Question 1

Assume that a consumer purchases a combination of products Y and Z and that the MU y/ Pᵧ = 48/8 and MU z/ Pz = 30/5. To maximize utility, without spending more money, the consumer should

Accepted Answer

A)  purchase less of Z and more of Y.
B)  purchase more of Z and less of Y.
C)  purchase more of both Y and Z.
D)  make no change in the quantities Y and Z.E) None of the above
F) A) and B)

Question 2

The table shows an indifference schedule for several combinations of X and Y.  In moving from combination b to c, the consumer

Accepted Answer

A)  gets 1 unit of X for 1 unit of Y.
B)  gets 2 units of X for 2 units of Y.
C)  gives up 3 units of X for 1 unit of Y.
D)  gives up 4 units of X for 1 unit of Y.E) A) and C)
F) All of the above

Question 3

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $3 and $4, respectively, and that consumer income is $18.  Which of the following price-quantity schedules would represent the demand for X in the $2 and $3 price range?

Accepted Answer

A)  option A
B)  option B
C)  option C
D)  option DE) None of the above
F) B) and C)

Question 4

Why do people tend to eat more at all-you-can-eat buffet restaurants than at restaurants where each item is purchased separately?

Accepted Answer

A)  Once the all-you-can-eat meal is purchased, consumers view additional trips back to the buffet as having a price of zero.
B)  MU/P is consistently greater at all-you-can-eat restaurants.
C)  People who eat at all-you-can-eat restaurants do not experience diminishing marginal utility.
D)  Food at all-you-can-eat restaurants tends to have fewer calories, so consumers feel the need to consume a greater volume of food.E) B) and D)
F) A) and C)

Question 5

If a consumer has an income of $200, the price of X is $5, and the price of Y is $10, what is the maximum quantity of X the consumer is able to purchase?

Accepted Answer

A)  5
B)  10
C)  20
D)  40E) A) and C)
F) A) and B)

Question 6

Which of the following best explains why most people don't consume units of goods to the point that their marginal utility falls to zero?

Accepted Answer

A)  If marginal utility is falling, then total utility is falling.
B)  Consumers face budget constraints that limit how much they can purchase.
C)  Governments tend to limit how much of a good a person is allowed to consume.
D)  The price of a good tends to rise as an individual attempts to purchase more.E) A) and B)
F) A) and C)

Question 7

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.  What level of total utility will the utility-maximizing consumer realize?

Accepted Answer

A)  96 utils
B)  108 utils
C)  72 utils
D)  142 utilsE) None of the above
F) C) and D)

Question 8

A consumer is in equilibrium and is spending income in such a way that the marginal utility of product X is 40 units and that of Y is 32 units. If the unit price of X is $5, then the price of Y must be

Accepted Answer

A)  $5 per unit.
B)  $4 per unit.
C)  $8 per unit.
D)  $7 per unit.E) B) and C)
F) A) and B)

Question 9

The first Pepsi yields Craig 15 units of utility and the second yields him an additional 13 units of utility. His total utility from threecans of Pepsi is 40 units of utility. The marginal utility of the third Pepsi is

Accepted Answer

A)  27 units of utility.
B)  28 units of utility.
C)  12 units of utility.
D)  40 units of utility.E) A) and B)
F) A) and C)

Question 10

The table shows a consumer's utility schedule.  Based on the data, you can conclude that the consumer

Accepted Answer

A)  receives increasing marginal utility from consuming the first three units.
B)  experiences diminishing marginal utility after consuming the first unit.
C)  experiences diminishing marginal utility only after consuming the fourth unit.
D)  will never consume just one unit of the product.E) C) and D)
F) B) and D)

Question 11

Refer to the diagram. The budget line shift that moves the consumer's equilibrium from point A to point B suggests

Accepted Answer

A)  an increase in the demand for product X.
B)  a decrease in the demand for product X.
C)  no change in the demand for product X.
D)  that X is an inferior good.E) C) and D)
F) All of the above

Question 12

A child is given $4 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents and hard candies 80 cents each. The marginal utilities derived from each product are as shown in the following table.  Based on taste and preference alone, which good does the child prefer?

Accepted Answer

A)  chocolates
B)  hard candies
C)  The child equally likes chocolates and hard candies.
D)  One cannot tell from the given data.E) All of the above
F) A) and D)

Question 13

Use diminishing marginal utility to explain why millionaires often do not have many homes, even if they can afford it.

Accepted Answer

Millionaires often do not have many home...

