ch08

Exam
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or
answers the question.
1)
Suppose Jill's consumption bundle is made up of 2 goods, apples and bottles of j
uice. If the price of an apple increases,
then Jill's budget line would
1)
_______
A)
shift away from the origin on the bottles of juice axis only.
B)
shift towards the origin on the apples axis only.
C)
not change.
D)
shift towards the origin on both the apples and bottles of juice axes.
2)
A person's consumption possibilities is defined by the budget line because
2)
_______
A)
it represents the individual's preference for different combinations of goods.
B)
all consumers must consume on their budget line.
C)
it marks the boundary between what is affordable and unaffordable.
D)
it marks the boundary between what can be produced and what is unattainable give
n the current state of technology and
resources.
3)
Tom's consumption possibilities is defined by
3)
_______
A)
his preferences for consumption of the goods that he consumes.
B)
his income and the prices of the goods that he consumes.
C)
his income only.
D)
the prices of the goods that he consumes only.
4)
Utility is best defined as

4)
_______
A)
the satisfaction from consuming a good.
B)
the practical usefulness of a good.
C)
the price of a good.
D)
the amount one is willing to pay for a good.
5)
Total utility describes
5)
_______
A)
an increase in consumption multiplied by the gain in utility.
B)
total consumption divided by marginal utility.
C)
the benefit gained from all consumption.
D)
total consumption multiplied by marginal utility.
6)
The total benefit that a person receives from the consumption of goods and servi
ces is called
6)
_______
A)
marginal utility.
B)
total utility.
marginal cost.
C)
D)
opportunity cost.
7)
A measure of all the satisfaction you receive from all the coffee that you consu
me is your
7)
_______
A)
marginal utility per dollar spent on coffee.
B)
total utility from coffee.
C)
marginal utility per dollar spent on coffee when you are in your consumer equili
brium.
D)
marginal utility of coffee.
8)
Which of the following statements is true?
8)
_______
A)
As more of a good is consumed, its total utility increases, unless the good is s
ubject to diminishing marginal utility.
B)
No two people have identical utility functions, just as no two people have ident
ical fingerprints.
C)
As more of a good is consumed, its total utility increases, even if the good is
subject to diminishing marginal utility.
D)
Both A and C above.
9)
Which of the following is NOT an assumption of marginal utility theory?
9)
_______
A)
A consumer derives utility from the goods consumed.
B)
As more of a good is consumed, the decrease in the marginal utility from the goo
d means that the total utility from the
good decreases also.
C)
Each additional unit of consumption yields additional utility.
D)
Consumers maximize their total utility.
10)
As Sean's consumption of rice goes up, his
10)
______
A)
total utility from consuming rice increases.
B)
average utility from consuming rice increases.
C)
marginal utility from consuming rice increases.
D)
elasticity of utility from consuming rice increases.
11)
As an individual's consumption of a good increases,
11)
______
A)
the price of the good increases.
B)
his or her marginal utility increases.
C)
his or her total utility increases.
D)
All of the above answers are correct.
12)
Mark's marginal utility from reading books is the ________ when he reads _______
_.
12)
______
A)
total utility he gets; one more book
B)
change in his total utility; more books
C)
change in his total utility; one additional book
D)
consumer surplus he gets; books
13)
Marginal utility is the
13)
______
A)
maximum price that a consumer is willing to pay for an additional unit of a good
.
B)
additional cost to a consumer when an additional unit of a good is consumed.
C)
total satisfaction that a person gets from the consumption of all of the units o
f a good consumed.
D)
change in satisfaction that results from a one-unit increase in the quantity of

a good consumed.
14)
________ is the additional satisfaction a person receives from consuming an extr
a unit of a good.
14)
______
A)
Marginal utility
B)
Preferences
C)
Diminishing marginal utility
D)
Total utility
15)
The measure of the benefit you get from consuming the next cup of coffee is your
15)
______
A)
total utility from coffee when you are at your consumer equilibrium.
B)
marginal utility of coffee.
C)
total utility from coffee.
D)
total utility per dollar spent on coffee.
16)
Liz's marginal utility for two different goods is determined by
16)
______
A)
summing her total utility from consumption of each good and then dividing by two
.
B)
how much benefit she gets from another unit of each of those goods.
C)
her average utility for the two goods.
D)
All of the above answers are correct.
17)
The marginal utility from the consumption of a good is equal to the

17)
______
A)
total utility divided by the quantity consumed.
B)
change in total utility divided by the change in the quantity consumed.
C)
change in total utility divided by the change in price.
D)
total utility divided by the price.
18)
Marginal utility measures the
18)
______
A)
additional utility from an additional unit of consumption.
B)
additional cost of an additional unit of consumption.
C)
total utility from consumption.
D)
average utility from an additional unit of consumption.
19)
Marginal utility is the
19)
______
A)
change in utility that results from a one-unit change in the quantity of a good
consumed.
B)
usefulness of a product.
C)
change in utility that results from a one-unit change in the price of a good con
sumed.
D)
utility that a person receives from the consumption of goods and services.
20)
The total utility from three skirts is
20)
______
A)
three skirts divided by total income.
B)
three times the marginal utility of the third skirt.
C)
the sum of the marginal utility of the first skirt plus the marginal utility of
the second skirt plus the marginal utility of the
third skirt.
D)
three times the price of a skirt.
21)
The total utility you get from eating slices of pizza on a given night is the
21)
______
A)
sum of the differences in marginal utility as you increase the number of slices
eaten.
B)
marginal utility of the last slice times the total number of slices eaten.
C)
sum of the marginal utilities of all slices eaten.
D)
sum of the marginal utilities per dollar spent on all slices eaten.
22)
Marginal utility theory assumes that when Sally consume less of a good that she
was previously consuming more than
one unit of, her ________.
22)
______
A)
total utility increases
B)
income increases
C)
marginal utility increases
D)
total utility is maximized
23)
Marginal utility
23)
______
A)
is always negative when total utility is positive and positive when total utilit
y is negative.
B)
is an implication of the law of demand.

C)
is the additional utility derived from the last unit of a good consumed.
D)
characterizes things of little use.
24)
The principle of diminishing marginal utility says that
24)
______
A)
total utility decreases as the quantity of the good consumed increases.
B)
total utility increases by smaller and smaller amounts as the quantity of the go
od consumed increases.
C)
total utility increases by larger and larger amounts as the quantity of the good
consumed increases.
D)
marginal utility is negative as the quantity of the good consumed increases.
25)
Diminishing marginal utility means that
25)
______
A)
beyond a certain point, total utility decreases as income rises.
B)
Ralph will enjoy his second hamburger less than the first.
C)
the price of two hamburgers is twice the price of one.
D)
the total utility from one hamburger exceeds the total utility from two hamburge
rs.
26)
Which of the following is consistent with the assumptions of marginal utility th
eory?
26)
______
A)
As Jose consumes more of one good, his marginal utility from consuming more of t
hat good decreases.
B)
As Jose consumes more of one good, his marginal utility from consuming more of a
ll good increases.
C)
As Jose consumes more of one good, his marginal utility from consuming more of t
hat good increases.
D)
As Jose consumes more of one good, his marginal utility from consuming more of a
ll goods decreases.
27)
The fact that the fourth plate from the "All You Can Eat Country Buffet" generat
ed more satisfaction than the fifth plate is
an example of
27)
______
A)
diminishing marginal utility.
B)
diminishing total utility.
C)
increasing marginal utility.
D)
the "paradox of value."
28)
If Pete enjoys his first pancake of the morning much more than his fifth pancake
of the morning, he is exhibiting
28)
______
A)
B)
utility maximizing behavior.
C)
diminishing total utility.
D)
irrational behavior.
29)
According to the principle of diminishing marginal utility, as the quantity of a
good or service consumed increases, total
utility
29)
______
A)
is unchanging.
B)
is zero.
C)
decreases.
D)
increases.
30)
As you consume more and more of any good, you experience ________ utility.
30)
______
A)
diminishing total
B)
negative marginal
C)
increasing marginal
D)
diminishing marginal
31)
The principle of diminishing marginal utility means that as you eat fewer slices
of pizza, your total utility from pizza will
________ and your marginal utility from each additional slice of pizza will ____
____.
31)
______
A)
increase; increase
B)
increase; decrease
C)
decrease; decrease
D)
decrease; increase
32)
Liz loves to eat popcorn. Still, the more she eats, the less she wants each addi
tional bite. Her marginal utility from
popcorn is
32)
______
negative.
A)
B)
zero.
C)
increasing.
D)
diminishing.
33)
"I really enjoy watching movies. The first one is best. After that I still enjoy
movies but the last one is not as much fun to
watch as the one before it." This statement reflects the
33)
______
A)
principle of diminishing marginal utility.
B)
law of supply.
C)
principle of diminishing total utility.
D)
principle of increasing marginal utility.
34)
The principle of diminishing marginal utility can be used to explain why
34)
______
A)
Bob enjoys his first soda more than Charlie enjoys his fourth.
B)
Charlie enjoys his fourth soda less than Bob enjoys his first.
C)
Bob's first soda is less enjoyable than his second soda.
D)
Bob's second soda is less enjoyable than his first soda.
35)
The marginal utility of a third skirt is
35)
______
A)
the change in total utility from the third skirt.
B)
three skirts times the price of a skirt.
C)
three times the average utility of the three skirts.
D)
the total utility of three skirts divided by three.
36)
Your marginal utility from a hamburger
36)
______
A)
depends on how many hamburgers you've already eaten.
B)
is always greater than your average utility from a hamburger.
C)
is always greater than the price of a hamburger.
D)
is always greater than your total utility from hamburgers.
Cookies
(pounds
per week)
0
1
2
3
4
5
Homer'
s total
utility
0
5
3
12
14
15
37)
The above table gives the total utility that Homer obtains from consuming variou
s quantities of chocolate chip cookies.
The marginal utility from the fifth pound of cookies is
37)
______
3.
A)
B)
1.
C)
2.
D)
15.
38)
The above table gives the total utility that Homer obtains from consuming variou
s quantities of chocolate chip cookies.
The marginal utility from the third pound of cookies is
38)
______
9.
A)
B)
3.
C)
12.
D)
4.
Units
consum
ed
1
2
3
4
Jim's
total
utility
12
22
30
36
Sally's
total
utility
16
26
34
35
39)
In the table above, which of the following is true?
39)
______
A)
Jim and Sally have diminishing marginal utility.
B)
Jim has diminishing marginal utility and Sally has increasing marginal utility.
C)
Jim and Sally have increasing marginal utility.
D)
Jim has increasing marginal utility and Sally has diminishing marginal utility.
40)
In the figure above, diminishing marginal utility is shown by
40)
______
A)
total utility curve A.
B)
total utility curve B.
C)
total utility curve C.
D)
all three curves.
41)
In the figure above, the curve that shows the diminishing marginal utility is
41)
______
A)
total utility curve A because it gets steeper as consumption of tomatoes increas

