Deck 9: The Rational Consumer

Question 1

The marginal utility of coffee consumption for Steve is the change in _____ generated by consuming an additional cup of coffee.

A) total utility
B) total consumption
C) total demand
D) price

Answer 1

total utility

Question 2

On a sparsely populated island, high-speed Internet service would have a _____ marginal utility than in New York City, while in New York City quiet evenings would carry a _____ marginal utility than on a deserted island.

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

Answer 2

higher; higher

Question 3

Utility is the:

A) difference between a firm's total revenue and its total economic cost.
B) good not adequately provided by a free market and usually provided by the government.
C) satisfaction consumers derive from their consumption of goods and services.
D) lowest price that buyers are willing to pay for a given quantity of a good.

Answer 3

satisfaction consumers derive from their consumption of goods and services.

Question 4

The utility of a good is determined by how much _____ a particular consumer obtains from it.

A) satisfaction
B) usefulness
C) cost
D) need fulfillment

Question 5

In economics, the ability of pumpkin pie to satisfy a want is referred to as its:

A) utility.
B) usefulness.
C) worthiness.
D) necessity.

Question 6

The amount by which an additional unit of a good or service changes a consumer's total satisfaction, all other things unchanged, is _____ utility.

A) marginal
B) maximum
C) average
D) required

Question 7

Xavier notices that the marginal utility of working with a tutor seems to fall with each hour the tutor helps him study. If Xavier keeps the tutor until his grade actually begins to fall, his marginal utility for the last hour of tutoring will be:

A) negative.
B) positive, but rising more slowly.
C) zero.
D) immeasurable.

Question 8

An individual gets 5 units of utility from one slice of pizza and 9 units of utility from two slices of pizza. The principle of diminishing marginal utility implies that the total utility from three slices of pizza will be _____ units of utility.

A) exactly 12
B) less than 13
C) less than 9
D) more than 14

Question 9

The principle of diminishing marginal utility means that when Sarah eats pizza, her satisfaction from the second slice of pizza is probably _____ that from the first.

A) greater than
B) equal to
C) less than
D) not comparable to

Question 10

How much _____ Susan obtains from eating green beans is a measure of the utility of green beans for her.

A) efficiency
B) usefulness
C) cost
D) satisfaction

Question 11

Suppose bad weather and pollution dramatically reduce the supply of crawfish in Louisiana next year. This would most likely lead to _____ in the marginal utility of crawfish consumption.

A) an increase
B) a decrease
C) no change
D) substitution and income effects

Question 12

The amount by which total utility changes when an additional unit of a good is consumed is called _____ utility.

A) average
B) additional
C) maximum
D) marginal

Question 13

The relation between an individual's consumption bundle and her satisfaction is called a _____ function.

A) demand
B) production
C) consumption
D) utility

Question 14

To say that you can't have too much of a good thing means that for any good that you enjoy (for example, pizza):

A) higher consumption will always lead to higher utility.
B) higher consumption will cause utility to decrease at an increasing rate.
C) higher consumption will increase utility, but only up to a point; after that utility will start to decrease.
D) it is valid to measure utility in utils.

Question 15

Which of the following best describes the principle of diminishing marginal utility? As an individual consumes more of a good:

A) the total utility obtained will eventually fall.
B) the total utility obtained will eventually become negative.
C) the addition to total utility obtained from the nth unit of the good will be less than that obtained from the immediately preceding unit of the good.
D) the marginal utility will eventually become negative.

Question 16

Utility is most closely related to:

A) usefulness.
B) satisfaction.
C) requirement.
D) necessity.

Question 17

Which of the following goods is MOST likely to display increasing marginal utility over some range?

A) chicken during the 1920s, when it was considered a luxury good
B) paint, because you need enough to paint at least one entire room
C) lobsters, which are so expensive that you must eat two to get your money's worth
D) peanut butter and jelly sandwiches

Question 18

Economists identify the satisfaction a person derives from the consumption of goods and services as:

A) happiness.
B) usefulness.
C) utility.
D) pleasure.

Question 19

For economists, the satisfaction an individual derives from the consumption of goods and services is best described as:

A) happiness.
B) usefulness.
C) utility.
D) opportunity cost.

Question 20

Economists describe the satisfaction consumers receive from consuming goods and services as:

A) utility.
B) income effects.
C) budget constraints.
D) substitution effects.

