MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

1) Tom's consumption possibilities is defined by 1)

A) the prices of the goods that he consumes only. B) his income only. C) his preferences for consumption of the goods that he consumes.

D) his income and the prices of the goods that he consumes.

2) Total utility describes 2) A) an increase in consumption multiplied by the gain in utility.

B) total consumption multiplied by marginal utility. C) total consumption divided by marginal utility. D) the benefit gained from all consumption.

3) Which of the following statements is true? 3) A) No two people have identical utility functions, just as no two people have identical

fingerprints.

B) As more of a good is consumed, its total utility increases, unless the good is subject to

diminishing marginal utility.

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.

4) ________ is the additional satisfaction a person receives from consuming an extra unit of a good. 4)

A) Marginal utility C) Diminishing marginal utility

Cookies Homer's total (pounds per week) utility

00 15 23 3 12 4 14 5 15

B) Preferences D) Total utility

5) The above table gives the total utility that Homer obtains from consuming various quantities of 5) chocolate chip cookies. The marginal utility from the fifth pound of cookies is

A) 2. B) 15. C) 1. D) 3.

6) The above table gives the total utility that Homer obtains from consuming various quantities of 6) chocolate chip cookies. The marginal utility from the third pound of cookies is

A) 12. B) 9.

C) 4. D) 3.

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7) In the figure above, diminishing marginal utility is shown by 7)

A) total utility curve A. C) total utility curve C.

Quantity Total utility 00

B) total utility curve B. D) all three curves.

Marginal utility 180 100

1 2 3 4 5

250

580 700

8) The above table gives some of Tammy's total and marginal utilities from comedy videos. Which of 8) the following statements is true?

A) Tammy's total utility from five comedy videos is 800. B) Tammy's marginal utility from the third comedy video is equal to 580/3.

C) D)

9) With A) B) C) D)

Tammy's marginal utility from the first comedy video is less than her marginal utility from the third comedy video. None of the above answers are correct.

a given income and prices of goods, Marcus will be in a consumer equilibrium if ________. 9) his marginal utility from all goods is at its maximum he purchases the same amounts of all goods he maximizes his total utility

his marginal utility from all goods is the same

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Quantity of Marginal utility Quantity of Marginal utility DVDs from DVDs pizza from pizza

1 150 1 200 2 120 2 180 3 100 3 150 4 90 4 120 5 60 5 100 6 40 6 60

10) Lisa spends all her income on pizzas and DVDs. The above table shows Lisa's marginal utility for 10) pizza and marginal utility for DVDs. If the price of a pizza is $10, the price of a DVD is $5, and Lisa has $40 to spend on the two goods, what combination of pizza and DVDs will maximize her utility?

A) 2 DVDs and 3 pizzas C) 4 DVDs and 2 pizzas

Chips Quantity Total utility

B) 6 DVDs and 1 pizza D) 5 DVDs and 4 pizzas

Sodas Total utility

Quantity 0000

1 60 1 200 2 100 2 300 3 120 3 390 4 135 4 470 5 145 5 530 6 150 6 580 7 153 7 620 8 155 8 650

11) The table above shows Mary's utility from chips and soda. Mary buys only chips and soda. Chips 11) cost $2 per bag and soda costs $4 per six-pack. She has $20 to spend per week. To maximize her utility, Mary will buy

A) 8 sodas and 8 bags of chips. B) 5 sodas and 5 bags of chips. C) 6 sodas and 2 bags of chips. D) 3 sodas and 3 bags of chips.

12) Bobby consumes only chocolate ice cream and vanilla ice cream. He is spending all of his income. 12) His marginal utility of chocolate is 100 and his marginal utility of vanilla is 200, and the price of chocolate is $1.00 per scoop and the price of vanilla is $2.00 per scoop. To maximize his utility, Bobby should

A) buy no chocolate ice cream. B) not change his purchases between chocolate ice cream and vanilla ice cream. C) buy more chocolate ice cream and less vanilla ice cream.

D) buy more vanilla ice cream and less chocolate ice cream.

13) Robinson spends all his income on mangos and bananas. Mangos cost $3 per pound and bananas 13) cost $1 per pound. The marginal utility is 24 for the last pound of mangos purchased and 10 for the last pound of bananas. To maximize his utility, Robinson should buy

A) more mangos and fewer bananas. C) only mangos.

B) the present combination of goods. D) more bananas and fewer mangos.

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Sub sandwiches

Quantity Marginal utility

Mountain Dew

Quantity Marginal utility

0000 1 54 1 30 2 44 2 22 3 24 3 18 4 20 4 12 5 12 5 6

14) The above table gives Sue's marginal utility schedules for sub sandwiches and Mountain Dew, the 14) 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

A) more Mountain Dews. B) fewer subs. C) fewer Mountain Dews so that she can still afford to buy two subs.

D) Both answers A and B are correct.

15) Water is cheap and diamonds are expensive because water has a ________, and diamonds have a 15) ________.

A) low total utility; high total utility B) high marginal utility; low marginal utility C) low marginal utility and a low total utility; high marginal utility and a high total utility

D) low marginal utility; high marginal utility