es.
B)
total utility curve C because it gets flatter as consumption of tomatoes increas
es.
C)
total utility curve C because it is lower than total utility curves B and C.
D)
total utility curve A because it is higher than total utility curves B or C.
42)
In the figure above, the marginal utility of the third crate of tomatoes for the
person with total utility curve C is
42)
______
A)
13 units of utility.
B)
C)
D)
43)
As the quantity of a good consumed increases, its marginal utility ________ and
its total utility ________.
43)
______
A)
increases; increases
B)
decreases; increases
C)
increases; decreases
D)
decreases; decreases
44)
As Goldilocks consumes more gummy bears, her total utility ________ and her marg
inal utility from gummy bears
________.
44)
______
A)
decreases; increases
B)
increases; increases
C)
decreases; decreases
D)
increases; decreases
45)
As Sally increases her consumption of a good, she experiences diminishing margin
al utility if her total utility
45)
______
decreases.
A)
B)
increases at a decreasing rate.
C)
increases at a constant rate.
D)
increases at an increasing rate.
46)
The principle of diminishing marginal utility implies that the
46)
______
A)
total utility from a product is also diminishing as more units are consumed.
B)
rate of change of marginal utility is very low as more units are consumed.
C)
rate of change of total utility is diminishing as more units are consumed.
D)
marginal utility of a product is negative.
47)
If marginal utility is positive but diminishing, as more units of a good are con
sumed, then the total utility from the good
must be
47)
______
A)
positive and rising at a decreasing rate.
B)
falling.
C)
positive and rising at an increasing rate.
D)
positive and rising at any rate.
48)
As you consume additional hamburgers, the relationship between total and margina
l utility is that
48)
______
A)
both total and marginal utility increase continuously.
B)
both total and marginal utility decrease continuously.
C)
total utility decreases, but marginal utility increases.
D)
total utility increases, but marginal utility decreases.
49)
As Shana's consumption of tacos decreases, her
49)
______
A)
both total and marginal utility from tacos decrease.
B)
marginal utility from tacos increases.
C)
total utility from tacos increases.
D)
marginal utility from tacos decreases.
50)
A decrease in consumption will result in
50)
______
A)
total utility decreasing, but marginal utility increasing.
B)
both total utility and marginal utility increasing.
C)
both total utility and marginal utility decreasing.
D)
total utility increasing, but marginal utility decreasing.
51)
As consumption increases, total utility increases
51)
______
A)
and marginal utility increases.
B)
at an increasing rate.
C)
at a constant rate.
D)
at a decreasing rate.
52)
If marginal utility is positive but diminishing, then total utility must be ____
____ as consumption of the good increases.
52)
______
decreasing
A)
B)
positive and rising at a decreasing rate
C)
positive and rising at an increasing rate
D)
positive and rising at any rate
Slices
per
Pizza
Total
utility
Quantit
y per
Pepsi
Total
utility
week
0
1
2
3
4
5
week
0
100
150
175
190
195
0
1
2
3
4
5
0
70
130
180
220
250
53)
The table shows Elaine's utility from pizza and Pepsi. If Elaine consumes 2 slic
es of pizza and 3 Pepsi's, her marginal
utility from the fourth Pepsi is ________ units.
53)
______
220
A)
B)
60
C)
40
D)
54
Quantity
0
1
2
3
4
5
Total utility
0
250
Marginal
utility
180
580
700
100
54)
The above table gives some of Tammy's total and marginal utilities from comedy v
ideos. Which of the following
statements is true?
54)
______
A)
Tammy's marginal utility from the first comedy video is less than her marginal u
tility from the third comedy video.
B)
Tammy's marginal utility from the third comedy video is equal to 580/3.
C)
Tammy's total utility from five comedy videos is 800.
D)
None of the above answers are correct.
Box of
doughnuts
1
2
3
4
5
6
Homer's total
utility
30
55
75
90
100
103
55)
The above table shows Homer's total utility from boxes of doughnuts. As Homer's
consumption of doughnuts increases,
55)
______
A)
both his total utility and his marginal utility increase.
B)
both his total utility and his marginal utility decrease.
C)
his total utility increases, but his marginal utility decreases.
D)
his total utility decreases, but his marginal utility increases.
56)
The above table shows Homer's utility from boxes of doughnuts. If Homer decrease
s his consumption of doughnuts from
4 boxes to 3 boxes, his
56)
______
A)
total utility will increase, but his marginal utility will decrease.
B)
total utility will decrease, but his marginal utility will increase.
C)
total utility and marginal utility will both decrease.
D)
total utility and marginal utility will both increase.
57)
The above table shows Homer's utility from boxes of doughnuts. The marginal util
ity that Homer receives from the third
box of doughnuts is equal to
57)
______
A)
25.
B)
3.
C)
20.
D)
75.
58)
The above table shows Homer's utility from boxes of doughnuts. As Homer's consum
ption of doughnuts increases, his
58)
______
A)
marginal utility is positive but decreasing.
B)
marginal utility is negative and decreasing.
C)
marginal utility is positive and increasing.
D)
marginal utility is negative but increasing.
Quantit
y of
cheeseb
urgers
1
2
3
4
5
Total
utility
from
cheeseb
urgers
36
66
86
100
110
59)
Julie's total utility from cheeseburgers is given in the table above. What is th
e marginal utility of the third cheeseburger?
59)
______
A)
86
B)
14
C)
28.7
D)
20
Quarts
of
ice
cream
0
1
2
3
4
Total
utility
from
ice
cream
0
80
150
210
260
60)
From the information in the above table, what is the marginal utility of the thi
rd quart of ice cream?
60)
______
230
A)
B)
60
C)
80
D)
70
Quantit
y
Fritos
Total
utility
Quantit
y
Fruit drinks
Total
utility
0
0
1
2
3
4
5
6
40
75
105
130
150
165
0
1
2
3
4
5
6
0
50
95
135
170
200
225
61)
The table above shows the total utility from the two goods Freddy likes to consu
me. The marginal utility Freddy receives
from consuming an extra bag of Fritos
61)
______
A)
decreases as he consumes more fruit drinks.
B)
equals 75 when he consumes 2 bags of Fritos.
C)
decreases as he consumes more bags of Fritos.
D)
depends on the quantity of fruit drinks consumed.
62)
me. Suppose that Freddy has already
eaten 5 bags of Fritos. If he consumes one more bag, his marginal utility will
62)
______
equal 35.
A)
B)
equal 15.
equal 40.
C)
D)
depend on the price of the extra bag.
63)
me. If Freddy has consumed 4 fruit drinks
and then decides to drink another,
63)
______
A)
the marginal utility from the 5th drink equals 30.
B)
his total utility will increase.
C)
the marginal utility from the 5th drinks equals 50.
D)
Both answers A and B are correct.
Quantit
y of
magazi
nes
0
1
2
3
4
5
Marginal
utility from
magazines
Quantity of
gummy
bears
Marginal
utility from
gummy
bears
0
100
75
50
25
5
1
2
3
4
5
200
180
160
140
120
64)
Kelly's marginal utilities for magazines and packages of gummy bears are listed
in the table above. For Kelly, what is the
total utility received from consuming 5 magazines?
64)
______
20
A)
B)
5
C)
25
D)
255
65)
Kelly's marginal utilities for magazines and packages of gummy bears are listed
in the table above. What is the extra
utility received by Kelly when she decides to consume 3 packages of gummy bears
instead of 2 packages?
65)
______
A)
180
B)
540
C)
20
D)
160
Quantit
y of
magazi
nes
0
1
2
3
4
5
6
7
8
Total
utility
from
magazi
nes
0
240
400
520
620
680
716
736
740
Quantit
y of
CDs
Total
utility
from
CDs
0
1
2
3
4
5
6
7
8
0
500
950
1350
1650
1800
1850
1870
1875
66)
The table above gives Jane's total utility from magazines and CDs. What is the m
arginal utility of Jane's sixth magazine?
66)
______
15 units
A)
B)
36 units
C)
80 units
D)
60 units
67)
The table above gives Jane's total utility from magazines and CDs. What is the m
arginal utility of the sixth CD?
67)
______
100 units
A)
B)
150 units
C)
50 units
D)
5 units
68)
The table above gives Jane's total utility from magazines and CDs. The price of
a magazine is $4 and the price of a CD is
$10. Which of the following correctly illustrates the principle of diminishing m
arginal utility? The fact that
68)
______
A)
Jane's marginal utility per dollar from the second magazine is the same as her m
arginal utility per dollar from the third
CD.
B)
the sixth magazine has less marginal utility than the sixth CD.
C)
the marginal utility per dollar from the sixth magazine is less than the total u
tility from six magazines.
D)
the marginal utility of the third CD is less than the marginal utility of second
CD.
69)
Economists using marginal utility theory assume that consumers' objectives are t
o
69)
______
A)
maximize their marginal utility.
B)
maximize their total utility.
C)
maximize their income.
D)
none of the above
70)
70)
______
A)
People derive utility from their consumption.
B)
Marginal utility diminishes with more consumption.
C)
More consumption yields more total utility.
D)
Utility can be measured and the units of utility are precisely defined..
71)
As more of a good is consumed, its marginal utility ________ and its total utili
ty ________.
71)
______
falls; falls
A)
B)
rises; rises
C)
rises; falls
D)
falls; rises
72)
Jeannie's marginal utility from her 4th book in a month is 50. Her marginal util
ity from her 5th book
72)
______
equals 50.
A)
B)
is less than 50.
C)
might be more than, less than, or equal to 50 but more information is needed.
D)
is greater than 50.
73)
When Alex eats 1 slice of pizza, his total utility is 80; when Alex eats 2 slice
s of pizza, his total utility is 120. Alex's
marginal utility from the second pizza is
73)
______
40.
A)
B)
200.
C)
60.
D)
80.
Quantit
y
(boxes)
0
1
2
3
4
Total
utility
0
30
50
66
?
Margin
al
utility
X
30
20
16
12
74)
The table above gives Andy's utility from popcorn. Andy's total utility from fou
r boxes of popcorn is
74)
______
70.
A)
B)
82.
C)
66.
D)
78.
75)
When Ramona is in consumer equilibrium,
75)
______
A)
her total utility per dollar spent is equal for all goods.
B)
her total utilities of all goods are equal.
C)
she is maximizing her utility, given her income and the prices of goods and serv
ices.
D)
any change in prices would make her worse off.
76)
With a given income and prices of goods, Marcus will be in a consumer equilibriu
m if ________.
76)
______
A)
his marginal utility from all goods is the same
B)
he purchases the same amounts of all goods
C)
his marginal utility from all goods is at its maximum
D)
he maximizes his total utility
77)
When a consumer spends all of his or her income and consumes a bundle of goods s
uch that the marginal utility per
dollar from all goods is equal, then the
77)
______
A)
consumer's total utility is maximized.
B)
consumer is in his or her consumption equilibrium.
C)
marginal utilities for each good are maximized.
D)
78)
Ricky is in a consumer equilibrium. Given the prices of goods, Ricky has allocat
ed all his income such that his marginal
utility per dollar spent is ________ for ________ goods.
78)
______
A)
maximized; all
B)
equal; all
equal; normal
C)
D)
as small as possible; all
79)
If the price of a good increases, all else the same, then the consumer's total u
tility will
79)
______
decrease.
A)
B)
decrease if there are no substitutes for the good and remain the same if there a
re substitutes for the good.
C)
increase.
D)
remain the same as consumption shifts to cheaper goods.
80)
Which of the following occur when a person maximizes utility?
I.
the marginal utility of each good bought is equal
II.
the highest level of utility is attained
III.
all of a person's budget is spent
80)
______
I and III
A)
B)
I and II
C)
I, II and III
D)
II and III
81)
Total utility is maximized when a consumer has spent all of his or her income an
d
81)
______
A)
spent equal amounts on all goods.
B)
the marginal utility per dollar from all goods is equal.
C)
the total utility per dollar from all goods is equal.
D)
marginal utility is maximized.
82)
At the utility maximizing equilibrium for two goods, X and Y, which of the follo
wing must be true?
82)
______
A)
The marginal utility per dollar spent on X will exceed the marginal utility per
dollar spent on Y.
B)
The marginal utility per dollar from X equals the marginal utility per dollar fr
om Y.
C)
The marginal utility will be the same for each good.
D)
The total expenditure will be the same for each good.
83)
Liane maximizes her total utility when she allocates all of her available income
such that the marginal utility per dollar
spent on each good ________.
83)
______
is the same
A)
B)
is diminishing
C)
is increasing
D)
is maximized
84)
Danny has $12 to spend on two goods pies and soda. The price of a pie is $4, and
the price of a can of soda is $2. To
maximize his utility, Danny buys ________.
84)
______
A)
the combination that gives him equal total utility from pies and soda
B)
the combination that gives him the same marginal utility per dollar spent on pie
s as on soda
C)
2 pies and 2 cans of soda
D)
only sodas because they are less expensive
Quantity of coffee
(cups per day)
1
2
3
4
Total utility
50
80
90
92
85)
Betsy's utility depending from her consumption of coffee is shown in the table a
bove. Betsy's marginal utility from the 3rd
cup of coffee per day is
85)
______
10
A)
B)
90
C)
85
D)
30
86)
As Betsy's consumption of coffee increases, her marginal utility from coffee
86)
______
A)
remains unchanged.
B)
increases first and then decreases.
C)
increases.
D)
decreases.
87)
Betsy's utility depending from her consumption of coffee is shown in the table a
bove. If the price of a cup of coffee is $2,
Betsy's marginal utility per dollar from the 2nd cup of coffee per day is
87)
______
A)
15
B)
20
C)
40
D)
32.5
Qu
anti
ty
of
DV
Ds
1
2
Marginal
utility from
DVDs
150
120
Qu
anti
ty
of
piz
za
1
2
Marginal
utility from
pizza
200
180
3
4
5
6
100
90
60
40
3
4
5
6
150
120
100
60
88)
Lisa spends all her income on pizzas and DVDs. The above table
inal utility for pizza and marginal
utility for DVDs. If the price of a pizza is $10, the price of
Lisa has $40 to spend on the two goods, what
combination of pizza and DVDs will maximize her utility?
88)
______
A)
4 DVDs and 2 pizzas
B)
5 DVDs and 4 pizzas
C)
6 DVDs and 1 pizza
D)
2 DVDs and 3 pizzas
89)
utility for DVDs. If the price of a pizza is $10 and the price
nd Lisa has $40 to spend on the two goods,
what combination of pizza and DVDs will maximize her utility?
89)
______
A)
2 DVDs and 4 pizzas
B)
3 DVDs and 5 pizzas
C)
2 DVDs and 2 pizzas
D)
1 DVD and 3 pizzas
90)
utility for DVDs. If the price of a pizza is $10 and the price
nd Lisa has $60 to spend on the two goods,
what combination of pizza and DVDs will maximize her utility?
shows Lisa's marg

a DVD is $5, and
shows Lisa's marg

of a DVD is $10 a
shows Lisa's marg

of a DVD is $10 a
90)
______
A)
2 DVDs and 4 pizzas
B)
4 DVDs and 2 pizzas
C)
3 DVDs and 3 pizzas
D)
3 DVDs and 5 pizzas
91)
Lisa spends all her income on pizzas and DVDs. The above table shows Lisa's marg
utility for DVDs. Suppose the price of a pizza is $10 and the price of a DVD is
$10 and Lisa initially has $40 to spend on
the two goods. Lisa gets a raise at work and so she now has $60 to spend on DVDs
and pizza. With her increase in income,
her consumption of DVDs ________ and hence DVDs are ________ good for Lisa.
91)
______
A)
rises; an inferior
B)
falls; an inferior
C)
falls; a normal
D)
rises; a normal
Qu
anti
ty
of
stea
k
1
2
3
4
5
Marginal
utility from
steak
100
80
35
25
10
Qu
anti
ty
of
chic
ken
1
2
3
4
5
Marginal
utility from
chicken
40
35
25
20
15
6
5
6
10
92)
John either buys a steak or chicken when dining out. John's marginal utility for
steak and chicken is given in the above
table. If the price of a steak is $10 and the price of a chicken is $5 and John
has $25 to spend on the two goods, what
combination of steak and chicken will John consume to maximize his utility?
92)
______
A)
0 steak and 5 chickens
B)
3 steaks and 2 chickens
C)
2 steaks and 1 chicken
D)
93)
John either buys a steak or chicken when dining out. John's marginal utility for
steak and chicken is given in the above
table. If the price of a steak is $5 and the price of a chicken is $5 and John h
as $25 to spend on the two goods, what
combination of steak and chicken will John consume to maximize his utility?
93)
______
A)
B)
C)
D)
Marginal Utility
Servin
gs per
week
1
2
Chicke
n
70
60
Fish
45
40
3
4
5
50
40
30
35
30
25
94)
Lily has $10 to spend each week on fish and chicken. Fish costs $2 a serving and
chicken costs $3 a serving. The table
shows Lily's marginal utilities of fish and chicken. Lily will consume ________
servings of chicken and ________ of fish
each week.
94)
______
A)
2; 2
B)
4; 0
C)
0; 5
D)
1; 3
Pizza
Slices
per
week
0
1
2
3
4
5
Total
utility
0
100
150
175
190
195
Pepsi
Quantit
y per
week
0
1
2
3
4
5
Total
utility
0
70
130
180
220
250
95)
Elaine spends $10 a week on pizza
d the price of a Pepsi is $2. The
Elaine's total utility from pizza
lity by buying ________ slices of
________ hamburgers a week.
95)
______
2; 3
A)
B)
and Pepsi. The price of pizza is $2 a slice an

table shows
and hamburgers. Elaine maximizes her total uti
pizza and
3; 2
C)
0; 5
D)
5; 0
Qu
anti
ty
of
skii
ng
0
1
2
3
4
5
Qu
anti
ty
of
ska
ting
Marginal
utility from
skiing
50
40
30
20
10
0
1
2
3
4
5
Marginal
utility from
skating
70
40
30
20
5
96)
Steve has two goods he can spend his income on, skiing and skating, and his marg
inal utilities from each are in the table
above. The price of each unit of skiing is $10 and the price of each unit of ska
ting is $5. Steve has $40 to spend. What
quantities of skiing and skating should Steve consume to maximize his utility?
96)
______
A)
1 unit of skiing and 2 units of skating