Question 14

The table shows the marginal-utility schedules for goods A and B for a hypothetical consumer. The price of good A is $1, and the price of good B is $2. The income of the consumer is $8.  If the consumer spends the given budget and gets maximum utility out of it, then she is receiving how much satisfaction from each dollar spent on the final unit of good A consumed?

Accepted Answer

A)  14 utils per dollar
B)  7 utils per dollar
C)  8 utils per dollar
D)  4 utils per dollarE) B) and C)
F) None of the above

Question 15

The table shows a consumer's utility schedule.  Based on the data in the table, you can conclude that the

Accepted Answer

A)  marginal utility of the second unit is 14.
B)  total utility of 3 units is 54.
C)  total utility of 4 units is 5.
D)  marginal utility of the fifth unit is 2.E) B) and C)
F) None of the above

Question 16

Marginal utility is the

Accepted Answer

A)  sensitivity of consumer purchases of a good to changes in the price of that good.
B)  change in total utility obtained by consuming one more unit of a good.
C)  change in total utility obtained by consuming another unit of a good divided by the change in the price of that good.
D)  total utility associated with the consumption of a certain number of units of a good divided by the number of units consumed.E) B) and D)
F) None of the above

Question 17

Describe the relationship between raising the marginal cost of crime and the quantity of crime committed. Explain the implications of this relationship as applied to property crimes.

Accepted Answer

The potential criminal compares the marg...

Question 18

Which situation is consistent with the law of diminishing marginal utility?

Accepted Answer

A)  The more pizza Joe eats, the more he enjoys an additional slice.
B)  The more pizza Joe eats, the less he enjoys an additional slice.
C)  Joe's marginal utility from eating pizza becomes positive after eating three slices.
D)  Joe's marginal utility from eating pizza reaches a maximum when total utility is zero.E) None of the above
F) A) and B)

Question 19

A consumer has an income of $200, and the price of X is $5, while the price of Y is $10. If the consumer buys 8 units of X, then the maximum quantity of Y that she could also buy is

Accepted Answer

A)  16
B)  18
C)  20
D)  14E) All of the above
F) C) and D)

Question 20

Refer to the diagram, in which the downsloping lines are budget lines and I₁, I₂, and I₃ comprise an indifference map. The combinations of products M and N indicated by points 1, 2, and 5 are such that

Accepted Answer

A)  point 2 yields more utility than either 1 or 5.
B)  points 1 and 5 yield more utility than point 2.
C)  points 1, 2, and 5 yield equal amounts of utility.
D)  the levels of utility associated with these three points cannot be compared.E) A) and B)
F) None of the above

Exam 7: Utility Maximization

The table shows an indifference schedule for several combinations of X and Y. In moving from combination b to c, the consumer

Correct Answer
verified

Refer to the diagram. The budget line shift that moves the consumer's equilibrium from point A to point B suggests

Correct Answer
verified

Refer to the diagram, in which the downsloping lines are budget lines and I₁, I₂, and I₃ comprise an indifference map. The combinations of products M and N indicated by points 1, 2, and 5 are such that

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. What level of total utility will the utility-maximizing consumer realize?

Correct Answer
verified

A child is given $4 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents and hard candies 80 cents each. The marginal utilities derived from each product are as shown in the following table. Based on taste and preference alone, which good does the child prefer?

Correct Answer
verified

A consumer is in equilibrium and is spending income in such a way that the marginal utility of product X is 40 units and that of Y is 32 units. If the unit price of X is $5, then the price of Y must be

Correct Answer
verified

The first Pepsi yields Craig 15 units of utility and the second yields him an additional 13 units of utility. His total utility from threecans of Pepsi is 40 units of utility. The marginal utility of the third Pepsi is

Correct Answer
verified

If a consumer has an income of $200, the price of X is $5, and the price of Y is $10, what is the maximum quantity of X the consumer is able to purchase?

Correct Answer
verified

Correct Answer
verified

The table shows a consumer's utility schedule. Based on the data in the table, you can conclude that the

Correct Answer
verified

Which of the following best explains why most people don't consume units of goods to the point that their marginal utility falls to zero?

Correct Answer
verified

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $3 and $4, respectively, and that consumer income is $18. Which of the following price-quantity schedules would represent the demand for X in the $2 and $3 price range?

Correct Answer
verified

Use diminishing marginal utility to explain why millionaires often do not have many homes, even if they can afford it.

