Reference no: EM13204950

1) Economists assume that the goal of consumers is to
A) do as little work as possible to survive. C) make themselves as well off as possible.
B) expend all their income. D) consume as much as possible.

2) Marginal utility is the
A) total satisfaction received from consuming a given number of units of a product.
B) average satisfaction received from consuming a product.
C) extra satisfaction received from consuming one more unit of a product.
D) satisfaction achieved when a consumer has had enough of a product

3) As a consumer consumes more of a product in a particular time period, eventually marginal utility
A) rises. B) is constant. C) declines. D) fluctuates.

4) If a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from
consuming three candy bars, the marginal utility of the second candy bar is
A) 25 utility units. C) 20 utility units.
B) 5 utility units. D) unknown as more information is needed to determine the answer.

5) Consumers maximize total utility within their budget constraint by buying
A) the cheapest goods they can find. C) the goods with the largest marginal utility per dollar spent.
B) whatever they like the best. D) the goods with the largest total utility per price ratio.

6) If a consumer always buys goods rationally, then
A) the total utilities of the different goods consumed will be equal.
B) the average utilities of the different goods consumed will be equal.
C) the marginal utility per dollar spent on all goods will be equal.
D) the marginal utility of the different goods consumed will be equal.

7) Carolyn spends her income on popular magazines and music CDs. If the price of a CD is four times the price of a magazine and if Carolyn is maximizing her utility, she buys
A) both goods until the marginal utility of the last CD purchased is four times the marginal utility of the last magazine purchased.
B) both goods until the marginal utility of the last magazine purchased is four times the marginal utility of the last CD purchased.
C) four times as much magazines as CDs.
D) four times as much CDs as magazines.

8) Aisha and Debbie both purchase milk and bread at the same Quik Mart. They have different tastes for milk and bread and different incomes. They both buy some milk and some bread, but they buy considerably different quantities of the two goods. Which of the following statements is true, given that Aisha and Debbie are utility-maximizers?

A) In equilibrium, the marginal utility per dollar ratio of milk equals to that of bread for each individual.
B) In equilibrium, the marginal utility per dollar ratio of milk for Aisha must be equal to the marginal utility per dollar ratio of milk for Debbie, and the marginal utility per dollar ratio of bread for Aisha must also be equal to the marginal utility per dollar ratio of bread for Debbie.
C) In equilibrium, if the marginal utility per dollar ratio of milk for Aisha is greater than the marginal utility per dollar ratio of milk for Debbie, then the marginal utility per dollar ratio of bread for Aisha must be smaller than the marginal utility per dollar ratio of bread for Debbie.
D) No statement can be made about their respective marginal utility per dollar ratios for Aisha or Debbie without knowing the exact prices of each good.

9) The demand curve for corn is downward sloping. If the price of corn, an inferior good, falls,

A) the income effect which causes you to reduce your corn purchases is smaller than the substitution effect which causes you to increase your corn purchases, resulting in a net increase in quantity demanded.
B) the income effect which causes you to increase your corn purchases is larger than the substitution effect which causes you to reduce your corn purchases, resulting in a net increase in quantity demanded.
C) both the income and substitution effects reinforce each other to increase the quantity demanded.
D) the income and substitution effects offset each other but the price effect of an inferior good leads you to buy less corn.