B)
5 units of skiing and 5 units of skating
C)
D)
97)
ting is $5. Steve has $40 to spend. If Steve
consumes the quantities of skiing and skating to maximize his utility, what is h
is total utility?
97)
______
250
A)
B)
60
C)
300
D)
40
98)
ting is $10. Steve has $40 to spend. What
quantities of skiing and ice skating will Steve consume to maximize his utility?
98)
______
A)
B)
C)
D)
Quantit
y
0
1
2
3
4
5
6
7
Chips
Total
utility
0
60
100
120
135
145
150
153
Quantit
y
0
1
2
3
4
5
6
7
Sodas
Total
utility
0
200
300
390
470
530
580
620
8
155
8
650
99)
The table above shows Mary's utility from chips and soda. Mary receives ________
units of utility from the third chip.
99)
______
40
A)
B)
30
C)
55
D)
20
100)
The table above shows Mary's utility from chips and soda. The table shows that
100)
_____
A)
Mary will consume no soda and only chips.
B)
Mary's marginal utility decreases as she consumes more chips.
C)
Mary's total utility decreases as she consumes more chips.
D)
Mary prefers sodas to chips.
101)
The table above shows Mary's utility from chips and soda. The table shows that M
ary has diminishing marginal utility for
101)
_____
A)
soda, but not chips.
B)
chips, but not soda.
C)
both chips and soda.
D)
neither chips nor soda.
102)
The table above shows Mary's utility from chips and soda. Mary buys only chips a
nd soda. Chips cost $2 per bag and soda
costs $4 per six-pack. She has $20 to spend per week. To maximize her utility, M
ary will buy
102)
_____
A)
6 sodas and 2 bags of chips.
B)
C)
D)
Quantit
y of Mt.
Dew
(per
day)
1
2
3
4
5
Total
utility
(units)
30
55
75
90
100
103)
The table above gives Cathy's total utility from Mt. Dew. Cathy's marginal utili
ty from the 4th Mt. Dew is ________ units.
103)
_____
75
A)
B)
15
C)
82.5
D)
90
104)
ty from the 3rd Mt. Dew is ________ units.
104)
_____
25
A)
B)
20
C)
75
D)
65
105)
ty from additional Mt. Dews is
105)
_____
negative.
A)
B)
increasing.
C)
diminishing.
D)
constant.
106)
The table above gives Cathy's total utility from Mt. Dew. If the price of a Mt.
Dew is $2, Cathy's marginal utility per dollar
from the 3rd Mt. Dew is ________ units per dollar
106)
_____
40
A)
B)
32.5
C)
10
D)
20
107)
The table above gives Cathy's total utility from Mt. Dew. If the price of a Mt.
Dew is $1.50, Cathy's marginal utility per
dollar from the 4th Mt. Dew is ________ units per dollar.
107)
_____
82.5
A)
B)
10
C)
22.5
D)
15
Quantit
y
1
2
3
4
5
Apples
Total
utility
5
9
12
15
16
Quantit
y
1
2
3
4
5
Tacos
Total
utility
10
18
24
28
30
108)
Sally derives utility from consuming apples and tacos as shown in the table abov
e. Apples cost $1 each and tacos cost $2
each. If Sally's income is $9, she will consume
108)
_____
A)
1 apple and 4 tacos.
B)
5 apples and 2 tacos.
C)
D)
no apples and 4 1/2 tacos.
109)
Sasha derives utility from consuming apples and tacos as shown in the table abov
e. Apples cost $1 each and tacos cost $2
each. If Sasha's income is $8, he will consume
109)
_____
A)
B)
C)
D)
110)
A consumer has maximized his or her utility by consuming
110)
_____
A)
at the midpoint of the budget constraint line.
B)
at the midpoint of the demand curve.
C)
so that the ratio of marginal utility to price is the same for all goods consume
d.
D)
so that the total utility of all goods consumed is the same.
111)
Total utility is maximized when the ________ for all goods.
111)
_____
A)
marginal utilities are zero
B)
marginal utility per dollar spent is equal
C)
marginal utilities are maximized
D)
marginal utilities are negative
112)
As long as the marginal utility per dollar from pizza is greater than the margin
al utility per dollar from soda, then to
maximize utility a consumer will buy
112)
_____
A)
less pizza and less soda.
B)
equal amounts of pizza and soda.
C)
more soda to equalize the marginal utility per dollar between soda and pizza.
D)
more pizza and less soda.
113)
To maximize her utility, Pat should spend all of her money and buy goods in a wa
y that
113)
_____
A)
her price elasticity of demand for each good is the same.
B)
the marginal utility of the last unit of each good is the same.
C)
her total expenditure on each good is the same.
D)
the marginal utility per dollar from each good is the same.
114)
When Frankie spends all his money in such a way that the marginal utility per do
llar is the same for all final purchases of
products he consumes, Frankie has maximized
114)
_____
A)
the number of products he consumes.
B)
his total utility.
C)
his total expenditure on all products.
D)
his marginal utility.
115)
When you chose to buy the second cup of coffee instead of the third bagel, which
of the following is necessarily correct?
115)
_____
A)
The second coffee will give you higher marginal utility.
B)
The marginal utility per dollar from the third bagel is less than the marginal u
tility per dollar from the second coffee.
C)
The second coffee is cheaper than the third bagel.
D)
Both answers A and C are correct.
116)
If the price of a good falls, before the amount consumed changes the marginal ut
ility per dollar from that good
116)
_____
increases.
decreases.
A)
B)
C)
might either increase or decrease depending on whether the good is a substitute
or a complement.
D)
More information is needed to determine the answer.
117)
Keesha consumes only milkshakes and burgers. At her consumer equilibrium, which
of the following is true when Keesha
can buy any portion of a unit of a milkshake or burger?
117)
_____
A)
The marginal utility per dollar will be the same for each good.
B)
The marginal utility per dollar from a burger will exceed the marginal utility p
er dollar from a milkshake if she likes
burgers more than milkshakes.
C)
The marginal utility per dollar from a milkshake will exceed the marginal utilit
y per dollar from a burger if she likes
burgers more than milkshakes.
D)
The marginal utility will be the same for each good.
118)
Keesha consumes only milkshakes and burgers. Once at her consumer equilibrium, w
hat would happen if she changed
her consumption by purchasing one more milkshake and one fewer burger?
118)
_____
A)
The marginal utility of a milkshake would increase.
B)
The total utility from the consumption of both goods would decrease.
C)
The marginal utility of a burger would decrease.
D)
all of the above
119)
If Katie purchases two slices of pizza and six breadsticks to maximize her total
utility, then
119)
_____
A)
a breadstick costs three times as much as a slice of pizza.
B)
a slice of pizza costs three times as much as a breadstick.
C)
her marginal utility from the second slice of pizza divided by the price of a sl
ice of pizza is equal to her marginal utility
from the sixth breadstick divided by the price of a breadstick.
D)
120)
Emma consumes only hot dogs and hamburgers. She is at her consumer equilibrium.
Hot dogs and hamburgers have the
same marginal utility. Thus
120)
_____
A)
she must be eating the same number of hot dogs and hamburgers.
B)
her total utility from all the hot dogs eaten must be the same as her total util
ity from all the hamburgers eaten.
C)
the price of a hot dog and the price of a hamburger must be the same.
D)
Both answers B and C are correct.
121)
Suppose the price of a soda is $2 each, the price of a hot dog is $3 each and th
e budget is $20. If the marginal utility of the
fourth soda is 100 and the marginal utility of the fourth hot dog is 150, to max
imize utility, a person will buy
121)
_____
A)
fewer sodas than 4 and more hot dogs than 4.
B)
buy more sodas than 4 to increase their utility.
C)
more hotdogs than 4 and fewer sodas than 4 because hot dogs provide more utility
.
D)
4 sodas and 4 hot dogs.
122)
If a consumer spends all of his or her income and the marginal utility per dolla
r is equal for all goods, then
122)
_____
A)
a consumer could not be better off even with greater income.
B)
marginal utility is maximized.
C)
total utility is maximized.
D)
the proportion of income spent on each good must be equal.
123)
A consumer maximizes total utility when all available income is spent and the
123)
_____
A)
marginal utility per dollar from each good is equal for all goods.
B)
total utility from all goods purchased is equal.
C)
marginal utility from each good is equal for all goods.
D)
dollars spent on the last unit of each good are equal for all goods.
124)
George spends all his income on sandwiches and juice. George's utility is maximi
zed when he is consuming sandwiches
and juice so that the
124)
_____
A)
marginal utility from sandwiches is at a maximum.
B)
marginal utility per dollar spent on sandwiches equals the marginal utility per
dollar spent on juice.
C)
total utility from sandwiches equals the total utility from juice.
D)
marginal utility from sandwiches equals the marginal utility from juice.
125)
Let MUa and MUb stand for the marginal utilities of apples and bagels. Let Pa an
d Pb stand for their prices. The general
necessary condition for consumer equilibrium is
125)
_____
A)
MUa/Pa = MUb/Pb.
B)
MUa/MUb = Pb/Pa.
MUa = MUb.
C)
D)
MUa = MUb and Pa = Pb.
126)
Jennifer consumes both apples and bread. Let Pa be the price of an apple and Pb
the price of a loaf of bread. TUa is her
total utility from apples and TUb is her total utility from bread. MUa is her ma
rginal utility from apples and MUb is her
marginal utility from bread. When Jennifer is in consumer equilibrium,
126)
_____
A)
MUa/Pb = MUb/Pa.
B)
MUa/Pa = MUb/Pb.
C)
TUa/Pb = TUb/Pb.
D)
MUa/TUa = MUb/TUb.
127)
Pam buys only thread and fabric, and she buys the quantities that maximize her u
tility. Her marginal utility from a spool
of thread is 30 units and her marginal utility from a yard of fabric is 60 units
. If the price of a spool of thread is $4, then
you are sure that the price of a yard of fabric is ________.
127)
_____
$12
A)
B)
$2
C)
$8
D)
$4
128)
Bobby consumes only chocolate ice cream and vanilla ice cream. He is spending al
l of his income. His marginal utility of
chocolate is 100 and his marginal utility of vanilla is 200, and the price of ch
ocolate is $1.00 per scoop and the price of
vanilla is $2.00 per scoop. To maximize his utility, Bobby should
128)
_____
A)
not change his purchases between chocolate ice cream and vanilla ice cream.
B)
buy more vanilla ice cream and less chocolate ice cream.
C)
buy no chocolate ice cream.
D)
buy more chocolate ice cream and less vanilla ice cream.
129)
vanilla is $2.00 per scoop. To maximize his utility, Bobby should
129)
_____
A)
B)
not change his purchases between chocolate ice cream and vanilla ice cream.
C)
buy no vanilla ice cream.
D)
130)
vanilla is $1.00 per scoop. Bobby has maximized his
130)
_____
A)
marginal utility of chocolate ice cream.
B)
marginal utility of vanilla ice cream.
C)
maximized his total utility.
D)
marginal utilities of chocolate ice cream and vanilla ice cream.
131)
Fred spends all of his income on two goods DVDs and downloaded music. If Fred's
marginal utility per dollar from DVDs
is greater than his marginal utility per dollar from downloaded music, Fred can
________ his total utility by buying
________.
131)
_____
A)
maximize; more DVDs and more downloaded music
B)
increase; more DVDs and less downloaded music
C)
increase; more downloaded music and fewer DVDs
D)
maximize; fewer DVDs and less downloaded music

132)
Robinson spends all his income on mangos and bananas. Mangos cost
nd bananas cost $1 per pound. The
marginal utility is 30 for the last pound of mangos purchased and
t pound of bananas. To maximize his
utility, Robinson should buy
132)
_____
A)
the present combination of goods.
B)
more bananas and fewer mangos.
C)
more mangos and fewer bananas.
D)
only mangos.
133)
Robinson spends all his income on mangos and bananas. Mangos cost
marginal utility is 24 for the last pound of mangos purchased and
t pound of bananas. To maximize his
utility, Robinson should buy
133)
_____
only mangos.
$3 per pound a
10 for the las
$3 per pound a
10 for the las
A)
B)
C)
D)
134)
Robinson spends all his income on mangos and bananas. Mangos cost $3 per pound a
marginal utility is 30 for the last pound of mangos purchased and 8 for the last
pound of bananas. To maximize his utility,
Robinson should buy
134)
_____
A)
B)
C)
only bananas.
D)
135)
Robinson spends all his income on mangos and bananas. Mangos cost $3 per pound.
Robinson's marginal utility is 30 for
the last pound of mangos purchased and 10 for the last pound of bananas. If Robi
nson maximizes his utility from
consuming these goods, the price of bananas is
135)
_____
$3 per pound.
A)
B)
$2 per pound.
$1 per pound.
C)
D)
$0.50 per pound.
136)
Michelle spends all of her income on mangos and rice. Mangos cost $2 per pound a
nd rice costs $1.50 per pound. If
Michelle is spending all of her income and the marginal utility per dollar spent
is 20 for the last pound of mangos
purchased and 10 for the last pound of rice purchased, then
136)
_____
A)
Michelle should buy more mangos and less rice to maximize utility.
B)
Michelle is maximizing utility from her present consumption bundle.
C)
Michelle should buy more rice and fewer mangos in order to maximize utility.
D)
None of the above answers is correct.
137)
Joe consumes pizza and movies. He is currently spending his entire income and hi
s marginal utility of pizza is 10 and his
marginal utility of movies is 5. If the price of a pizza is $10 and the price of
a movie is $5, then to maximize his utility Joe
should
137)
_____
A)
increase consumption of movies and decrease consumption of pizza.
B)
not change his current bundle of movies and pizza.
C)
increase consumption of pizza and decrease consumption of movies.
D)
increase consumption of both goods.
138)
Joe consumes pizza and movies. He is currently spending his entire income and hi
s marginal utility of pizza is 15 and his
marginal utility of movies is 10. If the price of a pizza is $10 and the price o
f a movie is $5, then to maximize his utility Joe
should
138)
_____
A)
increase consumption of pizza and decrease consumption of movies.
B)
increase consumption of movies and decrease consumption of pizza.
C)
increase consumption of both goods.
D)
not change his current bundle of movies and pizza.
139)
Lisa is spending all of her income on compact discs and downloadable games for h
er smart phone. She finds that the
marginal utility from the last compact disc she buys is 30 and the marginal util
ity from the last downloadable game is 10.
The price of a compact disc is $15 and the price of a downloadable game is $5. L
isa should
139)
_____
A)
not change her consumption of downloadable games and compact discs.
B)
increase her consumption of compact discs.
C)
increase her consumption of downloadable games.
D)
decrease the price of downloadable games.
140)
Gil can consume either pens or milkshakes. Both pens and milkshakes sell for $1.
Gil finds that when his income is spent,
his marginal utility of pens will be 10 while his

will be 8. Gil could increase his utility
without violating his budget by consuming
140)
_____
A)
fewer pens and fewer milkshakes.
B)
more pens and fewer milkshakes.
C)
more pens and more milkshakes.
D)
fewer pens and more milkshakes.
141)
Sam spends all of his income on textbooks and hot
is $40 and the price of a hot dog is $0.50.
If Sam is maximizing his utility and the marginal
st textbook he purchases is 400, then the
marginal utility he derives from his last hot dog
141)
_____
400.
marginal utility of milkshakes
dogs. The price of a textbook

utility he derives from the la
purchased must be
A)
B)
20.
C)
5.
D)
10.
142)
Brian consumes only pizza and soda. When the price of a soda is $2 and the price
of a slice of pizza is $4, Brian maximizes
his utility by buying 5 sodas and 10 slices of pizza. If the marginal utility of
the 5th soda is 100 , then the marginal utility
from the 10th slice of pizza must be ________ .
142)
_____
100
A)
B)
200
C)
50
D)
More information is needed to determine the marginal utility of the 10th slice o
f pizza.
143)
Suppose the price of soda is $2 each and the price of a pizza slice is $4 each.
Jean maximizes utility and buys only sodas
and slices of pizza. If the price of a soda increases to $3 each, Jean's margina
l utility per soda
143)
_____
A)
will increase and she'll buy more soda.
B)
will decrease and she'll buy fewer sodas.
C)
will decrease and she'll buy more pizza.
D)
Both B and C are correct.
Quantit
y
1
2
3
4
Bags of Popcorn
Margin
al
utility
100
80
60
50
Bottles of soda
Margin
Quantit
al
y
utility
1
60
2
50
3
30
4
20
144)
In the table above, if Brent maximizes his utility by consuming 3 bags of popcor
n and 3 bottles of soda, then the ratio of

the price of popcorn to the price of soda is expected to be
144)
_____
6/5.
A)
B)
1/2.
C)
5/6.
D)
2.
145)
Jenny buys sodas and popcorn. Sodas sell for $1 and popcorn sells for $2 a bag.
Currently she is in consumer equilibrium,
with the marginal utility from her last dollar spent on popcorn equal to 100 uni
ts of utility. The marginal utility from her
last dollar spent on sodas is
145)
_____
A)
B)
C)
D)
146)
Usharani consumes 35 apples a week and 14 loaves of bread. Apples cost $1 each a
nd bread costs $2 per loaf. Usharani is
maximizing his utility and finds that the marginal utility from his 35th apple
146)
_____
A)
is half his marginal utility from his 14th loaf of bread.
B)
equals his marginal utility from his 14th loaf of bread.
C)
is such that his total utility from apples equals his total utility from bread.
D)
is twice his marginal utility from his 14th loaf of bread.
147)
Shaniq has seen two movies this week and two baseball games. Her marginal utilit
y of one more movie is 20 and her
marginal utility of one more baseball game is 30. Shaniq will go to a baseball g
ame tonight, rather than to another movie,
147)
_____
A)
if the baseball game costs $10.00 and the movie costs $5.00.
B)
no matter how much more the baseball game costs compared to the movie.
C)
if the baseball game costs $10.00 and the movie costs $7.00.
D)
148)
Suppose Hank spends his entire budget buying 2 bagels and 3 cups of coffee each
day. Also, suppose the marginal utility
of the second bagel is 100 and the marginal utility of the third cup of coffee i
s 200. Which of the following statements is
true?
148)
_____
A)
Hank is not maximizing his utility.
B)
Hank is not maximizing utility because he is not buying equal amounts of each go
od.
C)
Hank might be maximizing utility only if the price of a cup of coffee is less th
an the price of a bagel.
D)
Hank will be maximizing his utility as long as the price of a cup of coffee is t
wice the price of a bagel.
149)
Suppose Hanna spends her entire budget buying bagels and cups of coffee each day
. Also, suppose the marginal utility of
her last bagel is 100 and the marginal utility of her last cup of coffee is 200.
If the price of a bagel is $4 and the price of a
cup of coffee is $2, then
149)
_____
A)
Hanna needs to decrease her consumption of bagels to maximize her utility.
B)
Hanna should buy half as many bagels as coffee in order to maximize her utility.
C)
bagels must provide more total utility than coffee.
D)
Hanna needs to increase her consumption of bagels to maximize her utility.
150)
Sarah consumes pizzas and hamburgers. The price of a hamburger is $1 and the mar
ginal utility from her last hamburger
is 5. Let Pp be the price of a pizza and MUp be the marginal utility of pizzas.
In consumer equilibrium, the ratio MUp/Pp
for Sarah's last pizza must equal
150)
_____
A)
1.0.
B)
0.2.
C)
5.0.
D)
infinity.
151)
Sarah consumes only strawberries and cream, and she is spending all of her incom
e. Her marginal utility of her last dish
of strawberries is 200 and her marginal utility of her last pint of cream is 200
. The price of strawberries is $1.00 per dish
and the price of cream is $2.00 per pint. To maximize her utility, Sarah should
151)
_____
A)
buy more cream and less strawberries.
B)
not change her purchases of strawberries and cream.
C)
definitely buy no cream at her consumer equilibrium.
D)
buy more strawberries and less cream.
Quantit
y of
pizza
0
1
2
3
4
5
6
7
Total
utility
from
pizza
0
24
44
60
72
76
79
80
Quantit
y of
Diet
Pepsi
0
1
2
3
4
5
6
7
Total
utility
from
Diet
Pepsi
0
14
26
36
44
50
54
56
152)
Suppose that you consume only pizza and Diet Pepsi. The table above gives your u
tility from consuming these two goods.
What is the marginal utility you get from the fourth slice of pizza?
152)
_____
18
A)
B)
4
C)
12
D)
36
153)
Suppose that you consume only pizza, which costs $4 per slice,
hich costs $2 each. The table above gives
your utility from consuming these two goods. If your income is
following consumption combinations
will you choose?
153)
_____
A)
3 slices of pizza and 1 Diet Pepsi
B)
1 slice of pizza and 5 Diet Pepsis
C)
0 slices of pizza and 7 Diet Pepsis
D)
154)
Suppose that you consume only pizza, which costs $4 per slice,
hich costs $2 each. The table above gives
your utility from consuming these two goods. If your income is
following consumption combinations
will you choose?
154)
_____
A)
2 slice of pizza and 6 Diet Pepsis
B)
and Diet Pepsi, w

