Question 1

Mr. Samuelson's current rates of purchase are such that the marginal utility of slacks is 18 and the marginal utility of ties for him is 5. If slacks and ties are priced at $12 and $2, respectively, it can be concluded that Mr. Samuelson

Accepted Answer

A)   is spending too much on slacks and not enough on ties.
B)   is spending too much on ties and not enough on slacks.
C)   is spending his income in such a way as to maximize his satisfaction.
D)   should buy six times as many ties as he does slacks.

Question 2

Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility)  that a consumer would get from successive quantities of products J and K.  If the consumer has money income of $52 and the prices of J and K are $8 and $4 respectively, the consumer will maximize her utility by purchasing

Accepted Answer

A)   2 units of J and 7 units of K.
B)   5 units of J and 5 units of K.
C)   4 units of J and 5 units of K.
D)   6 units of J and 3 units of K.

Question 3

Where total utility is at a maximum, marginal utility is

Accepted Answer

A)   negative.
B)   positive and increasing.
C)   zero.
D)   positive but decreasing.

Question 4

An increase in the real income of a consumer is one result from an increase in the price of a product that the consumer is buying.

Accepted Answer

A) True 
 B)False

Question 5

Indifference analysis assumes that utility is numerically measurable.

Accepted Answer

A) True 
 B)False

Question 6

Marginal utility is the

Accepted Answer

A)   sensitivity of consumer purchases of a good to changes in the price of that good.
B)   change in total utility obtained by consuming one more unit of a good.
C)   change in total utility obtained by consuming another unit of a good divided by the change in the price of that good.
D)   total utility associated with the consumption of a certain number of units of a good divided by the number of units consumed.

Question 7

Which of the following is correct?

Accepted Answer

A)   Budget lines are linear and upsloping; indifference curves are downsloping and concave to the origin.
B)   Budget lines are linear and downsloping; indifference curves are downsloping and concave to the origin.
C)   Budget lines are linear and downsloping; indifference curves are downsloping and convex to the origin.
D)   Budget lines are downsloping and convex to the origin; indifference curves are linear and downsloping.

Question 8

The financing of health care through insurance has

Accepted Answer

A)   decreased absolute total expenditures on health care.
B)   resulted in consumers directly paying less than the full price of health care.
C)   increased the marginal utility of health care services.
D)   made no change in health care consumption.

Question 9

Assume MUc and MUd represent the marginal utility that a consumer gets from products C and D, the respective prices of which are Pc and Pd. The consumer will increase his total utility from a specific money outlay by spending more on C and less on D if initially

Accepted Answer

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Question 10

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

Accepted Answer

A)   The more pizza Joe eats, the more he enjoys an additional slice.
B)   The more pizza Joe eats, the less he enjoys an additional slice.
C)   Joe's marginal utility from eating pizza becomes positive after eating three slices.
D)   Joe's marginal utility from eating pizza reaches a maximum when total utility is zero.

Question 11

An increase in the productivity of labor over time will

Accepted Answer

A)   decrease the value of time.
B)   increase the value of time.
C)   decrease the demand for labor-saving devices.
D)   decrease the demand for consumer goods and services.

Question 12

How did Apple overcome consumers' diminishing marginal utility for iPads?

Accepted Answer

A)   Apple lowered the price of iPads so that previous buyers would purchase another unit.
B)   Apple introduced new features to entice previous buyers to purchase new models.
C)   Apple ignored the problem and focused solely on attracting new buyers.
D)   Apple was unable to overcome the problem and has faced steadily declining sales.

Question 13

(Consider This)  A topographical map shows successively higher equal-elevation lines, whereas an indifference map shows successively higher levels of total

Accepted Answer

A)   utility.
B)   revenue.
C)   profit.
D)   cost.

Question 14

It is possible that as a result of the budget line shifting outward, the consumer will buy less of a product.

Accepted Answer

A) True 
 B)False

Question 15

The table shows the marginal-utility schedules for goods A and B for a hypothetical consumer. The price of good A is $1, and the price of good B is $2. The income of the consumer is $8.  If the price of B falls to $1, while the price of A and the consumer's income stay the same, what would be the utility-maximizing combination of goods A and B?

Accepted Answer

A)   5 A and 3 B
B)   4 A and 4 B
C)   3 A and 5 B
D)   2 A and 6 B

Question 16

The table shows a consumer's utility schedule.  Marginal utility begins to diminish with the consumption of the

Accepted Answer

A)   fifth unit.
B)   fourth unit.
C)   third unit.
D)   second unit.

Question 17

To the average consumer, the marginal utility of a second copy of today's newspaper is

Accepted Answer

A)   constant.
B)   increasing.
C)   close to zero.
D)   close to one.

