Sample_E101_Questions_2

Sample_E101_Questions_2 - Sample Questions From Utility and...

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Sample Questions From Utility and Demand until the end of Monopoly 1) Salina spends all her income on movies and soda. Movies cost $6 each and sodas cost $0.50 a can. In a diagram with movies on the horizontal axis and sodas on the vertical axis, the slope of Salina's budget line is A) - 12 sodas per movie. B) - 12 movies per soda. C) - 3 sodas per movie. D) - 3 movies per soda. 2) Which of the following is NOT an assumption of marginal utility theory? A) A consumer derives utility from the goods consumed. B) Each additional unit of consumption yields additional utility. C) Consumers maximize their total utility. D) As more of a good is consumed, the decrease in the marginal utility from the good means that the total utility from the good decreases also. 3) When consumption of a good increases, marginal utility will A) increase. B) decrease. C) remain unchanged. D) approach total utility. 4) In the figure above, diminishing marginal utility is shown by A) total utility curve A . B) total utility curve B . C) total utility curve C . D) all three curves. 5) As the quantity of a good consumed increases, its marginal utility ________ and its total utility ________. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases 6) Which of the following occur when a person maximizes utility? I. the marginal utility of each good bought is equal II. the highest level of utility is attained III. all of a person's budget is spent A) I and II B) I and III C) II and III D) I, II and III 1
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7) Suppose that Freda receives $500 as income each week. If she spends the $500 each week and equalizes the marginal utility per dollar that she spends, A) Freda is at a consumer equilibrium. B) Freda is maximizing her total utility. C) Freda's total utility will decline. D) Freda will reduce her marginal utility. Apples Tacos Quantity Total utility Quantity Total utility 1 5 1 10 2 9 2 18 3 12 3 24 4 15 4 28 5 16 5 30 8) Sally derives utility from consuming apples and tacos as shown in the table above. Apples cost $1 each and tacos cost $2 each. If Sally's income is $9, she will consume A) 5 apples and 2 tacos. B) 3 apples and 3 tacos. C) 1 apple and 4 tacos. D) no apples and 4 1/2 tacos. 9) A consumer has maximized his or her utility by consuming A) at the midpoint of the budget constraint line. B) at the midpoint of the demand curve. C) so that the total utility of all goods consumed is the same. D) so that the ratio of marginal utility to price is the same for all goods consumed. 10) Suppose the price of a soda is $2 each, the price of a hot dog is $3 each and the budget is $20. If the marginal utility of the fourth soda is 100 and the marginal utility of the fourth hot dog is 150, to maximize utility, a person will buy A) 4 sodas and 4 hot dogs. B) more hotdogs than 4 and fewer sodas
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This note was uploaded on 03/26/2009 for the course ECON 4343 taught by Professor Lila during the Spring '09 term at Acton School of Business.

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Sample_E101_Questions_2 - Sample Questions From Utility and...

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