$14, which of the
and Diet Pepsi, w

$20, which of the
5 slices of pizza and no Diet Pepsi

C)
D)
Quantit
y of
bottled
water
1
2
3
4
5
6
Margin
al
utility
from
bottled
water
35
25
16
10
5
4
Quantit
y of
hambur
gers
1
2
3
4
5
6
Margin
al
utility
from
hambur
gers
20
18
17
10
8
7
155)
Given the data in the above table, income of $13, a price of $1 for a bottle of
water and $2.00 for a hamburger, what is the
marginal utility per dollar spent on the fifth hamburger?
155)
_____
A)
6 units of utility
B)
4 units of utility
C)
8 units of utility
D)
10 units of utility
156)
water and $2 for a hamburger, what is the
quantity of water and the quantity of hamburgers that will maximize the consumer
's total utility?
156)
_____
A)
4 bottles of water and 4 hamburgers
B)
C)
1 bottle of water and 6 hamburgers
D)
157)
water and $2 for a hamburger, what is the
marginal utility per dollar spent on water and on hamburgers when the consumer i
s in consumer equilibrium?
157)
_____
A)
10 units of utility per dollar spent
B)
C)
1 unit of utility per dollar spent
D)
158)
Given the data in the above table, if income is $16, and the price is $1 for a b
ottle of water and $2 for a hamburger, what is
the quantity of water and the quantity of hamburgers that will maximize the cons
umer's total utility?
158)
_____
A)
B)
C)
D)
Quantit
y of
pens
0
1
2
3
4
5
6
Total
utility
from
pens
0
90
155
200
225
240
246
Quantit
y of
pencils
0
1
2
3
4
5
6
Total
utility
from
pencils
0
70
120
150
165
174
176
159)
The table above gives the utility from pens and pencils. The marginal utility de
rived from the third pen is
159)
_____
45.
A)
B)
155.
C)
445.
D)
200.
160)
The table above gives the utility from pens and pencils. If pens and pencils bot
h cost $.25 each and the consumer has an
income of $2.25, which of the following combinations maximizes the consumer's ut
ility?
160)
_____
A)
5 pens and 4 pencils
B)
C)
D)

161)
The table above gives the utility from pens and pencils. If the consumer has an
income of $4, pens cost $1, and pencils cost
$.20, which of the following combinations maximizes the consumer's utility?
161)
_____
A)
B)
C)
D)
no combination shown
162)
The table above gives the utility from pens and pencils. If the consumer has an
income of $4, pens cost $1, and pencils cost
$.20, what is the consumer's total utility when he or she maximizes utility?
162)
_____
A)
365
B)
405
C)
225
D)
374
Hours
spent
1
2
Total
utility
from
sailing
50
90
Total
utility
from
skiing
50
90
3
4
120
140
120
140
163)
As shown in the above table, Sam enjoys sailing and skiing equally well. Which o
f the following is true?
163)
_____
A)
If the prices per hour of sailing and skiing are the same, Sam will not spend th
e same number of hours at each activity.
B)
The marginal utility of the 3rd hour of either sailing or skiing is 120.
C)
Sam will not consume the same number of hours of sailing and skiing if the price
per hour of sailing is more than that of
skiing.
D)
None of the above is true.
Quantit
y of
videos
0
1
2
3
4
5
Total
utility
from
videos
0
250
430
580
700
800
Quantit
y of
CDs
0
1
2
3
4
5
Total
utility
from
CDs
0
400
700
900
1000
1060
164)
The above table shows Tammy's total utility from videos and CDs. If Tammy has $7
0 to spend on videos and CDs and if
the price of a video is $10 and the price of a CD is $20, then Tammy maximizes h
er utility by purchasing
164)
_____
A)
2 CDs and 3 videos.
B)
3 CDs and 1 video.
C)
1 CD and 5 videos.
D)
none of the above
165)
the price of a video is $10 and the price of a CD is $20, then the maximum utili
ty Tammy can attain is
165)
_____
450.
A)
B)
1200.
C)
1150.
D)
1280.
166)
the price of a video is $10 and the price of a CD is $20, then Tammy maximizes h
er utility by purchasing
166)
_____
A)
4 CDs and 3 videos.
B)
5 CDs and 1 video.
C)
3 CDs and 5 videos.
D)
none of the above
167)
the price of a video is $10 and the price of a CD is $20, then the maximum utili
ty Tammy can attain is
167)
_____
250.
A)
B)
300.
C)
1700.
D)
1580.
Quantit
y
0
1
2
3
4
5
6
7
8
9
10
Milkshakes
Total
utility
0
600
1000
1300
1540
1590
1636
1676
1708
1728
1738
Quantit
y
0
1
2
3
4
5
6
7
8
9
10
Sodas
Total
utility
0
240
360
460
520
570
590
602
610
616
620
168)
The table above shows Tom's total utility from milkshakes and sodas. What is the
marginal utility of Tom's eighth
milkshake?
168)
_____
32 units
A)
B)
10 units
C)
20 units
D)
16 units
169)
The table above shows Tom's total utility from milkshakes and sodas. What is the
marginal utility of the eighth soda?
169)
_____
32 units
A)
B)
20 units
C)
8 units
D)
10 units
170)
The table above shows Tom's total utility from milkshakes and sodas. A milkshake
costs $2.00. What is the marginal utility
per dollar spent when the eighth milkshake is purchased?
170)
_____
A)
20 units per dollar
B)
32 units per dollar
C)
16 units per dollar
D)
10 units per dollar
171)
The table above shows Tom's total utility from milkshakes and sodas. A soda cost
s $1.00. What is the marginal utility per
dollar spent when the eighth soda is purchased?
171)
_____
A)
10 units per dollar
B)
8 units per dollar

C)
20 units per dollar
D)
32 units per dollar
172)
The table above shows Tom's total utility from milkshakes and sodas. A milkshake
costs $2.00. How much marginal utility
per dollar would Tom get if he purchased the ninth milkshake?
172)
_____
A)
20 units per dollar
B)
1728 units per dollar
C)
10 units per dollar
D)
none of the above
173)
The table above shows Tom's total utility from milkshakes and sodas. Tom's total
budget for milkshakes and sodas is
$10.00 per week. Milkshakes cost $2.00 each and sodas cost $1.00 each. What comb
ination of milkshakes and sodas
maximizes Tom's utility?
173)
_____
A)
3 milkshakes and 4 sodas
B)
C)
D)
174)
$10.00 per week. Milkshakes cost $2.00 each and sodas cost $1.00 each. What quan
tity of milkshakes does Tom purchase at
his consumer equilibrium?

174)
_____
four
A)
B)
one
C)
two
D)
three
175)
tity of sodas does Tom purchase at his
consumer equilibrium?
175)
_____
four
A)
B)
two
C)
one
D)
three
176)
tity of milkshakes does Tom purchase at
176)
_____
A)
eight
B)
five
C)
seven
D)
six
177)
tity of sodas does Tom purchase at his
177)
_____
eight
A)
B)
six
C)
five
D)
seven
178)
$20.00 per week. Milkshakes cost $2.00 each and sodas cost $1.00 each. What is T
om's total utility at his consumer
equilibrium?
178)
_____
1900 units
A)
B)
2266 units
C)
2155 units
D)
2278 units
179)
$20.00 per week. Milkshakes cost $2.00 each and sodas cost $.50 each. What quant
ity of milkshakes does Tom purchase at
179)
_____
eight
A)
B)
five
C)
six
D)
seven
180)
$20.00 per week. Milkshakes cost $2.00 each and sodas cost $.50 each. What quant
ity of sodas does Tom purchase at his
180)
_____
seven
A)
B)
five
C)
eight
D)
six
Quantit
y
1
2
3
4
5
Pizza
Total
utility
95
180
255
320
375
Quantit
y
1
2
3
4
5
CDs
Total
utility
170
320
450
560
650
181)
Bobby spends $100 per month on pizza and CDs. His utility from these goods is sh
own in the table above. The price of a
pizza is $10 and the price of a CD is $20. Which of the following combinations o
f the two goods maximizes Bobby's
utility?
181)
_____
A)
8 pizzas and 1 CDs
B)
2 pizzas and 4 CDs
C)
6 pizzas and 2 CDs
D)
4 pizzas and 3 CDs
182)
pizza is $10 and the price of a CD is $20. If Bobby maximizes utility from these
goods, his total utility is ________ units.
182)
_____
880
A)
B)
750
C)
770
D)
705
183)
pizza is $10 and the price of a CD is $20. Bobby currently buys 6 pizzas and 2 C
Ds. To maximize his utility, he should
183)
_____
A)
stay with the current combination of goods.
B)
buy more of both goods.
C)
buy more pizza and fewer CDs.
D)
buy more CDs and fewer pizza.
184)
pizza is $10 and the price of a CD is $20. Bobby currently buys 2 pizzas and 6 C
Ds. To maximize his utility in the next
period, he should
184)
_____
A)
buy more CDs and fewer pizza.
B)
C)
buy more pizza and fewer CDs.
D)
Quantit
y
1
2
3
4
5
6
Cookies
Margin
al
utility
32
28
24
20
16
12
Quantit
y
1
2
3
4
5
6
Cake
Margin
al
utility
40
32
24
16
8
0
185)
The above table shows Homer's marginal utility from consuming various quantities
of chocolate chip cookies and cake.
The price of cookies is $2 per pound, the price of cake is $2 per slice and Home
r has $12 to spend on cookies and cake.
Homer will consume ________ of cookies and ________ of cake.
185)
_____
A)
3 pounds; 3 slices
B)
5 pounds; 2 slices
C)
2 pounds; 4 slices
D)
1 pound; 5 slices
186)
Homer will consume ________ pounds of cookies and ________ slices of cake.
186)
_____
6; 3
A)
B)
5; 4
4; 5
C)
D)
187)
Homer will consume ________ pounds of cookies and ________ slices of cake.
187)
_____
5; 2
A)
B)
3; 3
C)
2; 5
D)
Qu
anti
ty
of
ma
gaz
ines
Total utility
from
magazines
0
240
400
520
620
680
716
736
740
0
1
2
3
4
5
6
7
8
Qu
anti
ty
of
CD
s
0
1
2
3
4
5
6
7
8
Total utility
from CDs
0
500
950
1350
1650
1800
1850
1870
1875
188)
$10. What is the marginal utility per dollar from magazines when the sixth magaz
ine is purchased?
188)
_____
15 units
A)
B)
5 units
C)
36 units
D)
9 units
189)
$10. What is the marginal utility per dollar from CDs when the sixth CD is purch
ased?
189)
_____
5 units
A)
B)
15 units
C)
30 units
D)
40 units
190)
$10. If Jane's total budget for magazines and CDs is $70.00 per week, what is he
r total utility at her utility maximizing
190)
_____
30 units
A)
B)
1870 units
C)
2480 units
D)
210 units
191)
$10. If Jane's budget increases from $70 to $88, how many magazines does Jane pu
rchase at her consumer equilibrium?
191)
_____
seven
A)
B)
eight
C)
six
D)
five
192)
$10 and Jane's budget is $88. What is Jane's marginal utility per dollar spent o
n magazines at her consumer equilibrium?
192)
_____
15 units
A)
B)
5 units
C)
9 units
D)
36 units
193)
$10 and Jane's budget is $88. What is Jane's total utility when she maximizes he
r utility?
193)
_____
70 units
A)
B)
1516 units
C)
2586 units
D)
2536 units
194)
The table above gives Jane's total utility from magazines and CDs. Initially the
price of a magazine is $4 and the price of a
CD is $10. Suppose the price of a magazine stays at $4 each, but the price of a
CD falls to less than $10.00 each. With a
$70.00 budget, the
194)
_____
A)
marginal utility per dollar from CDs decreases and Jane buys fewer CDs in the ne
w equilibrium.
B)
marginal utility per dollar from CDs increases and Jane buys more CDs in the new
equilibrium.
C)
marginal utility from magazines does not change so Jane buys fewer magazines in
the new equilibrium.
D)
marginal utility from magazines increases and Jane buys more magazines in the ne
w equilibrium.
Quantit
y
0
1
2
3
Pizza
Margin
al
utility
0
20
16
10
Quantit
y
0
1
2
3
Pepsi
Margin
al
utility
0
30
8
7
195)
The above table shows Priscilla's marginal utility from the two goods she consum
es, pizza and Pepsi. The price of a slica
of pizza is $2 and of a can of Pepsi is $1. Suppose Priscilla has $6 to spend. W
hich combination of pizza and Pepsi will
maximize Priscilla's utility?

195)
_____
A)
3 slices of pizza
B)
1 slice of pizza and 3 cans of Pepsi
C)
2 slices of pizza and 2 cans of Pepsi
D)
3 cans of Pepsi and 1 slice of pizza

196)
of pizza is $2 and of a can of Pepsi is $1. Suppose Priscilla has $6 to spend. I
f Priscilla chooses to eat 3 slices of pizza,
196)
_____
A)
she is maximizing her total utility.
B)
she is not at a consumer equilibrium.
C)
she is not equating marginal utility per dollar for pizza and Pepsi.
D)
197)
of pizza is $2 and of a can of Pepsi is $1. Suppose Priscilla has $6 to spend. I
f Priscilla is consuming 1 slice of pizza and 2
cans of Pepsi, which of the following is correct?
197)
_____
A)
Priscilla should increase her consumption of Pepsi to maximize her utility.
B)
Priscilla should increase her consumption of pizza to maximize her utility.
C)
Priscilla is maximizing her utility.
D)
Quantit
y
1
2
3
4
5
6
7
Magazines
Margin
al
utility
50
42
34
26
18
10
4
Chocolate bars
Margin
Quantit
al
y
utility
8
26
10
23
12
20
14
17
16
14
18
11
20
8
198)
Sonya's budget for magazines and chocolate bars is $50. Her marginal utility fro
m these goods is shown in the table above.
If the price of a magazine is $5 and the price of a chocolate bar is $2.50, whic
h of the following combinations maximizes
Sonya's utility?
198)
_____
A)
3 magazines and 14 chocolate bars
B)
1 magazine and 18 chocolate bars
C)
D)
199)
The price of a magazine is $5 and the price of a chocolate bar is $2.50. Sonya c
urrently buys 3 magazines and 14 chocolate
bars. To maximize her utility, she should
199)
_____
A)
buy more magazines and fewer chocolate bars.
B)
C)
D)
buy more chocolate bars and fewer magazines.
200)
200)
_____
A)
B)
C)
D)
201)
201)
_____
A)
B)
C)
D)
202)
202)
_____
A)
B)
C)
D)
203)
If Bobby decides that his marginal utility per dollar spent on vanilla ice cream
exceeds his marginal utility per dollar spent
on chocolate ice cream, he should then
203)
_____
A)
buy all the vanilla ice cream he can.
B)
C)
never buy chocolate ice cream.
D)
204)
Katie has a choice of spending $6.00 for another hamburger, which has a marginal
utility of 30, or $9.00 for another pizza.
For her to choose the pizza, it would have to have a marginal utility of at leas
t
204)
_____
30.
A)
B)
31.
C)
46.
D)
9.
205)
Kumiko is not at her consumer equilibrium because she sees too many movies and b
uys too few books. As she moves
toward her consumer equilibrium, her marginal utility from movies will ________
and her marginal utility from books
will ________.
205)
_____
A)
decrease; decrease
B)
increase; decrease
C)
increase; increase
D)
decrease; increase
206)
Kumiko is not at her consumer equilibrium because she sees too many movies and b
uys too few books. As she moves
toward her consumer equilibrium, her total utility from movies will ________ and
her total utility from books will
________.
206)
_____
A)
decrease; increase
B)
increase; increase
C)
increase; decrease
D)
decrease; decrease
207)
Teddy buys only chocolate chip cookies and hot chocolate and spends all of his i
ncome on the two items. Suppose that
Teddy's marginal utility per dollar from cookies exceeds that from hot chocolate
. Teddy can make himself better off if he
buys
207)
_____
A)
an equal amount of cookies and hot chocolate.
B)
only hot chocolate.
C)
more cookies and less hot chocolate.
D)
fewer cookies and more hot chocolate.
208)
Joshua consumes only apples and bread and is in consumer equilibrium. Joshua rea
ds that eating bread is healthy, so his
total utility from each loaf of bread increases. At his new consumer equilibrium
Joshua would consume
208)
_____
A)
more apples and less bread.
B)
some combination of apples and bread corresponding to a lower ratio of the margi
nal utility of bread to the marginal
utility of apples.
C)
the same quantity of apples and the same quantity of bread.
D)
fewer apples and more bread.
Quantity
3
4
5
6
Marginal utility of
DVD rentals
100
90
80
70
Marginal utility of
movies
152
150
147
143
7
8
9
60
50
40
140
135
128
209)
Becky decides to spend $50 per month on DVD rentals and movie tickets. Her margi
nal utility schedules from these two
goods are shown in the table above. The price of a DVD rental is $2.50, and the
price of a movie ticket is $5. Suppose Becky
rents 8 DVDs and buys 6 movie tickets per month. She
209)
_____
A)
can increase her total utility if she rents fewer DVDs and buys more movie ticke
ts.
B)
can increase her total utility if she rents more DVDs and buys more movie ticket
s.
C)
can increase her total utility if she rents more DVDs and buys fewer movie ticke
ts.
D)
cannot increase her total utility because she already gets the maximum possible
utility from DVD rentals and movies
within her budget.
210)
goods are shown in the table above. The price of a DVD rental is $2.50, and the
price of a movie ticket is $5. Becky
maximizes her utility if she rents ________ DVDs per month and buys ________ mov
ie tickets per month.
210)
_____
4; 8
A)
B)
8; 6
C)
5; 7
D)
6; 7
211)
goods are shown in the table above. Initially the price of a DVD rental is $2.50
and the price of a movie ticket is $5. Then
the price of a movie ticket rises to $7.50. Now to maximize her utility, Becky m
ust rent ________ DVDs and buy ________
movie tickets.
211)
_____
more; fewer
A)
B)
the same quantity of; fewer
C)
more; the same quantity of
D)
fewer; more
212)
goods are shown in the table above. The price of a DVD rental is $2.50. If the p
rice of a movie ticket is $7.50, Becky watches
________ movies per month and if the price of a movie ticket falls to $5.00, Bec
ky watches ________ movies per month.
212)
_____
4; 6
A)
B)
3; 5
C)
4; 7
D)
5; 6
213)
Tom spends $20 a month on CDs and magazines. The price of a CD is $6 and the pri
ce of a magazine is $4. When Tom
maximizes his utility, the marginal utility from CDs is ________ the marginal ut
ility from newspapers.
213)
_____
the same as
A)
B)
20 times
C)
1 1/2 times
D)
1/2
214)
Tom spends all his income on comics and cola and maximizes his total utility. If
the price of a comic is $4 and the price of
a can of cola is $1, then the ratio of the ________ is 4.
214)
_____
A)
total utility from comics to the total utility from cola
B)
marginal utility from comics to the marginal utility from cola
C)
number of comics Tom buys to the number of cola Tom buys
D)
marginal utility from cola to the marginal utility from comics
215)
John and Sally have identical preferences except that Sally's utility is exactly
10 times John's for each basket of goods. If
they have the same income and face the same prices,
215)
_____
A)
John and Sally will have equal total utility.
B)
both will consume the same amount of all goods.
C)
Sally will consume 10 times the amount that John consumes.
D)
Sally will receive 1/10 the satisfaction of John.
216)
Economists using marginal utility theory assume that consumers' objectives are t
o
216)
_____
A)
maximize their income.
B)
maximize their marginal utility.

C)
maximize their total utility.
D)
none of the above
217)
217)
_____
A)
More consumption yields more total utility.
B)
Utility can be measured and the units of utility are precisely defined..
C)
People derive utility from their consumption.
D)
Marginal utility diminishes with more consumption.
218)
As more of a good is consumed, its marginal utility ________ and its total utili
ty ________.
218)
_____
rises; falls
A)
B)
falls; rises
C)
rises; rises
D)
falls; falls
219)
Jeannie's marginal utility from her 4th book in a month is 50. Her marginal util
ity from her 5th book
219)
_____
A)
is greater than 50.
B)
is less than 50.
C)
might be more than, less than, or equal to 50 but more information is needed.
D)
equals 50.
220)
When Alex eats 1 slice of pizza, his total utility is 80; when Alex eats 2 slice
s of pizza, his total utility is 120. Alex's
marginal utility from the second pizza is
220)
_____
40.
A)
B)
200.
C)
80.
D)
60.
221)
The marginal utility from the first burrito Bobby consumes is larger than the ma
rginal utility from the first taco Bobby
consumes. As a result,
221)
_____
A)
tacos are an inferior good for Bobby.
B)
Bobby will consume a taco only if the price of a taco is less than the price of
a burrito.
C)
Bobby will never consume tacos.
D)
burritos and tacos are substitute goods for Bobby.
222)
Sergio consumes only beef and snails and is maximizing his utility. If the price
of beef is less than the price of snails, then
we definitely know that
222)
_____
A)
Sergio buys more beef than snails.
B)
the marginal utility from the last pound of snails purchased is greater than the
marginal utility from the last pound of
beef purchased.
C)
the marginal utility from the last pound of beef purchased is greater than the m
arginal utility from the last pound of
snails purchased.
D)
Sergio buys more snails than beef.
223)
Tommy buys only soda and pizza and is buying the amounts that maximize his utili
ty. The marginal utility from a soda is
5 and the price of a soda is $1. The marginal utility from a slice of pizza is 1
0. The price of a slice of pizza must be
223)
_____
$2.
$1.
$10.
A)
B)
C)
D)
some amount that cannot be calculated without more information.
224)
Shaniq buys only soda and pizza and is buying the amounts that maximize her util
ity. The marginal utility from a soda is
30 and the price of a soda is $2. The marginal utility from a slice of pizza is
also 30. The price of a slice of pizza must be
224)
_____
$2.
$1.
$30.
A)
B)
C)
D)
some amount that cannot be calculated without more information.
225)
Katie finds that the marginal utility from a compact disc is 30 and the marginal
utility from a pizza is 10. The price of a
compact disc is $15 and the price of a pizza is $10. In order to increase her ut
ility, Katie should
225)
_____
A)
consume fewer compact discs and more pizzas.
B)
consume fewer compact discs and fewer pizzas.
C)
not change her consumption of pizza and compact discs.
D)
consume more compact discs and fewer pizzas.
226)
Bianca consumes apples and bananas and is in consumer equilibrium. The marginal
utility of the last apple is 10 and the
marginal utility of the last banana is 20. If the price of an apple is $0.50, th
en what is the price of a banana?
226)
_____
$0.25
A)
B)
$0.10
C)
$0.50
D)
$1.00
Quantit
y
(boxes)
0
1
2
3
4
Total
utility
0
30
50
66
?
Margin
al
utility
X
30
20
16
12
227)
The table above gives Andy's utility from popcorn. Andy's total utility from fou
r boxes of popcorn is
227)
_____
66.
A)
B)
82.
C)
78.
D)
70.
Total utility from
Quantit
y
(hours)
1
2
3
4
Golf
40
70
90
100
Tennis
40
70
90
100
228)
The above table shows Sue's total utility from golf and tennis. If the price of
each hour of golf is twice the price of each
hour of tennis, and Sue plays four hours of tennis, then Sue plays
228)
_____
A)
three hours of golf.
B)
two hours of golf.
C)
four hours of golf.
D)
one hour of golf.
229)
Marginal utility theory is used in the derivation of the
229)
_____
A)
positive slope of demand curves.
B)
positive slope of supply curves.
C)
negative slope of demand curves.
D)
negative slope of supply curves.
230)
The predictions of marginal utility theory
230)
_____
A)
contradict the idea that the demand curve slopes downward.
B)
support the idea that the supply curve slopes upward.
C)
support the idea that the demand curve slopes downward.
D)
contradict the idea that the supply curve slopes upward.
231)
In consumer equilibrium, Harold consumes pizza, sodas, and other goods. Pizza an
d soda are complements for Harold.
The price of a pizza rises while his income remains the same. Harold then consum
es
231)
_____
A)
less pizza and less soda.
B)
more pizza and less soda.
C)
less pizza and more soda.
D)
more pizza and more soda.
232)
ncome on the two items. Suppose the
price of a cookie rises. According to marginal utility theory, Teddy buys
232)
_____
more cookies.
A)
B)
an equal amount of cookies and hot chocolate.

C)
fewer cookies.
D)
more hot chocolate.
233)
ncome on the two items. Suppose the
price of a cookie rises. According to marginal utility theory, Teddy will buy
233)
_____
A)
fewer cookies and more hot chocolate, which decreases his marginal utility from
cookies and increases his marginal utility
from hot chocolate.
B)
fewer cookies and more hot chocolate, which increases his marginal utility from
cookies and decreases his marginal utility
from hot chocolate.
C)
more cookies and less hot chocolate, which decreases his marginal utility from c
ookies and increases his marginal utility
from hot chocolate.
D)
more cookies and less hot chocolate, which increases his marginal utility from c
ookies and decrease his marginal utility
from hot chocolate.
234)
Bianca consumes pizza. Marginal utility theory predicts that when the price of p
izza increases,
234)
_____
A)
Bianca will buy less pizza.
B)
Bianca's total utility from pizza will increase.
C)
Bianca's demand curve for pizza will shift leftward.
D)
Bianca's marginal utility from pizza will increase.
235)
The only goods you consume are pizza and soda. Both are normal goods. You consid
er pizza and soda to be substitutes.
Which of the following will lead you to eat more pizza?
235)
_____
A)
The price of a pizza falls.
B)
The price of a soda falls.

C)
The price of a soda rises.
D)
236)
Using marginal utility theory, when the price of a gallon of milk falls, a consu
mer will buy
236)
_____
A)
more milk only if its marginal utility is constant.
B)
the same amount of milk as before and buy more of all other goods.
C)
more milk.
D)
more milk only if its marginal utility is increasing.
237)
When the price of popcorn falls, before there is any change in consumption, the
237)
_____
A)
entire total utility of popcorn curve definitely shifts rightward.
B)
total expenditure on popcorn definitely rises.
C)
marginal utility of popcorn definitely increases.
D)
marginal utility per dollar from popcorn definitely increases.
238)
Suppose the price of soda is $2 each and the price of a pizza slice is $4 each.
David maximizes his utility by buying only
sodas and pizza. He buys 5 sodas and 10 slices of pizza. If the price of a soda
increases to $3 each, David will
238)
_____
A)
decrease the number of sodas bought and the demand curve for sodas will shift le
ftward.
B)
buy less pizza and the demand curve for pizza will shift leftward.
C)
buy more pizza and move along the demand curve for pizza.
D)
decrease the number of sodas bought and move along the demand curve for soda.
239)
Ricardo buys cola and popcorn. Cola sells for $0.50 a can and popcorn sells for
$1 per bag. He is in consumer equilibrium.
The price of a cola jumps to $1 per can. In his new consumer equilibrium, Ricard
o's
239)
_____
A)
total utility will be higher.
B)
marginal utility of cola will be equal to his marginal utility of popcorn.
C)
marginal utility of cola will decrease.
D)
marginal utility per dollar spent will be 2.
240)
Marginal utility theory concludes that a decrease in the price of a good increas
es the quantity demanded and
240)
_____
A)
increases total utility.
B)
increases the total expenditure on the good.
C)
increases the demand for substitutes.
D)
decreases the demand for complements.
241)
Marginal utility theory predicts that when the price of one good rises, the dema
nd for another good is a substitute
increases. This change occurs because of
241)
_____
A)
a decrease in the marginal utility per dollar from the good whose price has rise
n.
B)
a decrease in the marginal utility of the good whose price has risen.
C)
an increase in the marginal utility per dollar from the substitute good.
D)
an increase in the marginal utility of the substitute good.
242)
Marginal utility theory predicts that as the price of coffee rises, the ________
a substitute for coffee ________ and the
________ coffee ________.

242)
_____
A)
supply of; decreases; supply of; increases
B)
supply of; increases; demand for; decreases
C)
demand for; decreases; demand for; increases
D)
demand for; increases; quantity demanded of; decreases
243)
Roberta spends all of her income on two items, staplers and paper clips. If the
price of a stapler increases, there will be a
________ Roberta's demand curve for staplers and a ________ Roberta's demand cur
ve for paper clips.
243)
_____
A)
movement along; rightward shift of
B)
movement along; leftward shift of
C)
leftward shift of; movement along
D)
rightward shift of; leftward shift of
244)
Joe consumes pizza and movies. Pizza and movies are substitutes. According to ma
rginal utility theory, if the price of a
pizza rises then
244)
_____
A)
there is an upward movement along the demand curve for pizza and the demand curv
e for movies shifts rightward.
B)
the demand curve for pizza shifts leftward and the demand curve for movies shift
s rightward.
C)
there is an upward movement along the demand curve for pizza.
D)
the demand curve for pizza shifts leftward.
245)
Gunther rents Nintendo games and videos. The marginal utility from his last Nint
endo game is 10 and that from his last
video is 5. Nintendo games rent for $2 each. Gunther's demand curve for games is
shown in the figure above. How many
videos a week does Gunther rent?
245)
_____
4
A)
B)
3
C)
2
D)
1
246)
When economists speak of normal goods they mean goods for which
246)
_____
A)
the demand curve slopes downward.
B)
marginal utility decreases as consumption increases.
C)
marginal utility is positive.

D)
demand decreases when incomes fall.
247)
Renee consumes pizza and rice. An increase in her income causes her to consume f
ewer pizzas and more rice. The change
in pizzas consumed means that
247)
_____
A)
her total utility from consuming pizzas had been negative.
B)
pizza is an inferior good for Renee.
C)
her marginal utility from consuming pizzas had been negative.
D)
her marginal utility from consuming pizzas had been zero.
248)
Marginal utility theory predicts that when income increases a
248)
_____
A)
person's consumption of normal goods will increase.
B)
person's total utility will not change.
C)
person might increase the consumption of some normal goods and decrease the cons
umption of other normal goods.
D)
None of the above answers is correct because marginal utility theory does not ad
dress how demand changes in response
to changes in income.
249)
The only goods you consume are pizza and soda. Both are normal goods. For you, p
izza and soda are substitutes. Which
of the following leads you to buy more of both goods?
249)
_____
A)
Your income increases.
B)
The price of a soda falls.
C)
The price of a pizza falls.
D)
250)
Marginal utility theory predicts that if a consumer's income decreases, the cons
umer
250)
_____
A)
buys fewer inferior goods.
B)
buys fewer normal goods.
C)
buys more of all goods.
D)
might either increase or decrease purchases of normal goods.
251)
Marginal utility theory predicts that an increase in income means that the consu
mption of
251)
_____
A)
normal goods will increase and consumption of inferior goods will decrease.
B)
all goods will increase.
C)
inferior goods will increase and consumption of normal goods will decrease.
D)
252)
According to marginal utility theory, a rise in income will
252)
_____
A)
increase consumption of all goods.
B)
increase the marginal utility of all goods.
C)
increase a consumer's total utility.
D)
253)
Marginal utility theory predicts that
253)
_____
A)
if the price of one good rises, the demand for a substitute good increases.
B)
if income increases, the demand for a normal good increases.
C)
when the price of a good rises, the quantity demanded of that good decreases.
D)
All of the above answers are correct because all are predictions of marginal uti
lity theory.
254)
Emma consumes only tacos and pizza . They are substitute goods for her. The pric
e of a taco falls. Emma will buy
________ tacos and her marginal utility from the last slice of pizza she eats __
______.
254)
_____
A)
more; does not change
B)
the same quantity; does not change
C)
more; decreases
D)
less; increases
255)
Lucy buys only magazines and CDs. Both are normal goods. Lucy's income decreases
, but the prices of magazines and
CDs do not change. Marginal utility theory predicts that Lucy will ________.
255)
_____
A)
increase her marginal utility from both magazines and CDs by buying more magazin
es and CDs
B)
substitute magazines for CDs
C)
buy more magazines and more CDs
D)
buy fewer magazines and fewer CDs
256)
Jeremiah spends all of his income on oranges and cookies, which are normal goods
. If Jeremiah's income decreases, he
will buy ________ oranges and ________ cookies. His marginal utility from orange
s will ________ and his marginal utility
from cookies will ________.
256)
_____
A)
fewer; fewer; increase; increase
B)
more; more; decrease; decrease
C)
fewer; fewer; decrease; increase
D)
the same quantity of; fewer; remain constant; decrease
257)
Steve is in a consumer equilibrium. Then, the price of steak increases from $6 a
pound to $8 a pound. Steve decreases the
number of pounds of steaks he buys each week ________.
257)
_____
A)
and decreases his total utility
B)
so that the marginal utility per dollar spent on steaks is the same as it was wh
en the price was $6 a pound
C)
only if his income also decreases
D)
so that both his total utility and his marginal utility from steak fall
258)
258)
_____
A)
Marginal utility theory assumes that marginal utility diminishes as more of any
good is consumed.
B)
Utility units are observable.
C)
Total utility is equal to marginal utility.
D)
Utility is gained whenever someone wants a good.
259)
Kirk consumes normal goods. If Kirk's income decreases and the prices of all goo
ds remain unchanged, in his new
consumer equilibrium, his marginal utility from each good will ________ and his
total utility will ________.
259)
_____
A)
increase; increase
B)
decrease; increase
C)
increase; decrease
D)
decrease; decrease
260)
Patty spends $10 a week on bagels and soda. The price of a bagel is $2 and the p
rice of soda is $1 a can. Patty buys 2 bagels
and 6 cans of soda. Her marginal utility from bagels is 20 units. The price of a
bagel rises to $3 and the price of a can of
soda rises to $1.50. Patty now buys ________ bagels and her marginal utility fro
m bagels ________. She buys ________
cans of soda and her marginal utility from soda ________.
260)
_____
A)
2; is 20 units; 6; is 10 units
B)
fewer than 2; increases; fewer than 6; increases
C)
fewer than 2; decreases; fewer than 6; decreases
D)
fewer than 2; is 20 units; fewer than 6; is 10 units
Quantit
y
0
1
2
3
Pizza
Margin
al
utility
0
20
16
10
Quantit
y
0
1
2
3
Pepsi
Margin
al
utility
0
30
8
7
261)
es, pizza and Pepsi. A slice of pizza costs
$4 and a can of Pepsi $2. Suppose Priscilla has $12 to spend. Which of the follo
wing leads Priscilla to switch her choices of
pizza and Pepsi?
261)
_____
A)
a decrease in the price of Pepsi to $1 per can
B)
an increase in Priscilla's income
C)
an increase in the price of pizza to $6 per slice
D)
All of the above will cause Priscilla to change her choices.
262)
es, pizza and Pepsi. A slice of pizza costs
$4 and a can of Pepsi $2. Suppose Priscilla has $12 to spend. If the price of pi
zza decreases, Priscilla's preferences (her
marginal utility schedule) for pizza
262)
_____
will decrease.
will increase.
A)
B)
C)
will not change.
D)
may increase or decrease depending on what happens to the price of Pepsi.
263)
es, pizza and Pepsi. Initially, a slice of
pizza costs $4 and a can of Pepsi $2. Suppose Priscilla has $12 to spend. If the
price of pizza falls to $2, Priscilla will choose
to
263)
_____
A)
consume more Pepsi.
B)
consume more pizza.
C)
consume less pizza.
D)
Quantit
y
Sub sandwiches
Margin
al
Quantit
y
Mountain Dew
Margin
al
utility
0
54
44
24
20
12
0
1
2
3
4
5
0
1
2
3
4
5
utility
0
30
22
18
12
6
264)
The above table gives Sue's marginal utility schedules for sub sandwiches and Mo
untain Dew, the only products Sue
consumes. Suppose the price of a sub sandwich is $4 each and the price of a Moun
tain Dew is $2 each. Sue's income is
$12. If Sue is at a consumer equilibrium, she eats ________ sub sandwich(es) and
drinks ________ Mountain Dews.
264)
_____
2; 2
A)
B)
0; 6
C)
1; 4
D)
3; 0
265)
The above table gives Sue's marginal utility schedules for sub sandwiches and Mo
untain Dew, the only products Sue
consumes. Suppose initially the price of a sub sandwich is $4 each and the price
of a Mountain Dew is $2 each. Sue's
income is $12. If the price of subs rises to $6 each, Sue will consume
265)
_____
fewer subs.
A)
B)
more Mountain Dews.
C)
fewer Mountain Dews so that she can still afford to buy two subs.
D)
266)
Sue consumes only sub sandwiches and Mountain Dew. Subs and Mountain Dew are com
plements. If the price of a sub
sandwiches increases,
266)
_____
A)
Sue's demand curve for subs will shift leftward.
B)
Sue's demand curve for subs will shift rightward.
C)
Sue will move downward along her demand curve for subs.
D)
Sue will move upward along her demand curve for subs.
267)
Sue consumes only sub sandwiches and Mountain Dew. Subs and Mountain Dew are com
plements. If the price of a
Mountain Dew increases,
267)
_____
A)
Sue will move upward along her demand curve for Mountain Dews.
B)
Sue's demand curve for sub sandwiches will shift rightward.
C)
Sue will move downward along her demand curve for Mountain Dews.
D)
268)
Betty consumes only milkshakes and sandwiches and maximizes her total utility. S
uppose that the prices of a milkshakes
and sandwiches both double and at the same time Betty's income doubles. Betty bu
ys ________ sandwiches and her
marginal utility from sandwiches ________.
268)
_____
A)
more; decreases
B)
the same number of; remains the same
C)
fewer; decreases
D)
more; increases
269)
Andy spends $30 a week on movies and magazines. The price of a movie is $8, the
price of a magazine is $2, and Andy
sees 3 movies a week and buys 3 magazines. The price of a magazine increases to
$4 and Andy's brother gives him $6 a
week so that he can still see 3 movies a week and buy 3 magazines. In this situa
tion, Andy will see ________ movies a
week and buy ________ magazines.
269)
_____
A)
fewer than 3; more than 3
B)
3; 3
C)
more than 3; fewer than 3
D)
fewer than 3; fewer than 3
270)
Sam consumes only sandwiches and soda and maximizes his total utility. Suppose t
hat the price of a sandwich falls. At
the new consumer equilibrium, Sam substitutes ________ for ________. Sam's margi
nal utility from soda ________ and his
marginal utility per dollar spent on sandwiches ________.
270)
_____
A)
soda; sandwiches; stays the same; stays the same
B)
sandwiches; soda; increases; increases
C)
soda; sandwiches; decreases; increases
D)
sandwiches; soda; increases; decreases
271)
The paradox of value is illustrated by the fact that
271)
_____
A)
if diamonds were free they would no longer be useful for engagement rings.
B)
a pound of bread is cheaper than a pound of gold.
C)
teens buy designer jeans.
D)
gold and diamonds occupy little space.
272)
The paradox of value refers to the fact that
272)
_____
A)
the value of a good depends on its total utility.
B)
water costs little, while diamonds cost a lot.
C)
water brings little consumer surplus.
D)
different consumers value the same items differently.
273)
The water and diamonds paradox of value
273)
_____
A)
points out that we generally have a low total utility of water and a high total
utility of diamonds.
B)
is resolved by the principle that market price is determined by total utility, n
ot marginal utility.
C)
is that water is essential for life and yet is cheap, whereas diamonds are total
ly nonessential and yet are expensive.
D)
None of the above
274)
The diamond-water paradox of value can be explained by
274)
_____
A)
the fact that utility cannot be measured.
B)
water's high level of utility relative to diamonds.
C)
distinguishing between total utility and marginal utility.
D)
water's low price relative to diamonds.
275)
The paradox of value can be resolved by distinguishing between
275)
_____
A)
supply and quantity supplied.

B)
normative and positive statements.
C)
quantity demanded and quantity supplied.
D)
total utility and marginal utility.
276)
The paradox of value between diamonds and water is explained by the fact that th
e
276)
_____
A)
total utility of diamonds exceeds the marginal utility of water.
B)
total utility of diamonds exceeds the total utility of water.
C)
marginal utility of diamonds exceeds the total utility of water.
D)
marginal utility of diamonds exceeds the marginal utility of water.
277)
With respect to water and diamonds, water
277)
_____
A)
is cheaper than diamonds because it has a lower total utility.
B)
has a higher marginal utility than diamonds.
C)
has a lower marginal utility than diamonds.
D)
is cheaper than diamonds because it has a higher total utility.
278)
According to the paradox of value, expensive goods, such as gemstones, provide c
onsumers with
278)
_____
A)
low total utility and high marginal utility.
B)
high marginal utility and high total utility.
C)
high total utility and low marginal utility.
D)
low total utility and low marginal utility.
279)
The water and diamonds paradox of value results from
279)
_____
A)
the "law of demand."
B)
the concept of deadweight loss.
C)
the elasticity of demand.
D)
280)
Water is cheap and diamonds are expensive because water has a ________, and diam
onds have a ________.
280)
_____
A)
high marginal utility; low marginal utility
B)
low marginal utility and a low total utility; high marginal utility and a high t
otal utility
C)
low total utility; high total utility
D)
low marginal utility; high marginal utility
281)
Water has a ________ marginal utility and brings a ________ consumer surplus; di
amonds have a ________ marginal
utility and bring a ________ consumer surplus.
281)
_____
A)
small; large; large; small
B)
small; small; large; large
C)
large; small; small; large
D)
large; large; small; small

282)
Michael consumes only steak and lobster. Suppose that the price of steak rises.
After Michael is back at equilibrium,
compared to the situation when steak was cheaper, the marginal utility from the
last steak will
282)
_____
A)
have increased.
B)
not be comparable with the marginal utility before the price hike.
C)
have decreased.
D)
not have changed.
283)
Marginal utility theory predicts that a rise in the price of a banana results in
283)
_____
A)
a movement downward along the demand curve for bananas.
B)
the demand curve for bananas shifting rightward.
C)
the demand curve for bananas shifting leftward.
D)
a movement upward along the demand curve for bananas.
284)
284)
_____
A)
Marginal utility theory predicts that all goods are normal goods and that all go
ods are substitutes for each other.
B)
Marginal utility theory makes no prediction about a consumer's responses to hike
s in the prices of the goods and services
he or she consumes.
C)
It is possible to derive the law of demand
that a higher price decreases the quant
ity demanded using marginal utility
theory.
D)
Marginal utility theory predicts that an increase in a consumer's income increas
es consumption of all goods.
285)
Because we cannot observe or measure utility

285)
_____
A)
marginal utility theory is incomplete and so its predictions might not be valid.
B)
the predictions of marginal utility theory cannot be verified.
C)
marginal utility theory must be derived from assumptions about demand curves bec
ause demand curves can be
measured.
D)
None of the above answers are correct.
286)
The fact that rubies are more expensive than milk reflects the fact that for mos
t consumers
286)
_____
A)
a quart of rubies is considered to be prettier than a quart of milk.
B)
the marginal utility from rubies equals that from milk.
C)
the total utility from rubies exceeds that from milk.
D)
more milk is consumed than rubies.
287)
Marginal utility theory shows us that water, which is very common, has a _______
_ marginal utility and a ________ total
utility.
287)
_____
large; small
A)
B)
large; large
C)
small; small
D)
small; large
288)
Rembrandt paintings are expensive and not as vital for life as milk, which is ch
eap. Marginal utility theory explains this
paradox of value The total utility from a Rembrandt painting is ________ than th
e total utility from milk, and the marginal
utility from a Rembrandt painting is ________ than the marginal utility from mil
k.
288)
_____
larger; larger
A)
B)
smaller; larger
C)
larger; smaller
D)
smaller; smaller
289)
We can explain the paradox of value as follows The consumer surplus from water,
which is cheap, is ________ than the
consumer surplus from gold, which is expensive; the total utility from gold is _
_______ than the total utility from water;
and the marginal utility per dollar spent on water ________ the marginal utility
per dollar spent on gold.
289)
_____
A)
less; greater; greater than
B)
smaller; less; equals
C)
greater; greater; greater than
D)
greater; less; equals
290)
A behavioral economist will explain Tom's donation to charity by saying that Tom
is displaying ________.
290)
_____
A)
bounded self-interest
B)
the endowment effect

C)
bounded rationality
D)
bounded will power
291)
Suppose that Richard has just told you that he would not pay more than $100 doll
ars for one of his favorite baseball cards.
You offer to give him $110 dollars for his card and he refuses. What consumer ch
oice theory or effect explains this result?
291)
_____
A)
B)
C)
bounded rationality
D)
bounded will power
292)
According to a behavioral economist, people who is unwilling to sell the last po
und of rice they purchased for the same
price that they paid for it are displaying ________.
292)
_____
A)
bounded rationality
B)
C)
D)
bounded will power
293)
If Sean thinks that the choice between going to Olive Garden or Red Lobster is s
imply too confusing, a behavioral
economist will explain that Sean is showing ________.
293)
_____
A)
B)
bounded will power
C)
bounded rationality
D)
294)
Gene plays another hour of computer games rather than study for the hour even th
ough he knows that the next day, when
he takes his test, he will regret his decision. Gene is showing ________.
294)
_____
A)
B)
bounded will power
C)
bounded rationality
D)
295)
Lucky buys hats for $20 but Lucky will not sell one of her hats for less than $3
5. Lucky is ________.
295)
_____
A)
showing unbounded will power
B)
making decisions using her prefrontal cortex
C)
exhibiting bounded self-interest
D)
displaying the endowment effect
296)
The cost of basics like milk, bread, potatoes and bananas has jumped in the past
year, forcing families to nix luxuries, steer
away from organic goods and buy more house brands. "I think it's affecting every
body," said Elize Joseph 48, a nursing
attendant. "To spend $40 on groceries is nothing. It doesn't go a long way." Whe
n food prices increase, what will happen to
Elize's total utility?
296)
_____
It increases
It decreases
A)
B)
C)
It stays the same
D)
It cannot determine without knowing her total income
297)
At Revolution Doughnuts in Fort Collins, Colorado, a cup of coffee or a doughnut
is $1. Suppose Hannah loves going to
Revolution Doughnuts. She spends $5 a day at the shop on 3 doughnuts and 2 cups
of coffee. Is Hannah maximizing her
total utility?
297)
_____
No
A)
B)
Maybe, but I need to know more about Hannah's marginal utility per dollar for ea
ch of the two goods
C)
Yes
D)
Maybe, but I need to know more about Hannah's income
298)
Revolution Doughnuts. Currently, her marginal utility per dollar from doughnuts
is 14 and her marginal utility per dollar
from coffee is 10. Is Hannah maximizing her total utility?
298)
_____
A)
Yes, she is maximizing utility
B)
No, she needs to buy fewer doughnuts and less coffee
C)
No, she needs to buy more doughnuts and less coffee
D)
No, she needs to buy more coffee and fewer doughnuts
299)
Revolution Doughnuts. Currently, her marginal utility per dollar from doughnuts
is 14 and her marginal utility per dollar
from coffee is 14. Is Hannah maximizing her total utility?
299)
_____
A)
No, she needs to buy more coffee and fewer doughnuts
B)
No, she needs to buy more doughnuts and less coffee
C)
Yes, she is maximizing utility
D)
No, she needs to buy fewer doughnuts and less coffee
300)
Revolution Doughnuts and usually buys 2 doughnuts and 1 cup of coffee. On the wa
y to the shop, Hannah finds an extra
$2 dollars in change in her car and buys an extra doughnut and cup of coffee. Th
is means
300)
_____
A)
Doughnuts and coffee are inferior goods for Hannah
B)
Doughnuts are an inferior good and coffee is a normal good for Hannah
C)
Doughnuts are a normal good and coffee is an inferior good for Hannah
D)
Doughnuts and coffee are normal goods for Hannah
301)
The Denver Broncos is a football team in the NFL, the Colorado Crush is an arena
football team, and the Highlands Ranch
Falcons is a local High School team. Bronco's tickets cost about $415, the Crush
cost between $30 and $85 and Falcons
tickets are $6. What do the prices per unit tell you about the marginal utility
from each of these football games?
301)
_____
A)
The marginal utility will be greatest from a Crush game
B)
The marginal utility will be greatest from a Falcons game
C)
The marginal utility will be equal from each game
D)
The marginal utility will be greatest from a Broncos game
302)
The Denver Broncos is a football team in the NFL, the Colorado Crush was an aren
a football team, and the Highlands
Ranch Falcons is a local High School team. Bronco's tickets cost about $415, Cru
sh tickets cost between $30 and $85 and
Falcons tickets are $6. What does marginal utility theory predict about the marg
inal utility per dollar from each of these
football games?
302)
_____
A)
The marginal utility per dollar will be greatest for the Falcons
B)
The marginal utility per dollar will be equal for all games
C)
The marginal utility per dollar will be greatest for the Crush
D)
The marginal utility per dollar will be greatest for the Broncos
303)
The state Department of Agriculture raised the minimum price for a gallon of mil
k in the city on Tuesday to $4.37. "If
you've got two or three kids and you're living on a fixed income and you're payi
ng half your income on rent," Gioia said,
"then you're really in a bind and you're making choices you should never have to
make." If even after this price increase
Gioia's marginal utility per dollar is higher for milk than for other goods, wha
t should Gioia do?
303)
_____
A)
Decrease her consumption of milk
B)
Increase her consumption of milk only if her income increases
C)
Not change her consumption of milk
D)
Increase her consumption of milk
Hours per day
1
2
3
4
5
Total utility
Total utility
from friends from breaking a
and family
sweat
10
14
19
22
24
28
28
33
30
34
At 37, actor Matthew McConaughey says he only needs "friends and family" to keep
him happy and that he avoids "false
drama" at all costs. How do you maintain that bod? "I don't really have a workou
t regimen I follow. I just live my life. My
goal is to break a sweat each day." People June 25, 2007
Mr. McConaughey says he only needs friends and family and to break a sweat each
day to keep him happy. The table
above shows the total utility he gets from spending time with friends and family
and breaking a sweat.
304)
Mr. McConaughey has the afternoon, 5 hours, to spend doing whatever he wants. Ho
w much time does Mr.
McConaughey spend with his friends and family and how much time does he spend br
eaking a sweat to maximize his
total utility?
304)
_____
A)
3 hours with friends and family and 4 hours breaking a sweat
B)
C)
D)
305)
Which statement is true about Mr. McConaughey's marginal utility from spending t
ime with family and friends and
breaking a sweat?
305)
_____
A)
The marginal utility Mr. McConaughey gets from the third hour of spending time w
ith his family is less than the marginal
utility from the fourth hour of breaking a sweat.
B)
The marginal utility Mr. McConaughey gets from the second hour of spending time
with his family is greater than the
marginal utility from the first hour of breaking a sweat.
C)
The marginal utility Mr. McConaughey gets from the first hour of spending time w
ith his family is less than the marginal
utility from the first hour of breaking a sweat.
D)
The marginal utility Mr. McConaughey gets from the fourth hour of spending time
with his family is greater than the
marginal utility from the fourth hour of breaking a sweat.
306)
Does Mr. McConaughey's marginal utility from spending time with family and frien
ds and from breaking a sweat obey
the principle of diminishing marginal utility?
306)
_____
A)
No, neither obeys the principle of diminishing marginal utility
B)
Only spending time with friends and family obeys the principle of diminishing ma
rginal utility
C)
Only breaking a sweat obeys the principle of diminishing marginal utility
D)
Yes, they both obey the principle of diminishing marginal utility
307)
If Mr. McConaughey has 7 hours to spend with friends and family and breaking a s
weat, he will maximize his utility if he
spends
307)
_____
A)
5 hours with family and friends and 5 hours breaking a sweat
B)
C)
D)
308)
Jake has already bought his hockey gear for the season, but when he is in the sp
orts store, he falls in love with a different
hockey stick and buys it even though it means he can't go out to dinner later wi
th his friends which he would have
preferred. This example illustrates the ________ aspect of behavioral economics.
308)
_____
A)
bounded will-power
B)
bounded rationality
C)
empowerment effect
D)
309)
Janae donates $50 to the local Humane Society. This means she can't buy that new
pair of shoes, which according to her
utility schedule, would have maximized her utility. This example illustrates the
________ aspect of behavioral economics.
309)
_____
A)
B)
bounded rationality
C)
empowerment effect
D)
bounded will-power
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
310)
Is "utility" another word for the cost we give up when we consume a good?
311)
How can you compute the total utility derived from consuming five hamburgers usi
ng marginal utilities?
312)
How are total and marginal utility related?
313)
Are your total and marginal utility of ice cream schedules determined by the pri
ce of ice cream?
314)
"Diminishing marginal utility means a downward sloping total utility curve." Tru
e or false? Explain.
315)
What does "diminishing marginal utility" mean?
316)
"As Rob consumes more dates over the course of a day, it is likely that his marg
inal utility from date consumption will
rise." Is the previous statement likely correct or incorrect?
317)
Explain the concept of consumer equilibrium.
318)
If a consumer is consuming a combination of goods and services on his budget lin
e, has the consumer allocated his or her
entire budget?
319)
What are the two conditions that are met if a consumer is maximizing utility?
320)
You are studying with a friend, and your friend says "To maximize utility, a con
sumer must consume the combination of
goods so that the marginal utility of good X equals the marginal utility of good
Y." Explain whether your friends
statement is correct or incorrect.
321)
What is the utility-maximizing rule?
322)
Explain why total utility is maximized when the marginal utility per dollar on a
ll goods is equal.
323)
To maximize utility, why does a consumer consume the combination of goods that e
quates marginal utility per dollar on
the different goods rather than just equating the marginal utility of the differ
ent goods?
324)
Suppose that Arnold spends all his income on bratwursts and piano lessons and hi
s marginal utility per dollar on
bratwursts is lower than that on piano lessons. Is Arnold maximizing his utility
? Why or why not?
325)
Suppose that Alyssa spends all her income on video games and DVDs and her margin
al utility per dollar from video
games equals that from DVDs. Is Alyssa maximizing her utility? Now, suppose that
the price of a DVD falls. Should
Alyssa change the combination of goods she consumes? If yes, how? Explain.
326)
If Jack is a utility maximizer, shouldn't a fall in the price of popcorn cause a
n increase in his marginal utility of popcorn?
327)
What is the water and diamonds paradox of value and what is its resolution?
328)
Explain the paradox of value.
329)
"Water is very inexpensive. Thus the marginal and total utility of water is smal
l." Analyze the previous statements.
330)
Does the fact that diamonds, which we do not need to survive, are more expensive
than water, which is a necessity,
constitute a violation of utility maximization?
331)
Why does gold, which is a relatively nonessential item, have a higher price than
water, which is essential to life?
332)
A consumer allocates his budget according to rules of utility maximization. What
are the rules of utility maximization and
how do they explain the paradox of value, which is that diamonds are expensive b
ut useless, while water is inexpensive
but essential?
333)
"Because the price of a diamond is much greater than the price of a gallon of wa
ter, the consumer surplus from diamonds
is greater than the consumer surplus from water." Is the previous analysis corre
ct? Explain your answer.
334)
Does the fact that diamonds are so expensive imply that the demand curve for dia
monds has a positive slope? Use
marginal utility theory to answer the question.
Quantit
y
(rentals
per
week)
0
Total
utility
0
Margin
al
utility
X
1
2
3
4
5
6
7
28
54
78
100
120
138
154
____
____
____
____
____
____
____
335)
Amy has the total utility values given above for DVD rentals a week. Complete th
e table by calculating her marginal
utilities.
Quantit
y
(cones
per
week)
0
1
2
3
4
5
6
7
Total
utility
0
22
38
____
56
____
62
63
Margin
al
utility
X
____
____
11
____
4
____
____
336)
The table above gives the utility Andy receives from different quantities of van
illa ice cream cones. Complete the table.
Quantit
y
(tacos
per
week)
0
1
2
3
4
5
Total
utility
Margin
al
utility
0
____
35
45
52
57
X
20
____
____
____
____
337)
The table above gives Jessie's marginal utility and total utility from tacos. Co
mplete the table.
Quantit
y
Eclairs
Total
utility
Quantit
y
Cream puffs
Total
utility
0
1
2
3
4
5
0
126
243
342
414
441
0
1
2
3
4
5
0
54.0
103.5
145.5
177.0
196.5
338)
The table gives the total utility Jamal derives from the consumption of eclairs
and cream puffs. Jamal has $12 to spend on
these two confectionery goods. The price of an eclair is $3 and the price of a c
ream puff is $1.50.
a)
Jamal's budget is $12. In order for Jamal to maximize his utility, how many ecla
irs and cream puffs should he buy?
b)
Suppose the price of an eclair increase to $6. Jamal's income does not change an
d neither does the price of a cream
puff. What combination of eclairs and cream puffs will Jamal buy now?
c)
Using your answers to parts (a) and (b), derive two points on Jamal's demand cur
ve for eclairs.
Quantit
y
1
2
3
4
5
Pants
Margin
al
utility
220
180
140
100
60
Quantit
y
1
2
3
4
5
Belts
Margin
al
utility
85
65
45
25
15
339)
Tris is shopping for pants and belts. He has a budget of $100. The price of a pa
ir of pants is $20 and the price of a belt is $5.
His marginal utility schedules are above. What combination of pants and belts do
es Tris buy? Explain your answer.
Quantit
y
1
2
3
4
5
6
Ice cream
Total
utility
95
180
255
320
375
420
Quantit
y
1
2
3
4
5
6
Romance novels
Total
utility
170
320
450
560
650
720
340)
The table above shows Danielle's utility from ice cream and romance novels.
a)
What is Danielle's marginal utility from the 4th novel?
b)
The price of ice cream is $5 per gallon and a novel is $10. If Danielle's budget
for these two goods is $50 and she
buys 2 gallons of ice cream, how many novels can she buy? If she buys 6 gallons
of ice cream, what is her marginal utility
per dollar spent on novels?
c)
Which combination of the two goods is better 4 gallons of ice cream and 3 novels
or 6 gallons of ice cream and 2
novels?
341)
Ricardo likes to rent DVDs and attend concerts. The DVDs cost $4 and the concert
s cost $40. Ricardo's marginal utility
from the last DVD is 20 units. Ricardo is maximizing his utility. What is his ma
rginal utility from the last concert he
attended?
342)
Suppose Abe is allocating his entire income and he receives 100 units of utility
per dollar from the tenth slice of pizza and
200 units of utility per dollar from his second soda. Is Abe maximizing his util
ity? Should Abe change his consumption of
pizza and soda?
343)
For a consumer, the marginal utility of good A is 25 and its price is $5. The ma
rginal utility of good B is 60 and its price is
$12. The consumer has allocated his entire budget. Is this consumer maximizing h
is total utility? Explain your answer.
344)
If Mark's marginal utility per dollar spent on the last taco is 15 and his margi
nal utility per dollar spent on the last burrito
is 20 units, what should Mark do to increase his total utility?
345)
Suppose Jenny's marginal utility of fish is 40 and her marginal utility from chi
ps is 20. The price of fish is $10 and the price
of chips is $1. What should Jenny do to maximize her utility? Explain your answe
r.
Quantit
y
(pound
s)
1
2
3
4
5
6
Bananas
Margin
al
utility
per
dollar
30
24
18
12
6
0
Quantit
y
(pound
s)
1
2
3
4
5
6
Apples
Margin
al
utility
per
dollar
40
34
24
16
8
0
346)
The table above gives Sam's marginal utility schedule for bananas and apples. Sa
m's fruit budget is $10.
a)
If bananas cost $1 per pound and apples cost $2 per bag, what is Sam's marginal
utility per dollar for all quantities
of both goods?
b)
What is the utility maximizing combination of bananas and apples for Sam?
c)
If the price of bananas increases to $2 per pound, how does Sam's marginal utili
ty per dollar for bananas change?
d)
At the banana price of $2 per pound, what is the new utility maximizing combinat
ion of bananas and apples for
Sam?
e)
List two points on Sam's demand curve for bananas.
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false
.
347)
Total utility is the benefit received from consuming an extra unit of a good.
347)
_____
348)
According to the principle of diminishing marginal utility, as an individual con
sumes more and more of a good or service,
the total utility increases while the marginal utility decreases.
348)
_____
349)
Tom's marginal utility from a Sobe exceeds his marginal utility of crackers. The
refore, his total utility of Sobe must exceed
his total utility of crackers.
349)
_____
350)
Marginal utility diminishes as consumption of a good decreases.
350)
_____
351)
If Tom's total utility from watching one more minute of television increases but
the increase for each additional minute is
smaller than the previous minute, he has diminishing marginal utility.
351)
_____
352)
As a person consumes more and more slices of pizza, the marginal utility of each
extra slice diminishes.
352)
_____
353)
A consumer will maximize utility when all income is spent and the marginal utili
ty is equal for all goods.
353)
_____
354)
When Kathryn spends her entire budget and equates marginal utility per dollar ac
ross all goods' Kathryn's total utility is
maximized.
354)
_____
355)
If it costs $6.00 to go to the movies and $25.00 to go to a hockey game, Tom is
maximizing his utility between movies and
hockey if his marginal utility of movies is 12 units and his marginal utility fr
om hockey is 25.
355)
_____
356)
If it costs $6.00 to go to the movies and $25.00 to go to a hockey game, Tom is
maximizing his utility between movies and
hockey if his marginal utility of movies is 12 units and his marginal utility fr
om hockey is 50.
356)
_____
357)
A consumer's total utility is maximized when the total utility per dollar from a
ll goods is equalized.
357)
_____
358)
If Dana spends all her income on ice cream and Mountain Dew and her marginal uti
lity per dollar from ice cream is
greater than her marginal utility per dollar from Mountain Dew, she should buy m
ore ice cream and less Mountain Dew.
358)
_____
359)
If the price of a good increases, a consumer will substitute away from the relat
ively more expensive good, which will
increase the marginal utility for that good and bring the consumer back to equil
ibrium.
359)
_____
360)
When Tom's income increases, his demand curve for Mountain Dew shifts rightward
because the higher income increases
his marginal utility of Mountain Dew.
360)
_____
361)
The Paradox of Value is resolved by the willingness for an individual to pay a h

