Multiple Choice Identify the
choice that best completes the statement or answers the question.
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1.
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In Exhibit 0079, the marginal utility of consuming the fourth scone is
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2.
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In Exhibit 0079, the total utility of consuming five scones is
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3.
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Marginal utility is negative only when quantity demanded is negative.
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4.
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When total utility is increasing, marginal utility must be positive.
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5.
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If marginal utility is negative, then the total utility must be
a. | decreasing | b. | increasing | c. | constant | d. | negative | e. | positive |
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6.
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In Exhibit 0078, marginal utility is _________ until the _________ unit.
After that, diminishing marginal utility occurs.
a. | increasing; third | b. | increasing; first | c. | increasing;
second | d. | decreasing; second | e. | decreasing;
third |
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7.
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The law of diminishing marginal utility states that
a. | total utility falls as more of a good is consumed, other things
constant | b. | total utility falls as marginal utility falls, other things
constant | c. | marginal utility falls as less of a good is consumed, other things
constant | d. | marginal utility falls as more of a good is consumed, other things
constant |
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8.
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The law of diminishing marginal utility implies that the marginal utility of my
fifth waffle is less than the marginal utility of my friend's second waffle, other things
constant.
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9.
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A consumer maximizes utility when the marginal utilities of all goods
a. | having positive money prices that are equal to zero | b. | are
equal | c. | are maximized | d. | are equal to the opportunity costs for all
goods that are considered necessities | e. | are exactly proportional to their market
prices |
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10.
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Consumers maximize utility and therefore
a. | product prices play no role in utility maximization | b. | how consumers
allocate their income to different products is not affected by the prices or
income. | c. | income and product prices are both considered in utility maximization, and a change
in either income or prices will likely change the quantities the consumer purchases of different
products. | d. | the marginal utility of each product is zero | e. | product prices
become zero at equlibrium. |
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11.
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When total utility is falling, marginal utility is
a. | increasing | b. | decreasing | c. | positive | d. | negative | e. | 0 |
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12.
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The law of diminishing marginal utility states that as you consume more and more
of a good, other things constant,
a. | total utility eventually rises | b. | marginal utility can become
positive | c. | marginal utility approaches, but never becomes, 0 | d. | total utility can
never become negative | e. | marginal utility eventually
declines |
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13.
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What effect most likely explains why most people rarely see the same movie more
than once at a movie theatre?
a. | diminishing marginal utility | b. | increasing marginal costs | c. | income effect
| d. | all of the above |
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14.
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The marginal utility of a second copy of today's New York Times
is
a. | infinite | b. | practically 0 | c. | positive and greater
than the marginal utility of the first copy | d. | equal to the marginal utility of the first
copy | e. | 50 cents |
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15.
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A rational person will undertake an activity (increase the quantity) until the
point where
a. | marginal benefit is zero | b. | marginal cost is zero | c. | marginal benefit
equals marginal cost | d. | total benefit equals total
cost |
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Ian runs a personal car washing service. He will come to your home or
office and wash your car. He has six customers and each will hire him at a different price to
wash their car, but each will only buy a maximum of one car wash per per customer per week. The
customers and the price each is willing to pay each week is as
follows:
Customer Price Monica
$30 Phoebe
5 Rachel
20 Joey
15 Chandler 10 Ross
25
Ian has figured out his costs for providing car washes (he
ahs no sunk costs) and they appear in the following table:
# of washes per
week
Cost 1
$17.50
2
$35.00 3
$52.50 4
$70.00 5
$87.50 6
$105.00
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16.
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Ian’s optimal number of car washes is
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17.
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Ian faces
a. | increasing marginal benefit | b. | constant marginal benefit | c. | increasing marginal
cost | d. | constant marginal cost |
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18.
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At the optimal level of car washes, Ian’s net gain from washing cars
is
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19.
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If the government requires all car washers to be licensed and the government
requires a $20 license to paid for the right to wash cars each week, then Ian’s optimal number
of car washes will
a. | fall to 1 car wash | b. | fall to 2 car washes | c. | fall to 4 car
washes | d. | not change the number of car washes | e. | increase |
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Harry has $50 per week to spend on movie tickets and DVD rentals combined.
The price of each movie ticket is $10 and each movie rental (DVD) is $5.
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20.
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In Situation10.1, which of the following is one of the consumption bundles
can Harry afford?
a. | 10 rentals and 2 tickets | b. | 5 tickets and no rentals | c. | 6 rentals and 2
tickets | d. | all of the above | e. | only b or c from
above |
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21.
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Hugo had been paying $60 per month for cell phone service to Verizon
Wireless. Recently, the price of his service increased. Hugo decides to switch to Sprint
PCS, which was also offering a $60 per month rate. This illustrates what effect?
a. | diminishing marginal utility | b. | subsitution effect | c. | income
effect | d. | increasing marginal costs |
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