Question 21

Use the following to answer questions
Figure and Table: The Budget Line
(Figure and Table: The Budget Line) Look at the figure and table The Budget Line. An increase in income would:

A) rotate the budget line along the horizontal axis.
B) shift the budget line to the left.
C) rotate the budget line along the vertical axis.
D) shift the budget line to the right.

Question 22

Use the following to answer questions
Figure and Table: The Budget Line
(Figure and Table: The Budget Line) Look at the figure and table The Budget Line. _____ in the price of clams would rotate the budget line along the _____ axis _____ the origin.

A) An increase; horizontal; away from
B) A decrease; horizontal; away from
C) An increase; vertical; toward
D) A decrease; vertical; away from

Question 23

Use the following to answer questions
Figure and Table: The Budget Line
(Figure and Table: The Budget Line) Look at the figure and table The Budget Line. A decrease in income would:

A) rotate the budget line along the horizontal axis.
B) shift the budget line to the left.
C) rotate the budget line along the vertical axis.
D) shift the budget line to the right.

Question 24

Use the following to answer questions
Figure: Budget Lines for Tea and Scones
(Figure: Budget Lines for Tea and Scones) Look at the figure Budget Lines for Tea and Scones. For months now, Agnes has had $20 per month to spend on tea and scones. The price of each cup of tea and each scone has been $1. Which of the charts shows what will happen to her budget line if the price of both a cup of tea and a scone increase to $2?

A) A
B) B
C) C
D) D

Question 25

Joe's budget line reflects the _____ available to Joe if he spends _____ of his income.

A) consumption bundles; all
B) consumption bundles; part
C) utility; all
D) utility; part

Question 26

Chuck spends all of his income on tacos and milkshakes. His income is $100, the price of tacos is $10, and the price of milkshakes is $2. Put tacos on the horizontal axis and milkshakes on the vertical axis. The vertical for Chuck's budget line is _____ milkshakes.

A) 50
B) 10
C) 5
D) 100

Question 27

Use the following to answer questions
Figure and Table: The Budget Line
(Figure and Table: The Budget Line) Look at the figure and table The Budget Line. _____ in the price of clams would rotate the budget line along the _____ axis _____ the origin.

A) An increase; horizontal; toward
B) A decrease; horizontal; toward
C) An increase; vertical; toward
D) A decrease; vertical; away from

Question 28

Use the following to answer questions
Figure and Table: The Budget Line
(Figure and Table: The Budget Line) Look at the figure and table The Budget Line. _____ in the price of potatoes would rotate the budget line along the _____ axis _____ the origin.

A) An increase; horizontal; away from
B) A decrease; horizontal; toward
C) An increase; vertical; toward
D) A decrease; vertical; toward

Question 29

Faruq spends all of his income on tacos and milkshakes. His income is $100, the price of tacos is $10, and the price of milkshakes is $2. Put tacos on the horizontal axis and milkshakes on the vertical axis. The horizontal intercept for Faruq's budget line is _____ tacos.

A) 50
B) 10
C) 5
D) 100

Question 30

Use the following to answer questions
Figure: Budget Lines for Tea and Scones
(Figure: Budget Lines for Tea and Scones) Look at the figure Budget Lines for Tea and Scones. For months now, Agnes has had $20 per month to spend on tea and scones. The price of each cup of tea and each scone has been $1. Which of the charts shows what will happen to her budget line if the price of a cup of tea falls to $0.50?

A) A
B) B
C) C
D) D

Question 31

Faruq spends all of his income on tacos and milkshakes. His income is $100, the price of tacos is $10, and the price of milkshakes is $2. Put tacos on the horizontal axis and milkshakes on the vertical axis. The slope of Faruq's budget line is equal to:

A) -1/5.
B) -5.
C) 1/5.
D) 5.

Question 32

Use the following to answer questions
Figure: Budget Lines for Tea and Scones
(Figure: Budget Lines for Tea and Scones) Look at the figure Budget Lines for Tea and Scones. For months now, Agnes has had $20 per month to spend on tea and scones. The price of each cup of tea and each scone has been $1. Which of the charts shows what will happen to her budget line if the price of a scone rises to $2?

A) A
B) B
C) C
D) D

Question 33

Use the following to answer questions
Figure: Budget Lines for Tea and Scones
(Figure: Budget Lines for Tea and Scones) Look at the figure Budget Lines for Tea and Scones. For months now, Agnes has had $20 per month to spend on tea and scones. The price of each cup of tea and each scone is $1. Which of the charts shows what will happen to her budget line if her income increases to $25?

A) A
B) B
C) C
D) D

Question 34

Use the following to answer questions
Figure: Budget Lines for Tea and Scones
(Figure: Budget Lines for Tea and Scones) Look at the figure Budget Lines for Tea and Scones. For months now, Agnes has had $20 per month to spend on tea and scones. The price of each cup of tea and each scone has been $1. Which of the charts shows what will happen to her budget line if her income decreases to $10?

A) A
B) B
C) C
D) D

Question 35

Chuck spends all of his income on tacos and milkshakes. His income is $100, the price of tacos is $10, and the price of milkshakes is $2. If the price of each good doubles and Chuck's income doubles:

A) Chuck's budget line will be unaffected.
B) Chuck's budget line will shift out.
C) Chuck's budget line will shift in.
D) Chuck will be able to buy more of both goods.

Question 36

Faruq spends all of his income on tacos and milkshakes. His income is $100, the price of tacos is $10, and the price of milkshakes is $2. Put tacos on the horizontal axis and milkshakes on the vertical axis. If Faruq spends all of his income, the opportunity cost of one taco equals _____ milkshakes.

A) 2
B) 10
C) 5
D) 1/5

Question 37

Faruq spends all of his income on tacos and milkshakes. His income is $100, the price of tacos is $10, and the price of milkshakes is $2. If Faruq spends all of his income, the opportunity cost of one milkshake is equal to _____ tacos.

A) 2
B) 10
C) 5
D) 1/5

Question 38

Faruq spends all of his income on tacos and milkshakes. His income is $100, the price of tacos is $10, and the price of milkshakes is $2. If Faruq purchases 10 milkshakes, he can purchase _____ tacos.

A) 10
B) 50
C) 8
D) 18

Question 39

A consumer's spending is restricted because of:

A) marginal utility.
B) total utility.
C) a budget constraint.
D) utility maximization.

Question 40

Use the following to answer questions
Figure and Table: The Budget Line
(Figure and Table: The Budget Line) Look at the figure and table The Budget Line. _____ in the price of potatoes would rotate the budget line along the _____ axis _____ the origin.

A) An increase; horizontal; away from
B) A decrease; horizontal; toward
C) An increase; vertical; away from
D) A decrease; vertical; away from

Question 41

Use the following to answer questions
Scenario: Tom's Budget Constraint
Tom is trying to decide how to allocate his $50 budget for music downloads and online movie streaming when the price of a music download is $1 and the price of a movie is $5.
(Scenario: Tom's Budget Constraint) Read the scenario Tom's Budget Constraint. The combination _____ music downloads and _____ movies lies INSIDE Tom's budget line. (Tom can afford this combination, but he will not be spending the entire $50.)

A) 50; 10
B) 50; no
C) no; 5
D) 100; 5

Question 42

Use the following to answer questions
Scenario: Tom's Budget Constraint
Tom is trying to decide how to allocate his $50 budget for music downloads and online movie streaming when the price of a music download is $1 and the price of a movie is $5.
(Scenario: Tom's Budget Constraint) Read the scenario Tom's Budget Constraint. The combination _____ music downloads and _____ movies lies ON Tom's budget line.

A) 50; 10
B) 50; no
C) no; 5
D) 100; 5

Question 43

Whatever the relevant time, Molly's spending will be _____ by her _____.

A) unlimited; marginal utility
B) limited; marginal utility
C) limited; budget
D) unlimited; budget

Question 44

Use the following to answer questions
Scenario: Tom's Budget Constraint
Tom is trying to decide how to allocate his $50 budget for music downloads and online movie streaming when the price of a music download is $1 and the price of a movie is $5.
(Scenario: Tom's Budget Constraint) Read the scenario Tom's Budget Constraint. The combination _____ music downloads and _____ movies lies OUTSIDE Tom's budget line. (Tom cannot afford this combination.)

A) 50; 10
B) 50; no
C) no; 5
D) 20; 5