Correct Answer
verified
Millionaires often do not have many home...
View Answer

Which situation is consistent with the law of diminishing marginal utility?

Correct Answer
verified

Marginal utility is the

Correct Answer
verified

A consumer has an income of $200, and the price of X is $5, while the price of Y is $10. If the consumer buys 8 units of X, then the maximum quantity of Y that she could also buy is

Correct Answer
verified

The table shows a consumer's utility schedule. Based on the data, you can conclude that the consumer

Correct Answer
verified

Why do people tend to eat more at all-you-can-eat buffet restaurants than at restaurants where each item is purchased separately?

Correct Answer
verified

Assume that a consumer purchases a combination of products Y and Z and that the MU y/ Pᵧ = 48/8 and MU z/ P_z = 30/5. To maximize utility, without spending more money, the consumer should

Correct Answer
verified

Describe the relationship between raising the marginal cost of crime and the quantity of crime committed. Explain the implications of this relationship as applied to property crimes.

Correct Answer
verified
The potential criminal compares the marg...
View Answer

Exam 7: Utility Maximization

The table shows an indifference schedule for several combinations of X and Y. In moving from combination b to c, the consumer

Correct AnswerverifiedShow Answer

Refer to the diagram. The budget line shift that moves the consumer's equilibrium from point A to point B suggests

Correct AnswerverifiedShow Answer

Refer to the diagram, in which the downsloping lines are budget lines and I₁, I₂, and I₃ comprise an indifference map. The combinations of products M and N indicated by points 1, 2, and 5 are such that

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. What level of total utility will the utility-maximizing consumer realize?

Correct AnswerverifiedShow Answer

A child is given $4 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents and hard candies 80 cents each. The marginal utilities derived from each product are as shown in the following table. Based on taste and preference alone, which good does the child prefer?

Correct AnswerverifiedShow Answer

A consumer is in equilibrium and is spending income in such a way that the marginal utility of product X is 40 units and that of Y is 32 units. If the unit price of X is $5, then the price of Y must be

Correct AnswerverifiedShow Answer

The first Pepsi yields Craig 15 units of utility and the second yields him an additional 13 units of utility. His total utility from threecans of Pepsi is 40 units of utility. The marginal utility of the third Pepsi is

Correct AnswerverifiedShow Answer

If a consumer has an income of $200, the price of X is $5, and the price of Y is $10, what is the maximum quantity of X the consumer is able to purchase?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The table shows a consumer's utility schedule. Based on the data in the table, you can conclude that the

Correct AnswerverifiedShow Answer

Which of the following best explains why most people don't consume units of goods to the point that their marginal utility falls to zero?

Correct AnswerverifiedShow Answer

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $3 and $4, respectively, and that consumer income is $18. Which of the following price-quantity schedules would represent the demand for X in the $2 and $3 price range?

Correct AnswerverifiedShow Answer

Use diminishing marginal utility to explain why millionaires often do not have many homes, even if they can afford it.

Correct AnswerverifiedMillionaires often do not have many home...View AnswerShow Answer

Which situation is consistent with the law of diminishing marginal utility?

Correct AnswerverifiedShow Answer

Marginal utility is the

Correct AnswerverifiedShow Answer

A consumer has an income of $200, and the price of X is $5, while the price of Y is $10. If the consumer buys 8 units of X, then the maximum quantity of Y that she could also buy is

Correct AnswerverifiedShow Answer

The table shows a consumer's utility schedule. Based on the data, you can conclude that the consumer

Correct AnswerverifiedShow Answer

Why do people tend to eat more at all-you-can-eat buffet restaurants than at restaurants where each item is purchased separately?

Correct AnswerverifiedShow Answer

Assume that a consumer purchases a combination of products Y and Z and that the MU y/ Pᵧ = 48/8 and MU z/ Pz = 30/5. To maximize utility, without spending more money, the consumer should

Correct AnswerverifiedShow Answer

Describe the relationship between raising the marginal cost of crime and the quantity of crime committed. Explain the implications of this relationship as applied to property crimes.

Correct AnswerverifiedThe potential criminal compares the marg...View AnswerShow Answer

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Millionaires often do not have many home...
View Answer

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Correct Answer
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Correct Answer
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Assume that a consumer purchases a combination of products Y and Z and that the MU y/ Pᵧ = 48/8 and MU z/ P_z = 30/5. To maximize utility, without spending more money, the consumer should

Correct Answer
verified

Correct Answer
verified
The potential criminal compares the marg...
View Answer