Question 1

Mrs. Arnold is spending all her money income by buying bottles of soda and bags of pretzels in such amounts that the marginal utility of the last bottle is 60 utils and the marginal utility of the last bag is 30 utils. The prices of soda and pretzels are $0.60 per bottle and $0.40 per bag, respectively. It can be concluded that

Accepted Answer

A)   the two commodities are substitute goods.
B)   Mrs. Arnold should spend more on pretzels and less on soda.
C)   Mrs. Arnold should spend more on soda and less on pretzels.
D)   Mrs. Arnold is buying soda and pretzels in the utility-maximizing amounts.E) B) and C)
F) A) and D)

Question 2

Suppose you have a limited money income and you are purchasing products A and B, whose prices happen to be the same. To maximize your utility, you should purchase A and B in such amounts that

Accepted Answer

A)   their marginal utilities are the same.
B)   their total utilities are the same.
C)   their marginal and total utilities are proportionate.
D)   the income and substitution effects associated with each are equal.E) All of the above
F) A) and B)

Question 3

The table below shows the utility schedule for a consumer of candy bars.  This consumer begins to experience diminishing marginal utility when consuming the

Accepted Answer

A)   third candy bar.
B)   fourth candy bar.
C)   sixth candy bar.
D)   seventh candy bar.E) A) and B)
F) All of the above

Question 4

Each point on a single indifference curve reflects the same level of total utility for a consumer.

Accepted Answer

A) True 
 B)False

Question 5

If consumption of a good is subsidized by the government, then the MU/P of that good among consumers will

Accepted Answer

A)   decrease.
B)   become negative.
C)   increase.
D)   not be affected.E) A) and D)
F) None of the above

Question 6

A leftward shift of a consumer's budget line to a position parallel with the original one could indicate that the

Accepted Answer

A)   price of one product has decreased in relation to the other.
B)   prices of both products have decreased in the same proportion.
C)   consumer's money income has increased and the prices of both products have also increased but proportionately less.
D)   consumer's money income has increased but the prices of both products have increased proportionately more.E) B) and D)
F) B) and C)

Question 7

A product has utility if it

Accepted Answer

A)   takes more and more resources to produce successive units of it.
B)   violates the law of demand.
C)   satisfies consumer wants.
D)   is useful.E) None of the above
F) B) and C)

Question 8

Increases in product prices shift the consumer's

Accepted Answer

A)   budget line to the right.
B)   budget line to the left.
C)   indifference curves to the left.
D)   indifference curves to the right.E) A) and B)
F) C) and D)

Question 9

The table shows the utility schedule for a consumer of candy bars.  Based on the data in the table, you can conclude that the

Accepted Answer

A)   marginal utility of the fourth unit is 96.
B)   marginal utility of the third unit is 18.
C)   total utility of 2 units is 16.
D)   total utility of 6 units is 35.E) B) and C)
F) All of the above

Question 10

Marginal utility is total utility divided by the number of units consumed.

Accepted Answer

A) True 
 B)False

Question 11

When a consumer has maximized total utility, he or she cannot increase total utility by reallocating expenditures among different products.

Accepted Answer

A) True 
 B)False

Question 12

When a consumer shifts purchases from X to Y, the marginal utility of X falls and the marginal utility of Y rises.

Accepted Answer

A) True 
 B)False

Question 13

(Consider This)  When the federal government started requiring restaurants to print calorie counts next to menu items, some people increased their consumption of higher-calorie items. Whichof the following best explains this phenomenon?

Accepted Answer

A)   Consumers at restaurants are systematically irrational.
B)   Consumers are more interested in maximizing calories per dollar than health per dollar.
C)   Restaurants lowered the prices of healthier items, signaling to consumers that they are less appealing.
D)   Restaurants cut portion sizes on all items to reduce calorie counts.E) A) and B)
F) A) and C)

Question 14

Many people buy no more than one iPad because

Accepted Answer

A)   there's always a shortage of iPads.
B)   the MU/P of a second iPad is quite low for many people.
C)   the price of iPads has increased significantly.
D)   iPads have quickly become obsolete.E) None of the above
F) A) and B)

Question 15

Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2, respectively, and that the consumer's income is $18.  If the price of X decreases to $2, then the utility-maximizing combination of the two products is

Accepted Answer

A)   2 of X and 5 of Y.
B)   4 of X and 6 of Y.
C)   6 of X and 3 of Y.
D)   4 of X and 5 of Y.E) B) and D)
F) None of the above

Question 16

Refer to the budget line shown in the diagram. Given the same money income, reductions in the prices of both products C and D will

Accepted Answer

A)   shift the budget line outward on the horizontal axis but leave it anchored at "10" on the vertical axis.
B)   shift the budget line to the left.
C)   shift the budget line to the right.
D)   have no effect on the budget line.E) A) and C)
F) B) and C)

Question 17

Refer to the budget line shown in the diagram. The absolute value of the slope of the budget line is
C/MUD. B)  one-half. C)    D)   " class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   MUC/MUD.
B)   one-half.
C)   C/MUD. 
B)   one-half. 
C)     
D)    " class="answers-bank-image d-inline" rel="preload" >
D)   C/MUD. 
B)   one-half. 
C)     
D)    " class="answers-bank-image d-inline" rel="preload" >E) All of the above
F) C) and D)

Question 18

If total utility is increasing, marginal utility

Accepted Answer

A)   is positive but may be either increasing or decreasing.
B)   must also be increasing.
C)   may be either positive or negative.
D)   will be increasing at an increasing rate.E) A) and D)
F) A) and B)

Question 19

You can drive from Kansas City to St. Louis in five hours. You can fly between the cities in two hours. The price of an airline ticket is $150. The cost of driving between the cities is $50. About what hourly wage would make the "full" cost of driving equal the "full" cost of flying, where "full" cost includes the value of time?

