.50.

Question 53

According to utility theory you would consume more and more of a service until your marginal utility

A)fell to the level of price.
B)rose to the level of price.
C)was less than price.
D)was more than price.

Question 54

The Adonis Tanning Salon is running a special this month of $1 a session.Lothario Goodman goes there 15 times,instead of his customary 5.

A)His consumer surplus is larger.
B)His consumer surplus is smaller.
C)His consumer surplus is the same.
D)It cannot be determined if his consumer surplus is larger,smaller,or the same.

Question 55

Daniel Zimiles will buy more and more baseball cards until

A)the total utility of cards begins to fall.
B)the total utility of the cards falls to zero.
C)the marginal utility of the cards starts to fall.
D)the marginal utility of the cards falls to the price of the cards.
E)the marginal utility of the cards falls to zero.

Question 56

Which would be the most accurate statement?

A)No one enjoys a consumer surplus.
B)We enjoy a consumer surplus on many goods and services.
C)We enjoy a consumer surplus on all goods and services.

Question 57

When marginal utility is zero,total utility

A)is zero.
B)is maximized.
C)is falling.
D)is negative.

Question 58

If you received a free month's trial membership in a gym,you would keep going until your marginal utility reached

A)a maximum.
B)zero.
C)a positive number.
D)a negative number.

Question 59

A product's utility

A)is measured by its usefulness.
B)determines the price charged by the seller.
C)has no effect on a person's consumption decision.
D)None of these choices are correct.

Question 60

Given the demand curve in this graph,if price were $1.00,how much is consumer surplus?

A)$0
B)$1.50
C)$5.00
D)$10.50

Question 61

Statement I: The water-diamond paradox can be resolved using utility theory.
Statement II: If the price of water was high and the price of diamonds was low,there would be no water-diamond paradox.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 62

Her marginal utility of her fifth pack of trading cards would be

A)$40.
B)$34.
C)$30.
D)$6.
E)None of the choices are true.

Question 63

The concept based on the assumption that we get bargains on each unit we purchase until the last one is called

A)total utility.
B)consumer surplus.
C)marginal utility.
D)the law of diminishing marginal utility.

Question 64

Demand and Utility Table for Milk Shakes $$\begin{array} { | c | c | c | c | } \hline \text { Price } & \text { Quantity Demanded } & \text { Marginal Utility } & \text { Total Utility } \\\hline \$ 4 & 1 & & \\\hline \$ 3.50 & 2 & & \\\hline \$ 3.00 & 3 & & \\\hline \$ 2.50 & 4 & & \\\hline \$ 2.00 & 5 & & \\\hline\end{array}$$

-If the price of milk shakes was $2.50 each,your total utility would be ______ and your marginal utility would be ______.

A)$13.00 and $4.00
B)$15.00 and $4.00
C)$13.00 and $2.50
D)$15.00 and $2.50

Question 65

Marginal utility

A)is the usefulness a consumer derives from a certain good or service.
B)is the utility a consumer derives from a certain good or service.
C)increases as more of a good or service is consumed.
D)is the additional utility derived from consuming one more unit of a good or service.

Question 66

The additional utility from her purchase of a third pack of trading cards would be

A)$8.
B)$9.
C)$19.
D)$27.
E)None of the choices are true.

Question 67

Which statement is false?

A)A product's utility to a buyer is measured by how much the buyer is willing to pay for it.
B)A person would maximize her total utility when she had no consumer surplus.
C)We will consume a service when its marginal utility is equal to its price.
D)As the price of a good rises the consumer surplus decreases.

Question 68

Which philosopher-economist observed: "Individuals make choices in order to promote pleasure and to avoid pain"?

A)Thomas Malthus
B)Jeremy Bentham
C)Publilius Syrus
D)Stanley Jevons
E)Samuel Taylor Coleridge

Question 69

Statement I: The marginal utility of diamonds we purchase is quite high.
Statement II: The marginal utility of water we consume is quite high.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 70

Demand and Utility Schedules for Packs of Star Wars Trading Cards $$\begin{array} { | l | c | c | c | } \hline \text { Price } & \text { Quantity Demanded } & \text { Marginal Utility } & \text { Total Utility } \\\hline \$ 10 & 1 & & \\\hline \$ 9 & 2 & & \\\hline \$ 8 & 3 & & \\\hline \$ 7 & 4 & & \\\hline \$ 6 & 5 & & \\\hline\end{array}$$

-Katie's total utility for 4 packs of Star Wars trading cards would be

A)$24.
B)$27.
C)$28.
D)$34.
E)None of the choices are correct.

Question 71

If the price was $6,her consumer surplus would be

A)$40.
B)$30.
C)$10.
D)$6.
E)None of the choices are true.

Question 72

If you bought eight pairs of shoes,the marginal utility of the seventh pair was

A)greater than the price.
B)equal to the price.
C)less than the price.

Question 73

Demand and Utility Table for Milk Shakes $$\begin{array} { | c | c | c | c | } \hline \text { Price } & \text { Quantity Demanded } & \text { Marginal Utility } & \text { Total Utility } \\\hline \$ 4 & 1 & & \\\hline \$ 3.50 & 2 & & \\\hline \$ 3.00 & 3 & & \\\hline \$ 2.50 & 4 & & \\\hline \$ 2.00 & 5 & & \\\hline\end{array}$$

-If the price of milk shakes were $2.00 each,your consumer surplus would be

A)$15.00.
B)$11.00.
C)$10.00.
D)$5.00.
E)$2.00.

Question 74

Demand and Utility Table for Milk Shakes $$\begin{array} { | c | c | c | c | } \hline \text { Price } & \text { Quantity Demanded } & \text { Marginal Utility } & \text { Total Utility } \\\hline \$ 4 & 1 & & \\\hline \$ 3.50 & 2 & & \\\hline \$ 3.00 & 3 & & \\\hline \$ 2.50 & 4 & & \\\hline \$ 2.00 & 5 & & \\\hline\end{array}$$

-If the price of milk shakes was $3.00 each,your consumer surplus would be

A)$10.50.
B)$6.00.
C)$3.50.
D)$3.00.
E)$1.50.

Question 75

If the marginal utility you derived from the last video game you played was 50 cents and the game costs 50 cents to play,

A)you have been playing the game too long.
B)you haven't been playing the game long enough.
C)you have maximized your total utility.
D)there is no way to determine whether you have played the game long enough.

Question 76

If the price was $8,her consumer surplus would be

A)$27.
B)$19.
C)$8.
D)$3.
E)None of the choices are correct.

Question 77

As people buy more of the same product,

A)their consumer surplus rises.
B)their consumer surplus falls.
C)their consumer surplus will fall to zero to maximize their total utility.
D)the additional purchases do not affect their consumer surplus.

Question 78

As the price of a good falls,

A)the consumer surplus rises.
B)the consumer surplus falls.
C)the consumer surplus may rise or fall.
D)a change in price will not affect consumer surplus.

Question 79

The water-diamond paradox

A)occurs because goods essential to life such as water are cheap (and sometimes free).
B)occurs because nonessential goods such as diamonds are rare and therefore very expensive.
C)occurs because the price of a product is determined by its marginal utility,not its total utility.
D)All of the choices are correct.

Question 80

Which statement is true?

A)If you know a person's demand schedule,you can find his total utility,but not his marginal utility.
B)If a good is free,you will consume more and more of it until your marginal utility is zero.
C)If a good is free,you will consume more and more of it until your total utility is zero.
D)If you know a person's demand schedule you can find her marginal utility,but not her total utility.