igh price for a good or service that has a
high marginal utility per dollar.
361)
_____
362)
Tom's marginal utility of Mountain Dew exceeds his marginal utility of crackers
at his consumer equilibrium. Therefore,
his consumer surplus from Mountain Dew must exceed his consumer surplus from cra
ckers.
362)
_____
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
Quantity
(per year)
0
1
2
3
4
5
Utility
from CDs
(units)
0
50
92
126
152
170
Utility
from
DVDs
(units)
0
70
130
180
220
250
363)
Margo buys music CDs and movies on DVDs. The table above shows her total utility
from each good.
a)
Draw graphs showing Margo's utility from music CDs and from movies on DVDs.
b)
Compare the two utility graphs. Describe Margo's preferences.
c)
Draw graphs that show Margo's marginal utility from music CDs and from movies on
DVDs.
d)
What do the two marginal utility graphs tell you about Margo's preferences?
Quantity
(magazine
s per year)
0
4
8
12
16
20
Utility
from
magazines
(units)
0
80
152
216
272
320
Quantity
(gallons of
ice cream
per year)
0
4
8
12
16
20
Utility
from ice
cream
(units)
0
120
224
312
384
440
364)
Sarah spends $100 a year on magazines and ice cream. The table above shows her u
tility from each good. If the price of a
magazine is $5 and the price of ice cream is $5 per gallon, how does Sarah spend
the $100?
1)
B
C
B
A
C
B
B
C
B
A
C
C
D
A
B
B
B
A
A
C
C
C
C
B
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
13)
14)
15)
16)
17)
18)
19)
20)
21)
22)
23)
24)
25)
B
A
A
A
D
D
D
D
A
D
A
A
B
B
A
C
B
A
B
D
B
C
A
D
B
A
26)
27)
28)
29)
30)
31)
32)
33)
34)
35)
36)
37)
38)
39)
40)
41)
42)
43)
44)
45)
46)
47)
48)
49)
50)
D
B
C
C
C
B
C
A
D
B
C
B
D
D
D
B
C
D
B
D
D
B
A
D
C
51)
52)
53)
54)
55)
56)
57)
58)
59)
60)
61)
62)
63)
64)
65)
66)
67)
68)
69)
70)
71)
72)
73)
74)
75)
76)
D
D
B
A
D
B
B
A
B
A
D
A
A
D
A
D
C
B
A
A
D
A
A
77)
78)
79)
80)
81)
82)
83)
84)
85)
86)
87)
88)
89)
90)
91)
92)
93)
94)
95)
96)
97)
98)
99)
D
100)
B
101)
C
102)
A
103)
B
104)
B
105)
C
106)
C
107)
B
108)
C
109)
B
110)
C
111)
B
112)
D
113)
D
114)
B
115)
B
116)
A
117)
A
118)
B
119)
C
120)
C
121)
D
122)
C
123)
A
124)
B
125)
A
126)
B
127)
C
128)
A
129)
D
130)
C
131)
B
132)
A
133)
D
134)
A
135)
C
136)
A
137)
B
138)
B
139)
A
140)
B
141)
C
142)
B
143)
D
144)
D
145)
B
146)
A
147)
C
148)
D
149)
A
150)
C
151)
D
152)
C
153)
D
154)
C
155)
B
156)
B
157)
B
158)
C
159)
A
160)
A
161)
A
162)
D
163)
C
164)
A
165)
D
166)
C
167)
C
168)
A
169)
C
170)
C
171)
B
172)
C
173)
D
174)
A
175)
B
176)
C
177)
B
178)
B
179)
A
180)
C
181)
D
182)
C
183)
D
184)
C
185)
A
186)
B
187)
A
188)
D
189)
A
190)
C
191)
A
192)
B
193)
C
194)
B
195)
C
196)
D
197)
B
198)
A
199)
C
200)
C
201)
C
202)
B
203)
D
204)
C
205)
B
206)
A
207)
C
208)
D
209)
A
210)
D
211)
A
212)
C
213)
C
214)
B
215)
B
216)
C
217)
B
218)
B
219)
B
220)
A
221)
B
222)
B
223)
A
224)
A
225)
D
226)
D
227)
C
228)
A
229)
C
230)
C
231)
A
232)
C
233)
B
234)
A
235)
D
236)
C
237)
D
238)
D
239)
B
240)
A
241)
A
242)
D
243)
A
244)
A
245)
A
246)
D
247)
B
248)
A
249)
A
250)
B
251)
A
252)
C
253)
D
254)
C
255)
D
256)
B
257)
A
258)
A
259)
C
260)
B
261)
D
262)
C
263)
D
264)
A
265)
D
266)
D
267)
A
268)
B
269)
C
270)
B
271)
B
272)
B
273)
C
274)
C
275)
D
276)
D
277)
C
278)
A
279)
D
280)
D
281)
A
282)
A
283)
D
284)
C
285)
D
286)
D
287)
D
288)
B
289)
D
290)
A
291)
A
292)
B
293)
C
294)
B
295)
D
296)
B
297)
B
298)
C
299)
C
300)
D
301)
D
302)
B
303)
D
304)
D
305)
C
306)
D
307)
D
308)
A
309)
A
310)
No, utility does not mean the opportunity cost of consuming a good. Utility is t
he benefit or satisfaction a person gets
from consumption of a good or service.
311)
The total utility from consuming any product is the sum of the marginal utilitie
s of each unit of the product. So, if the five
hamburgers yielded marginal utilities of 12, 8, 7, 5, and 3, respectively, the t
otal utility from hamburgers would equal 35.
312)
Marginal utility is the change in total utility from consuming one more unit of
a good.
313)
No. Your total and marginal utility are determined purely by how much or how lit
tle you like ice cream. If you like it a lot,
your marginal utility will be higher than otherwise for each additional ice crea
m scoop you consume and that will cause
your total utility to be higher.
314)
False. Diminishing marginal utility means a downward sloping marginal utility cu
rve. A total utility curve stays upwardsloping as long as marginal utility is po
sitive.
315)
As the consumption of a good or service increases, the marginal utility decrease
s. For example, the first cup of coffee you
drink in the morning will give you great satisfaction. As you keep on drinking m
ore and more cups of coffee, the
satisfaction from additional cups will diminish.
316)
The statement is incorrect. The principle of diminishing marginal utility means
that Rob marginal utility from eating dates
decreases as he eats more dates.
317)
A consumer equilibrium is a situation in which a consumer has allocated all his
or her available income in the way that,
given the prices of goods and services, the combination of goods and services ma
ximizes the consumer's total utility.
318)
Yes, the consumer has allocated his or her entire budget because the consumer is
spending his or her entire budget.
319)
There are two conditions (1) The consumer spends all his or her income. (2) The
consumer equalizes the marginal utility
per dollar from all goods.
320)
Your friend's statement is incorrect. To maximize utility, a consumer spends his
or her entire budget and consumes the
combination of goods and services so that the marginal utility per dollar from t
he goods is equal.
321)
The utility-maximizing rule states that for a person to maximize utility, the pe
rson must allocate (spend) his or her entire
budget and consume the quantities of goods and services so that the marginal uti
lity per dollar from each good or service
is equal to the marginal utility per dollar from all the other goods and service
s.
322)
It is easiest to prove that total utility is maximized when the marginal utility
per dollar is equal across goods by looking at
a situation in which the marginal utility per dollar is NOT equal across goods.
If the marginal utility per dollar is 5 for
good X and 8 for good Y, then the consumer could reallocate one dollar away from
good X (losing 5 units of utility) and
towards good Y (gaining 8 units of utility). The net result is a gain of 3 units
of utility, for an increase in total utility. Hence
whenever the marginal utility per dollar is not equal, the consumer can always r
earrange his or her consumption and
increase his or her total utility. Therefore the total utility cannot be at its
maximum when the marginal utility per dollar
differs for different goods. Only when all goods have the same marginal utility
per dollar is it impossible for the consumer
to reallocate funds and become better off. Hence at this point the consumer must
have the maximum total utility.
323)
The consumer equates the marginal utility per dollar on the goods because goods
have different prices. For instance, the
marginal utility of a Porsche might be 120,000 units and the marginal utility of
a Hyundai might be 60,000 units. The
consumer certainly prefers the Porsche to the Hyundai because the former has a g
reater marginal utility than the latter.
However, we did not consider the prices. If the Porsche costs $120,000 and the H
yundai costs $10,000, the marginal utility
per dollar on the Porsche is 1 and the marginal utility per dollar on the Hyunda
i is 6. A Hyundai gives the consumer more
utility per dollar. Thus when maximizing total utility, the consumer compares th
e marginal utility per dollar not the
marginal utility.
324)
No. If Arnold spends a dollar less on bratwursts and a dollar more on piano less
ons, his utility gain from more piano
lessons will be greater than his utility loss from the decreased consumption of
bratwursts and so his total utility will
increase.
325)
If Alyssa spends all her income on video games and DVDs and her marginal utility
per dollar from video games equals
that from DVDs, both utility maximization conditions are met and therefore Alyss
a maximizes her utility. If the price of a
DVD falls, Alyssa's marginal utility per dollar from DVDs becomes greater than t
hat from video games. Therefore, if she
spends a dollar more on DVDs and a dollar less on video games, her utility gain
from the increased consumption of DVDs
will be greater than her utility loss from the decreased consumption of video ga
mes and hence her total utility increases.
So, to maximize her utility, Alyssa should increase her consumption of DVDs and
decrease her consumption of video
games.
326)
No. If the price of popcorn drops, Jack will buy more popcorn. With diminishing
marginal utility, his total utility from
popcorn will increase but his marginal utility from popcorn will fall.
327)
The paradox is that water is critical to life has high total utility but sells for a lo
price. Diamonds, in contrast, are
nonessential have low total utility but sell for a high price. The paradox is resolved
y realizing that the price we are
willing to pay is linked to the marginal utility from the next glass of water or
diamond, not the total utility of all units of
each previously obtained. We already have much water, so the marginal utility of
the next water is low. But most people
have few diamonds, so the marginal utility of the next diamond is high.
328)
The paradox of value questions why water, which is essential for life, costs les
s than diamonds, which are not. This puzzle
can be resolved by realizing the difference between marginal utility and total u
tility. Water has high total utility, but
because we consume so much water, the last unit has little value, that is, the w
ater has low marginal utility. Diamonds have

little total utility, but because we consume few diamonds, the last unit of diam
onds has high marginal utility.
329)
Parts of the statement are true but a key part is false. Water is, indeed, very
inexpensive and so its marginal utility is small.
Because water is so inexpensive, the quantity people buy is large, which is why
its marginal utility is small. However,
water is essential to life. Hence the total utility of water is immense.
330)
No, the fact that diamonds are less useful but more expensive than water reflect
s the paradox of value. The resolution to
this paradox comes from the observation that utility maximization involves margi
nal utility (specifically, marginal utility
per dollar) not total utility. Water has a low marginal utility, because people
have a lot of it, but a very high total utility,
because it is essential to life. Diamonds have a high marginal utility, because
people have fewer diamonds, but a relatively
low total utility because diamonds are not necessary to life. Hence the low marg
inal utility of water is reflected in the low
price of water, while the high marginal utility of diamonds is reflected in the
high price of a diamond.
331)
Gold has a high price and a high marginal utility, while water has a low price a
nd a low marginal utility. Water is
relatively abundant in supply, while gold is relatively scarce. Hence people con
sume a lot of water and only a little gold.
As a result, the marginal utility of water is low and the marginal utility of go
ld is high. The utility maximizing rule, that
the marginal utility per dollar on gold must equal that of water, in combination
with the high marginal utility of gold and
low marginal utility of water, implies that the price of gold must be higher tha
n that of water.
332)
The rules of utility maximization are to allocate the entire available budget an
d consume the combination of goods and
services that make the marginal utility per dollar equal for all goods and servi
ces. Equating the marginal utility per dollar
is what explains the paradox of value. People consume a great deal of water. Bec
ause they consume a lot of water, the
marginal utility of water is quite low. However, people have only a few diamonds
. Hence the marginal utility of a
diamond is quite high. Thus for the marginal utility per dollar of water to equa
l that of diamonds requires that the price
of water be low and the price of diamonds high. Note, however, that this conditi
on says nothing about the total utility
from water or the total utility from diamonds. Because water is essential to lif
e, its total utility is tremendous. Because
diamonds are not essential, their total utility is much smaller.
333)
No, the analysis is incorrect. The paradox of value points out the error. Diamon
ds are scarce, so they have a high price and
a high marginal utility. Water is abundant, so it has a low price and a low marg
inal utility. But the total utility from water
(vastly) exceeds that from diamonds and so the consumer surplus from water (vast
ly) exceeds that from diamonds.
334)
No. In order for the demand curve for diamonds to have a positive slope, the mar
ginal utility of each diamond consumed
would have to increase as more diamonds are consumed. Diamonds are no different
than any other good. As more
diamonds are consumed, the marginal utility of a diamond decreases. Therefore in
order to increase the quantity of
diamonds people demand, the price of diamonds must fall, which indicates a downw
ard-sloping demand curve for
diamonds.
335)
Quantity
(rentals per
week)
0
1
2
3
4
5
6
7
Total utility
Marginal utility
0
28
54
78
100
120
138
154
X
28
26
24
22
20
18
16
The completed table is above.
336)
Quantity
(cones per
week)
0
1
2
3
4
5
6
Total utility
Marginal utility
0
22
38
49
56
60
62
X
22
16
11
7
4
2
7
63
1
337)
Quantity
(tacos per week)
0
1
2
3
4
5
Total utility
Marginal utility
0
20
35
45
52
57
X
20
15
10
7
5
338)
a)
Jamal's utility maximizing combination will allocate (spend) his budget and be s
uch that the marginal utility per
dollar from the last eclair equals the marginal utility per dollar from the last
cream puff. Jamal's utility maximizing
combination is 3 eclairs and 2 cream puffs. At this combination, Jamal spends $9
on eclairs (3 eclairs $3) and $3 on cream
puffs (2 cream puffs $1.50) for a total of $12. The marginal utility of the third
eclair is 99 (= 342 - 243), so the marginal
utility per dollar from eclairs is 99 3 = 33. The marginal utility of the second
cream puff is 49.50 (= 103.5 - 54.0), so the
marginal utility per dollar from cream puffs is 49.5 $1.50 = 33. Hence the margin
al utilities per dollar are equal, so the
combination of 3 eclairs and 2 cream puffs maximizes Jamal's utility.
b)
Jamal's new utility maximizing combination is 1 eclair and 4 cream puffs. As in
part (a), this combination allocates
all of Jamal's income and equalizes the marginal utility per dollar from the two
goods. (Both are equal to 21.)
c)
When the price of an eclair is $3, Jamal buys 3 eclairs, so one point on Jamal's
demand curve is the price of $3 and
the quantity demanded of 3 eclairs. When the price of an eclair increases to $6,
Jamal buys only 1 eclair. So another point

on Jamal's demand curve is the price of $6 and quantity demanded of 1 eclair.
339)
Tris buys 4 pairs of pants and 4 belts because this is the combination that allo
cates (spends) all of his budget and has the
marginal utility per dollar from a pair of pants equal to the marginal utility p
er dollar from a belt. For the first
requirement, that Tris allocate his entire budget, the combination of 4 pants an
d 4 belts spends (4 pairs of pants) ($20 per
pair of pants) = $80 on pants and (4 belts) ($5 per belt) = $20 on belts, for a t
otal spent of $100. For the second
requirement, the equality of the marginal utilities per dollar, the marginal uti
lity per dollar from a pair of pants is (100
units) ($20) = 5 units per dollar and the marginal utility per dollar from a belt
is (25 units) ($5) = 5 units per dollar.
340)
a)
Danielle's marginal utility from the 4th novel is 560 - 450 = 110.
b)
When Danielle buys 2 gallons of ice cream, she spends $5 2 = $10 on ice cream. So
Danielle spends the rest of
her budget, which is $50 - $10 = $40, on novels. Because the price of a novel is
$10, she buys $40 $10 = 4 novels. When
Danielle buys 6 gallons of ice cream, she spends $5 6 = $30 on ice cream. So Dani
elle spends the rest of her budget,
which is $50 - $30 = $20, on novels. Because the price of a novel is $10, she bu
ys $20 $10 = 2 novels. So her marginal
utility from the second novel is 320 - 170 = 150 and, since the price of a novel
is $10, the marginal utility per dollar is 150
$10 = 15.
c)
4 gallons of ice cream and 3 novels is better. In both cases Danielle spends all
her budget. But if she buys 4 gallons
of ice cream and 3 novels, her total utility is 320 + 450 = 770, while if she bu
ys 6 gallons of ice cream and 2 novels, her total
utility is 420 + 320 = 740.
341)
The marginal utility from his last concert is 200 units. In order for Ricardo to
maximize his utility, the marginal utility per
dollar must be equal for all goods. The marginal utility per dollar from the las
t DVD is (20 units) ($4) = 5. So the
marginal utility per dollar from the last concert also must equal 5, which, give
n its price of $40, means that concert has a
marginal utility of 200, because (200 units) ($40) = 5.
342)
Abe is not maximizing his utility because his marginal utility per dollar from p
izza does not equal his marginal utility per
dollar from soda. Abe should consume more soda (because it provides more satisfa
ction per dollar) and less pizza.
343)
Yes, the consumer is maximizing his utility. He has allocated his entire budget
and he is consuming the combination of
goods A and B such that the marginal utility per dollar from each is the same.
344)
Mark should buy more burritos and fewer tacos. If Mark decreases his purchases o
f tacos by $1, he loses 15 units of utility.
But if he then spends the dollar on burritos, he gains 20 units of utility. Beca
use his gain in utility exceeds his loss, Mark's
total utility increases as he buys more burritos and fewer tacos.
345)
Jenny should buy more chips and fewer fish. Her marginal utility per dollar from
chips is 20 and her marginal utility per
dollar from fish is 4. If Jenny decreases her purchases of fish by $1, she loses
4 units of utility. But if she spends the dollar
on chips, she gains 20 units of utility. Because her gain in utility exceeds her
loss, Jenny's total utility increases as she buys
more chips and fewer fish.
346)
Bananas
Apples
Quantity
Quantity
(pounds)
Marginal utility
(pounds)
Marginal utility
1
30
1
20
2
24
2
17
3
18
3
12
4
12
4
8
5
6
5
4
6
0
6
0
a)
The table above has Sam's marginal utility per dollar for bananas and apples.
b)
Sam's utility maximizing combination of bananas and apples is 4 pounds of banana
s and 3 bags of apples. This

quantity allocates (spends) his budget and equates the marginal utility per doll
ar from bananas and apples.
Bananas
Quantity
(pounds)
Marginal utility
1
15
2
12
3
9
4
6
5
3
6
0
c)
The table with Sam's new marginal utility per dollar for bananas is above.
d)
Sam's new utility maximizing combination of bananas and apples is 2 pounds of ba
nanas and 3 bags of apples.
e)
When the price of a pound of bananas is $1, the quantity demanded is 4 pounds an
d when the price rises to $2,
the quantity demanded decreases to 2 pounds.
347)
FALSE
348)
TRUE
349)
FALSE
350)
FALSE
351)
TRUE
352)
TRUE
353)
FALSE
354)
TRUE
355)
FALSE
356)
TRUE
357)
FALSE
358)
TRUE
359)
TRUE
360)
FALSE
361)
FALSE
362)
FALSE
363)
a)
b)
The figure with the total utilities is above.
Margo gets more utility from any number of movies on DVDs than she does from the
same number of music CDs.
c)
The figure with the marginal utilities is above.
d)
Margo's marginal utility from an additional DVD is greater than that from an add
itional music CD when she has
the same number of each.
364)
Sarah buys 6 magazines and 14 gallons of ice cream. She spends $100 and her marg
inal utility per dollar from magazines
and ice cream is the same, 3.6 units per dollar.

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Exam

Utility is best defined as

change in satisfaction that results from a one-unit increase in the quantity of

The marginal utility from the consumption of a good is equal to the

is an implication of the law of demand.

total utility curve A because it gets steeper as consumption of tomatoes increas

shows Lisa's marg

shows Lisa's marg

shows Lisa's marg

and Pepsi. The price of pizza is $2 a slice an

1 unit of skiing and 2 units of skating

maximize; fewer DVDs and less downloaded music

his marginal utility of pens will be 10 while his

marginal utility of milkshakes

dogs. The price of a textbook

n and 3 bottles of soda, then the ratio of

and Diet Pepsi, w

and Diet Pepsi, w

5 slices of pizza and no Diet Pepsi

4 pens and 5 pencils

8 units per dollar

his consumer equilibrium?

maximize Priscilla's utility?

3 cans of Pepsi and 1 slice of pizza

maximize their marginal utility.

an equal amount of cookies and hot chocolate.

The price of a soda falls.

________ coffee ________.

marginal utility is positive.

supply and quantity supplied.

large; large; small; small

Because we cannot observe or measure utility

the endowment effect

The Paradox of Value is resolved by the willingness for an individual to pay a h

ater has low marginal utility. Diamonds have

Jamal buys only 1 eclair. So another point

s and 3 bags of apples. This

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coffee .