Accepted Answer

A)   $17
B)   $21
C)   $29
D)   $33E) B) and C)
F) All of the above

Question 20

Diminishing marginal utility explains why

Accepted Answer

A)   the income effect exceeds the substitution effect.
B)   the substitution effect exceeds the income effect.
C)   supply curves are upsloping.
D)   demand curves are downsloping.E) B) and C)
F) A) and D)

Exam 7: Utility Maximization

Correct Answer
verified

When a consumer has maximized total utility, he or she cannot increase total utility by reallocating expenditures among different products.

Correct Answer
verified

The table shows the utility schedule for a consumer of candy bars. Based on the data in the table, you can conclude that the

Correct Answer
verified

Increases in product prices shift the consumer's

Correct Answer
verified

The table below shows the utility schedule for a consumer of candy bars. This consumer begins to experience diminishing marginal utility when consuming the

Correct Answer
verified

A leftward shift of a consumer's budget line to a position parallel with the original one could indicate that the

Correct Answer
verified

If total utility is increasing, marginal utility

Correct Answer
verified

Refer to the budget line shown in the diagram. Given the same money income, reductions in the prices of both products C and D will

Correct Answer
verified

If consumption of a good is subsidized by the government, then the MU/P of that good among consumers will

Correct Answer
verified

(Consider This) When the federal government started requiring restaurants to print calorie counts next to menu items, some people increased their consumption of higher-calorie items. Whichof the following best explains this phenomenon?

Correct Answer
verified

Refer to the budget line shown in the diagram. The absolute value of the slope of the budget line is

Correct Answer
verified

Marginal utility is total utility divided by the number of units consumed.

Correct Answer
verified

Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2, respectively, and that the consumer's income is $18. If the price of X decreases to $2, then the utility-maximizing combination of the two products is

Correct Answer
verified

Correct Answer
verified

A product has utility if it

Correct Answer
verified

Suppose you have a limited money income and you are purchasing products A and B, whose prices happen to be the same. To maximize your utility, you should purchase A and B in such amounts that

Correct Answer
verified

Diminishing marginal utility explains why

Correct Answer
verified

Many people buy no more than one iPad because

Correct Answer
verified

When a consumer shifts purchases from X to Y, the marginal utility of X falls and the marginal utility of Y rises.

Correct Answer
verified

Each point on a single indifference curve reflects the same level of total utility for a consumer.

Correct Answer
verified

Exam 7: Utility Maximization

Correct AnswerverifiedShow Answer

When a consumer has maximized total utility, he or she cannot increase total utility by reallocating expenditures among different products.

Correct AnswerverifiedShow Answer

The table shows the utility schedule for a consumer of candy bars. Based on the data in the table, you can conclude that the

Correct AnswerverifiedShow Answer

Increases in product prices shift the consumer's

Correct AnswerverifiedShow Answer

The table below shows the utility schedule for a consumer of candy bars. This consumer begins to experience diminishing marginal utility when consuming the

Correct AnswerverifiedShow Answer

A leftward shift of a consumer's budget line to a position parallel with the original one could indicate that the

Correct AnswerverifiedShow Answer

If total utility is increasing, marginal utility

Correct AnswerverifiedShow Answer

Refer to the budget line shown in the diagram. Given the same money income, reductions in the prices of both products C and D will

Correct AnswerverifiedShow Answer

If consumption of a good is subsidized by the government, then the MU/P of that good among consumers will

Correct AnswerverifiedShow Answer

(Consider This) When the federal government started requiring restaurants to print calorie counts next to menu items, some people increased their consumption of higher-calorie items. Whichof the following best explains this phenomenon?

Correct AnswerverifiedShow Answer

Refer to the budget line shown in the diagram. The absolute value of the slope of the budget line is

Correct AnswerverifiedShow Answer

Marginal utility is total utility divided by the number of units consumed.

Correct AnswerverifiedShow Answer

Answer the question on the basis of the following marginal utility data for products X and Y. Assume that the prices of X and Y are $4 and $2, respectively, and that the consumer's income is $18. If the price of X decreases to $2, then the utility-maximizing combination of the two products is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A product has utility if it

Correct AnswerverifiedShow Answer

Suppose you have a limited money income and you are purchasing products A and B, whose prices happen to be the same. To maximize your utility, you should purchase A and B in such amounts that

Correct AnswerverifiedShow Answer

Diminishing marginal utility explains why

Correct AnswerverifiedShow Answer

Many people buy no more than one iPad because

Correct AnswerverifiedShow Answer

When a consumer shifts purchases from X to Y, the marginal utility of X falls and the marginal utility of Y rises.

Correct AnswerverifiedShow Answer

Each point on a single indifference curve reflects the same level of total utility for a consumer.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified