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Assignment 4

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Question 1 (1 point)
In product markets, consumer behavior is modeled by
  1. the demand curve.
  2. the production possibilities curve.
  3. the supply curve.
  4. the consumer curve.
  5. None of these.
Question 2 (1 point)
Utility is most closely defined as
  1. opportunity cost.
  2. extra.
  3. usefulness.
  4. marginal.
  5. satisfaction.
Question 3 (1 point)
Suppose that Jen states that a banana provides her with 10 utils and an apple provides her with 8 utils. Then
  1. Jen likes bananas more than apples.
  2. Jen likes apples more than bananas.
  3. Jen should buy a banana.
  4. Jen should buy an apple.
  5. Both a. and c.
Question 4 (1 point)
The additional satisfaction that a consumer receives from one more unit of a good or service is known as
  1. the law of diminishing marginal utility.
  2. total utility.
  3. marginal utility.
  4. disutility.
  5. profit.
Question 5 (1 point)
Pizza & Marginal Utility
Refer to the table above. The total utility of two slices of pizza is equal to
  1. 60
  2. 280
  3. 90
  4. 150
  5. 240
Question 6 (1 point)
When total utility is at a maximum, marginal utility is
  1. at a minimum.
  2. increasing.
  3. decreasing.
  4. at a maximum.
  5. equal to zero.
Question 7 (1 point)
The law of diminishing marginal utility states that
  1. the marginal utility of all products consumed must be equal.
  2. the marginal utility of the last unit consumed of any good is less than the marginal utility of all other products consumed.
  3. as more of a good or service is consumed, its marginal utility relative to other products remains the same.
  4. as more of a good or service is consumed, its marginal utility decreases.
  5. as more of a good or service is consumed, ceteris paribus, its marginal utility relative to the marginal utility of other products increases.
Question 8 (1 point)
Quantity vs Utility
Refer to the table above. Which of the following units of the good yields disutility?
  1. Units 1 and 4
  2. Units 2 and 3
  3. Unit 3
  4. Units 3, 4, and 5
  5. Units 4 and 5
Question 9 (1 point)
Marginal utility declines more quickly
  1. the greater the number of consumers.
  2. the shorter the time period.
  3. the greater the number of firms producing the good.
  4. the longer the time period.
  5. None of these.
Question 10 (1 point)
Since consumers are not identical, then
  1. total utility schedules will differ among consumers.
  2. consumers have different tastes and preferences.
  3. marginal utility will decline at different rates for different individuals.
  4. different consumers will maximize their utility with different quantities of goods and services.
  5. All of these.
Question 11 (1 point)
If you buy one more unit of a product for $20 and it gives you 10 utils, then
  1. your marginal utility per dollar spent on this unit is 0.5 util.
  2. you should buy more of it since the marginal utility is not negative.
  3. your average utility per dollar spent on this unit is 2 utils.
  4. your marginal utility per dollar spent on this unit is 2 utils.
  5. the total utility will increase by 200 utils.
Question 12 (1 point)
Which of the following equations reflects the equimarginal principle?
  1. (MU x / PX) = (MU y / P y )
  2. Y = mX + b
  3. MU x = MU y
  4. Y = (1 / P y ) - (P x / P y )X
  5. None of these.
Question 13 (1 point)
Mr. Rational has $27 that he plans to spend purchasing 5 units of good X (priced at $3 per unit) and 6 units of good Y (priced at $2 per unit). The marginal utility of the fifth unit of X is 30, and the marginal utility of the sixth unit of Y is 30. If Mr. Rational is a utility maximizer, he should
  1. not buy anything.
  2. buy X and Y in the quantities indicated.
  3. buy more of X and less of Y.
  4. buy less of X and more of Y.
  5. do none of these because, from the information given, it is impossible to determine whether or not Mr. Rational is maximizing utility.
Question 14 (1 point)
Which of the following will not cause a change in consumer equilibrium?
  1. A change in the price of a product
  2. A change in consumer preferences
  3. A change in income
  4. A change in the quantity supplied
  5. A change in the price of another product
Question 15 (1 point)
Total Utility X vs Y
Refer to the table above. Assume that the price of good X is $2 per unit, that the price of good Y is $5 per unit, and that the consumer has $14 to spend buying X and Y. Under the circumstances, a utility-maximizing consumer should buy
  1. 2 units of X and 2 units of Y.
  2. 6 units of X and 7 of Y.
  3. 7 units of X.
  4. anything she wants because it is not possible to determine the utility-maximizing combination.
  5. 2.8 units of Y.
Question 16 (1 point)
How do consumers make choices?
  1. They allocate their scarce incomes among goods and services in order to maximize the number of different goods they purchase.
  2. They allocate their scarce incomes among goods and services in order to maximize the ratio of marginal utility to price.
  3. They allocate their scarce incomes among goods and services in order to maximize their marginal utility.
  4. They allocate their scarce incomes among goods and services in order to maximize the ratio of price to marginal utility.
  5. They allocate their scarce incomes among goods and services in order to maximize their utility.
Question 17 (1 point)
Suppose that due to a new government study, consumer preferences for chicken suddenly increase. In the model of consumer theory, this would be represented by
  1. an increase in the individual demand curves for chicken.
  2. an increase in the total utility of chicken.
  3. an increase in the market demand curve for chicken.
  4. an upward shift of the total utility schedule for chicken.
  5. All of these.
Question 18 (1 point)
Consumer surplus is a measure of the difference between
  1. the value a consumer places on a good and the utility of the last unit of that good that is produced.
  2. the price a consumer is willing to pay for a good and the market price of the good.
  3. the price a consumer is willing to pay for a good and the marginal utility of that good.
  4. the marginal and the total utility.
  5. the market price of a good and the marginal utility of the good.
Question 19 (1 point)
Suppose Kim is willing to pay $5 for her first ice cream sundae, $4 for a second ice cream sundae, and $2 for a third ice cream sundae. If Kim is able to buy all three ice cream sundaes for $2 apiece, she has realized a consumer surplus of
  1. $3.
  2. $4.
  3. $5.
  4. $2.
  5. $1.
Question 20 (1 point)
If the price of one good changes while other prices are held constant,
  1. there is an income effect as real income changes.
  2. there is a substitution effect as relative prices change.
  3. the marginal utility per dollar spent on that good will change.
  4. the quantity demanded of that good will change.
  5. All of these.
Question 1 (5.00 points)
Using utility theory, how would you explain peer pressure?
Question 2 (5.00 points)
To increase marginal utility, you must decrease consumption (everything else held constant). This statement is correct, even though it sounds strange. Explain why.
Copyright 2008, by the Contributing Authors. Cite/attribute Resource . admin. (2009, January 27). Assignment 4. Retrieved January 07, 2011, from Free Online Course Materials — USU OpenCourseWare Web site: http://ocw.usu.edu/economics/introduction-to-microeconomics-1/assignment4.htm. This work is licensed under a Creative Commons License Creative Commons License