Which of the following statements concerning utility is correct?

1. It is possible to precisely measure the utility an individual receives from consuming a particular good or service
2. It is always possible to determine whether Dalene or Juloy gets more utility from consuming two units of the same good
3. The utility of goods can be measured while the same is not true for services
4. Utility is a subjective measure of satisfaction an individual receives from consuming a good or service
5. It is only useful if there is no scarcity

D

Economists assume people's tastes are

1. determined solely by advertising
2. relatively stable over time
3. quite variable
4. irrelevant to utility analysis
5. identical

B

Marginal utility is the

1. overall satisfaction obtained from consuming a good
2. additional satisfaction obtained from consuming one more unit of a good
3. average satisfaction obtained from consuming a good
4. the change in satisfaction obtained from consuming 1 percent more of a good
5. additional cost of one more unit of a good

B

The law of diminishing marginal utility states that

1. total utility falls as more of a good is consumed, other things constant
2. total utility falls as marginal utility falls, other things constant
3. marginal utility falls as total utility increases, other things constant
4. marginal utility falls as more of a good is consumed, other things constant
5. marginal utility falls as less of a good is consumed, other things constant

D

Diminishing marginal utility means that

1. as you consume more of a good, other things constant, the total satisfaction you obtain from consuming this good tends to fall
2. as you hire more labor, other things constant, the total amount produced begins to fall
3. as you hire more labor, other things constant, the marginal product begins to fall
4. as you consume more of a good, other things constant, the additional satisfaction you obtain from each additional unit of the good tends to fall
5. as you consume more of a good, other things constant, the extra satisfaction you obtain from each extra good becomes negative

D

Which of the following illustrates the law of diminishing marginal utility?

1. The marginal utility of Diane's second Coke is greater than the marginal utility of her third pretzel, other things constant.
2. The marginal utility of Diane's second Coke is greater than the marginal utility of Ken's third pretzel, other things constant.
3. The marginal utility of Diane's second Coke is greater than the marginal utility of her third Coke, other things constant.
4. The total utility of one Coke is greater than the total utility of two Cokes, other things constant.
5. The marginal utility of Diane's second Coke is greater than the marginal utility of Ken's third Coke, other things constant.

C

The marginal utility of a second copy of today's New York Times is

1. infinite
2. practically zero
3. positive and greater than the marginal utility of the first copy
4. equal to the marginal utility of the first copy
5. 50 cents

B

"I don't feel so good. I shouldn't have had that last doughnut." Which statement best describes this situation?

1. The marginal utility of the last doughnut was positive.
2. The marginal utility of doughnuts is still increasing.
3. The total utility from eating doughnuts is negative.
4. The marginal utility of the last doughnut was negative.
5. The marginal utility of the next doughnut will be positive

D

Carvel advertises a football-shaped ice cream cake for $7; you can buy a second one for only $4. What do they know about consumer preferences?

1. Consumers would never buy a second ice cream cake.
2. Two cakes are worth less to the consumer than one.
3. Marginal utility of ice cream cakes diminishes.
4. Consumers only value the first cake at $4.
5. Consumers value all cakes they eat at $4.

C

In Exhibit 6-2, where does marginal utility first begin to diminish?

1. sometime after the first unit consumed
2. sometime after the second unit consumed
3. sometime after the third unit consumed
4. sometime after the fourth unit consumed
5. sometime after the fifth unit consumed

B

If a good is offered to you free of charge, then you

1. never stop consuming it
2. stop consuming it when its marginal utility begins to fall
3. stop consuming it when its marginal utility begins to increase
4. stop consuming it when its marginal utility equals 0
5. stop consuming it when its total utility equals 0

D

If the price of a good is 0, a consumer will

1. consume all units that have positive total utility
2. consume an infinite quantity
3. consume all units with positive marginal utility
4. consume the entire amount supplied
5. consume until total utility becomes 0

C

Suppose Enid could increase her total utility by purchasing one more book and one less video rental. Which of the following is true?