Question 18

Refer to the diagram, where xy is the relevant budget line and I1, I2, and I3 are indifference curves. If the consumer is initially at point L, he or she should 1, I2, and I3 are indifference curves. If the consumer is initially at point L, he or she should   A)  strive for point N by obtaining a larger money income. B)  purchase more of X and less of Y. C)  remain at that point to maximize utility. D)  purchase more of Y and less of X." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   strive for point N by obtaining a larger money income.
B)   purchase more of X and less of Y.
C)   remain at that point to maximize utility.
D)   purchase more of Y and less of X.

Question 19

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $3 and $4, respectively, and that consumer income is $18.  If the price of X decreases from $3 to $2, while the price of Y and the consumer's income stay the same, then the utility-maximizing combination is such that the quantity of X

Accepted Answer

A)   increases from 2 to 3.
B)   decreases from 3 to 2.
C)   stays the same at 2.
D)   increases from 2 to 4.

Question 20

If two combinations of goods X and Y give a consumer equal satisfaction, then these two combinations must both be on the same

Accepted Answer

A)   budget line.
B)   indifference curve.
C)   demand curve.
D)   supply curve.

Exam 7: Utility Maximization

Marginal utility is the

Correct Answer
verified

Correct Answer
verified

Assume MU_cand MU_drepresent the marginal utility that a consumer gets from products C and D, the respective prices of which are P_cand P_d. The consumer will increase his total utility from a specific money outlay by spending more on C and less on D if initially

Correct Answer
verified

To the average consumer, the marginal utility of a second copy of today's newspaper is

Correct Answer
verified

Refer to the diagram, where xy is the relevant budget line and I₁, I₂, and I₃are indifference curves. If the consumer is initially at point L, he or she should

Correct Answer
verified

If two combinations of goods X and Y give a consumer equal satisfaction, then these two combinations must both be on the same

Correct Answer
verified

Which of the following is correct?

Correct Answer
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(Consider This) A topographical map shows successively higher equal-elevation lines, whereas an indifference map shows successively higher levels of total

Correct Answer
verified

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

Correct Answer
verified

How did Apple overcome consumers' diminishing marginal utility for iPads?

Correct Answer
verified

Mr. Samuelson's current rates of purchase are such that the marginal utility of slacks is 18 and the marginal utility of ties for him is 5. If slacks and ties are priced at $12 and $2, respectively, it can be concluded that Mr. Samuelson

Correct Answer
verified

It is possible that as a result of the budget line shifting outward, the consumer will buy less of a product.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The table shows a consumer's utility schedule. Marginal utility begins to diminish with the consumption of the

Correct Answer
verified

An increase in the productivity of labor over time will

Correct Answer
verified

An increase in the real income of a consumer is one result from an increase in the price of a product that the consumer is buying.

Correct Answer
verified

The financing of health care through insurance has

Correct Answer
verified

Indifference analysis assumes that utility is numerically measurable.

Correct Answer
verified

Where total utility is at a maximum, marginal utility is

Correct Answer
verified

Exam 7: Utility Maximization

Marginal utility is the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assume MUc and MUd represent the marginal utility that a consumer gets from products C and D, the respective prices of which are Pc and Pd. The consumer will increase his total utility from a specific money outlay by spending more on C and less on D if initially

Correct AnswerverifiedShow Answer

To the average consumer, the marginal utility of a second copy of today's newspaper is

Correct AnswerverifiedShow Answer

Refer to the diagram, where xy is the relevant budget line and I1, I2, and I3 are indifference curves. If the consumer is initially at point L, he or she should

Correct AnswerverifiedShow Answer

If two combinations of goods X and Y give a consumer equal satisfaction, then these two combinations must both be on the same

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

(Consider This) A topographical map shows successively higher equal-elevation lines, whereas an indifference map shows successively higher levels of total

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

How did Apple overcome consumers' diminishing marginal utility for iPads?

Correct AnswerverifiedShow Answer

Mr. Samuelson's current rates of purchase are such that the marginal utility of slacks is 18 and the marginal utility of ties for him is 5. If slacks and ties are priced at $12 and $2, respectively, it can be concluded that Mr. Samuelson

Correct AnswerverifiedShow Answer

It is possible that as a result of the budget line shifting outward, the consumer will buy less of a product.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The table shows a consumer's utility schedule. Marginal utility begins to diminish with the consumption of the

Correct AnswerverifiedShow Answer

An increase in the productivity of labor over time will

Correct AnswerverifiedShow Answer

An increase in the real income of a consumer is one result from an increase in the price of a product that the consumer is buying.

Correct AnswerverifiedShow Answer

The financing of health care through insurance has

Correct AnswerverifiedShow Answer

Indifference analysis assumes that utility is numerically measurable.

Correct AnswerverifiedShow Answer

Where total utility is at a maximum, marginal utility is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Assume MU_cand MU_drepresent the marginal utility that a consumer gets from products C and D, the respective prices of which are P_cand P_d. The consumer will increase his total utility from a specific money outlay by spending more on C and less on D if initially

Correct Answer
verified

Correct Answer
verified

Refer to the diagram, where xy is the relevant budget line and I₁, I₂, and I₃are indifference curves. If the consumer is initially at point L, he or she should

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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