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SCAN0812_000 - Chapter Ten Name Date 1 The relationship...

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Unformatted text preview: Chapter Ten. Name: Date: 1. The relationship between an individual‘s consumption bundle and his or her utiiity is called a: A) demand function. B) production function. C) consumption function. D) utility fiinction. 2. The marginal utility of coffee consumption for Steve is the change in generated by consuming an additional unit of coffee. A) total utility B) total consumption C) totai demand D) price 3. Xavier notices that the marginal utility of working with a tutor seems to fall with each hour the tutor helps him study. If Xavier keeps the tutor until his grade actually begins to fall, his marginai utility will be: A) negative. B) positive, but rising more slowly. C) zero. D) immeasurable. 4. On a deserted island, highwspeed Internet service would have a marginal utility than in New York City, while in New York City, quiet evenings would carry a marginal utility than on a deserted island. A) lower; higher B) higher; lower C) lower; lower D) higher; higher 5. The principle of diminishing marginal utility states that as an individual consumes more of a good: A) the total utility obtained will eventually fall. B) the total utility obtained will eventually become negative. C) the addition to total utility obtained from the nth unit of the good will be iess than that obtained from the (12— 1) unit of the good. D) the marginal utility will eventuaily become negative. 6. Economists identify the satisfaction a person derives from the consumption of goods and services as: A) happiness. B) usefulness. C) utility. D) pleasure. Chapter Ten Page 1 10. 11. 12. 13. . The amount by which total utility increases when an additional unit of a good is consumed is called utility. A) average B) additional C) maximum D) marginal . The utility of a good is determined by how much a particular consumer obtains from it. A) satisfaction B) usefulness C) cost D) need fulfillment . When total utility is at a maximum, marginal utility is: A) rising. B) at its average value. C) atamaximum. D) zero. The amount by which total utility rises when an additional unit of a good is consumed is called: A) average utility. B) the law of diminishing returns. C) incremental utility. D) marginal utility. Utility is the: A) difference between a firm's total revenue and its total economic cost. 13) good not adequately provided by a free market and usually provided by the government. C) satisfaction consumers derive from their consumption of goods and services. D) lowest price that buyers are willing to pay for a given quantity of a good. Marginal utility is best computed as the: A) change in total utility from an additional unit consumed. B) total utility divided by the total quantity consumed. C) change in total utility divided by the total quantity consumed. D) total utility divided by the change in quantity consumed. For Darryl, the optimum consumption bundle is the one that his , given his budget constraint. A) minimizes; utility B) maximizes; utility C) maximizes; opportunity cost D) minimizes; opportunity cost Chapter Ten Page 2 14. 15. 16. 17. 18. 19. 20. A consumer's spending is restricted because of: A) marginal utility. B) total utility. C) a budget constraint. D) utility maximization. Suzy knows she has maximized her utility, because she is on her budget constraint and: A) consumption of Good X equais consumption of Good Y. B) what is spent on Good X equals what is spent on Good Y. C) MUx/Px = M Uy/Py. D) MUx = 11403:. Benny spends all his money buying wine and cheese. The marginal utility of the last bottle of wine is 60, and the marginal utility of the last block of cheese is 30. The price of wine is $3, and the price of cheese is $2. Benny: A) is buying wine and cheese in the utility—maximizing amounts. B) should buy more wine and less cheese. C) should buy more cheese and less wine. D) is spending too much money on wine and cheese. Jessica spends all her income on two goods, .4 and B. The price OM! is $5, and the price of B is $7. At the current consumption bundle, the marginal utiiity of A is 10, and the marginal utility of B is 21. To maximize utility given her income, Jessica should: A) increase her consumption of B and decrease her consumption. ofA. B) increase her consumption ofA and decrease her consumption of B. C) continue to consume the current bundle. D) consume equal amounts of}! and B. At the optimal consumption bundle: A) the marginal utility of all goods consumed is equal. B) the marginal utility per doilar spent is equal for all goods consumed. C) the price of all goods consumed is equal. D) total utiiity from all goods consumed is equal. If a consumer purchases a combination of commodities X and Y such that M [Ix/P,t = 20 and M Uy/Py = 10, to maximize utility, the consumer should buy: A) less of X and more of Y. B) more ofX and less of Y. C) more ofbotthnd Y. D) less of both X and Y. If, for a particular consumer, the marginal utiiity of ties is greater than the marginal utiiity of shirts, this consumer should: A) buy more ties and fewer shirts. B) buy more shirts and fewer ties. C) buy the same amount of each. D) not do anything until more information is available. Chapter Ten Page 3 22. 23. 24. 25. . How much utility is gained by spending an additional dollar on Good X? A) the average utility of GoodX divided by the price of Good X B) M [Lt/Px C) ETA/PX D) M Ely/Pr If a consumer derives more utility by spending an additional $1 on Good X rather than on Good Y, then: A) MUx/P,c > AMY/P5,. B) M W x = M Uy/Py. C) M Ux/Px < M Uy/Py. D) Px/MUx > Py/M‘Uy. The optimal consumption rule for all goods requires that: A) the marginal utilities of all goods consumed divided by their prices are equal to the budget constraint. B) the marginal utilities of all goods consumed exceed the total utility of all goods. C) the marginal utilities of all goods consumed divided by their respective prices are equaL D) the prices of all goods are equal. According to the substitution effect, a decrease in the price of a product leads to an increase in the quantity of the product demanded because buyers: A) have more real income. 13) purchase fewer substitute goods. C) purchase more of the now relatively less expensive good. D) purchase more complementary goods. If the price of a good falls and the consumer decides to buy more of the good solely because it is relatively less expensive, this describes the: A) income effect. B) substitution effect. C) consumer surplus effect. D) marginal-maximizing rule. Chapter Ten Page 4 ...
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