1. The marginal utility of video rentals exceeds the marginal utility of books.
2. The marginal utility of books exceeds the marginal utility of video rentals.
3. The marginal utility of video rentals is negative.
4. The marginal utility per dollar spent on books exceeds that of video rentals.
5. Total utility is at a maximum.

D

As a consumer allocates income between good A and good B, total utility is maximized when

1. the marginal utility of A = the marginal utility of B
2. the marginal utility of A = the marginal utility of B = 0
3. the price of A = price of B
4. marginal utility of A/price of A = marginal utility of B/price of B = 0
5. marginal utility of A/price of A = marginal utility of B/price of B

E

When income is allocated to two goods, x and y, consumer equilibrium occurs when

1. MU_x = MU_y
2. MU_x = MU_y, and the budget is exhausted
3. TU_x/P_y = TU_x/P_y
4. MU_x/P_y = MU_x/P_y, and some money is not spent
5. MU_x/P_x = MU_y/P_y, and the budget is exhausted

E

Sally is allocating her budget between two goods, A and B. If Sally has used up the budget on a combination of A and B for which MU_A/PA exceeds MU_B/P_B, she can increase total utility by buying

1. more A and less B
2. more B and less A
3. more A without changing her consumption of B
4. less B without changing her consumption of A
5. more B and more A

A

If Arnold thinks his last dollar spent golfing yields less satisfaction than the last dollar spent on movies, and Arnold is a utility-maximizing consumer, he should

1. golf more so that the total satisfaction from this activity will increase
2. spend less on movies so that the marginal satisfaction from expenditures in this area will increase
3. golf less and spend more on movies
4. eliminate golfing from his schedule
5. golf more since it costs less

C

Suppose a glass of orange juice has a price of $2 and a glass of soft drink has a price of $1. If the consumer is maximizing utility,

1. juice must have higher MU than soda drink
2. the soft drink must have higher MU than juice
3. both must have equal MU
4. consumers would buy more soda drink than orange juice
5. the consumer would buy twice as much orange juice as soft drink

A

To derive a demand curve using utility analysis,

1. change a consumer's marginal utilities and note the effect of demand curve changes on market prices
2. change a consumer's marginal utilities and note the effect of supply curve changes on market prices
3. change a consumer's marginal utilities and note the effect of supply and demand curve changes on market prices
4. note how the consumer's utility-maximizing consumption bundle changes in response to price changes
5. note how the consumer's utility-maximizing consumption bundle changes in response to demand-curve shifts

D

If you buy a good, its expected marginal value to you

1. is equal to its price

is greater than its price

is less than its price

may be less than or equal to but not greater than its price

may be greater than or equal to but not less than its price

E

In Exhibit 6-10, at a price of $2, consumer surplus is

1. $4
2. $5
3. $10
4. $80
5. $200

D

When the price is P in Exhibit 6-11, the shaded area represents

1. a shortage
2. producer surplus
3. a price floor
4. consumer surplus
5. a price ceiling

D

Elvis values the first gravy sandwich at $5, the second at $4.50, the third at $4. If he buys three for $4 each, his consumer surplus is

1. $5
2. $4
3. $1.50
4. $9.50
5. $12

C

What happens to consumer surplus as price falls along a given demand curve?

1. It always increases.
2. It always decreases.
3. It never changes.
4. It increases only if price increases just a little.
5. It depends on the elasticity of demand and supply.

A

A measure of consumer surplus in any market is

1. total expenditure on the good
2. the area above the supply curve and below the price
3. the area beneath the demand curve
4. the area beneath the demand curve and above the price
5. the market price

D

If Ed is willing to pay a maximum of $200 for a tweed sport coat but buys one for $180, that $20 saved is

1. his reservation price
2. the store's producer surplus
3. his total expenditure
4. his marginal utility
5. his consumer surplus

E

The market demand curve is

1. any individual's demand curve multiplied by the number of consumers in the market
2. the relationship between income and quantity demanded
3. the horizontal sum of the individual demand curves for all consumers in the market
4. the vertical summation of all individual demand curves
5. the sum of prices paid at each quantity demanded

C