Microeconomics Consumer Behaviour Chapter 6 PDF

***Microeconomics - Canadian Ed., 17e* (Ragan et al.)** **Chapter 6 Consumer Behaviour** 6.1 Marginal Utility and Consumer Choice 1\) In economics, the term \"utility\" is defined as the A\) system of basing the price of a good on its usefulness to society. B\) usefulness of a good. C\) total...

***Microeconomics - Canadian Ed., 17e* (Ragan et al.)** **Chapter 6 Consumer Behaviour** 6.1 Marginal Utility and Consumer Choice 1\) In economics, the term \"utility\" is defined as the A\) system of basing the price of a good on its usefulness to society. B\) usefulness of a good. C\) total consumer satisfaction received from consumption of a good. D\) usefulness of a theory to explain price determination. E\) a service such as sewer and water or electricity. Answer: C Diff: 1 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Recall Learning Obj.: 6-1 Distinguish between marginal and total utility. Category: Qualitative 2\) Which of the following statements best describes an important assumption economists make about consumers? Consumers A\) are motivated to maximize their profit. B\) are poor judges of what is best for them. C\) spend all of their current income. D\) usually save as much as possible of their income. E\) are motivated to maximize their utility. Answer: E Diff: 1 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Recall Learning Obj.: 6-1 Distinguish between marginal and total utility. Category: Qualitative 3\) Economists use the term \"marginal utility\" to describe the A\) change in total satisfaction caused by consumption of an additional unit of a good. B\) average utility of each unit of a good consumed. C\) inverse of the measure of total utility. D\) total satisfaction received from consumption of a good. E\) price paid for every unit consumed. Answer: A Diff: 1 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Recall Learning Obj.: 6-1 Distinguish between marginal and total utility. Category: Qualitative 4\) The idea that the utility a consumer derives from successive units of a good diminishes as total consumption of the good increases is known as A\) the paradox of value. B\) the utility theory of demand. C\) utility maximization. D\) diminishing marginal utility. E\) diminishing total utility. Answer: D Diff: 1 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Recall Learning Obj.: 6-1 Distinguish between marginal and total utility. Category: Qualitative 5\) The \"law\" of diminishing marginal utility implies that the A\) first unit of a good consumed will contribute most to the consumer\'s satisfaction. B\) last unit of a good consumed will contribute most to the consumer\'s satisfaction. C\) total utility is negative. D\) total utility is constant as more units are consumed. E\) marginal utility of a good diminishes as the consumer gets older. Answer: A Diff: 1 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Recall Learning Obj.: 6-1 Distinguish between marginal and total utility. Category: Qualitative 6\) If consumption of an extra unit of some good generates a marginal utility of zero, then consumption of that additional unit would mean that total utility would A\) also be zero. B\) not change. C\) be increasing. D\) be decreasing. E\) be negative. Answer: B Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Category: Qualitative 7\) If total utility from the consumption of some product is increasing as more units are consumed, then marginal utility must be A\) decreasing at an increasing rate. B\) negative. C\) increasing. D\) increasing at an increasing rate. E\) positive. Answer: E Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Recall Learning Obj.: 6-1 Distinguish between marginal and total utility. Category: Qualitative 8\) If total utility from the consumption of some product is decreasing as more units are consumed, then marginal utility must be A\) positive. B\) negative. C\) decreasing. D\) decreasing at an increasing rate. E\) increasing at a decreasing rate. Answer: B Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Category: Qualitative 9) Short description: A graph plots unit of a good against the total utility. Long description: The horizontal axis representing the unit of a good ranges from 0 to 6, in increments of 1. The vertical axis representing total utility ranges from 0 to 110, in increments of 10. The graph shows a curve that passes through the following points: (0, 0), (1, 60), (2, 80), (3, 92), (4, 98), and (5, 100). Note: all values are approximate. **FIGURE 6-1** Refer to Figure 6-1. The marginal utility of the second unit of the good consumed is A\) 10. B\) 20. C\) 30. D\) 40. E\) 50. Answer: B Diff: 1 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Graph Category: Quantitative 10)  **FIGURE 6-1** Refer to Figure 6-1. The total utility from consuming two units of the good is A\) 20. B\) 40. C\) 60. D\) 80. E\) 140. Answer: D Diff: 1 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Graph Category: Quantitative 11) Short description: A graph plots unit of a good against the total utility. Long description: The horizontal axis representing the unit of a good ranges from 0 to 6, in increments of 1. The vertical axis representing total utility ranges from 0 to 110, in increments of 10. The graph shows a curve that passes through the following points: (0, 0), (1, 60), (2, 80), (3, 92), (4, 98), and (5, 100). Note: all values are approximate. **FIGURE 6-1** Refer to Figure 6-1. The consumer\'s total utility is A\) increasing at an increasing rate. B\) increasing at a decreasing rate. C\) decreasing at an increasing rate. D\) decreasing at a decreasing rate. E\) constant. Answer: B Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Graph Category: Quantitative 12)  **FIGURE 6-1** Refer to Figure 6-1. If this figure represents the utility obtained from consuming units of a good, how many units would this consumer consume if the good were free? A\) 1 B\) 2 C\) 3 D\) 4 E\) at least 5 Answer: E Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Graph Category: Qualitative 13) Short description: A graph plots unit of a good against the total utility. Long description: The horizontal axis representing the unit of a good ranges from 0 to 6, in increments of 1. The vertical axis representing total utility ranges from 0 to 110, in increments of 10. The graph shows a curve that passes through the following points: (0, 0), (1, 60), (2, 80), (3, 92), (4, 98), and (5, 100). Note: all values are approximate. **FIGURE 6-1** Refer to Figure 6-1. The total utility curve in this figure illustrates the law of A\) maximizing utility. B\) increasing partial utility. C\) diminishing total utility. D\) diminishing marginal utility. E\) increasing marginal utility. Answer: D Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Graph Category: Qualitative 14)  **FIGURE 6-1** Refer to Figure 6-1. Marginal utility is zero when total utility is A\) equal to zero. B\) is decreasing. C\) is increasing. D\) equal to marginal utility. E\) at its maximum. Answer: E Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Graph Category: Qualitative 15) Short description: A graph plots unit of a good against the total utility. Long description: The horizontal axis representing the unit of a good ranges from 0 to 6, in increments of 1. The vertical axis representing total utility ranges from 0 to 110, in increments of 10. The graph shows a curve that passes through the following points: (0, 0), (1, 60), (2, 80), (3, 92), (4, 98), and (5, 100). Note: all values are approximate. **FIGURE 6-1** Refer to Figure 6-1. Total utility is at its maximum when marginal utility is A\) equal to zero. B\) negative. C\) positive. D\) equal to total utility. E\) at the maximum. Answer: A Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Graph Category: Qualitative 16\) If consumption of an extra unit of a product delivers a positive marginal utility, then consumption of that additional unit would mean A\) that total utility is also zero. B\) that total utility would not change. C\) that total utility is increasing. D\) that total utility is decreasing. E\) that the consumer would no longer receive any satisfaction from any consumption of this good. Answer: C Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Recall Learning Obj.: 6-1 Distinguish between marginal and total utility. Category: Qualitative 17\) A basic hypothesis of marginal utility theory is that the utility a consumer derives from successive units of a good diminishes as total consumption of the good increases. This hypothesis is known as A\) the paradox of value. B\) the utility theory of demand. C\) utility maximization. D\) the law of diminishing marginal utility. E\) the law of diminishing total utility. Answer: D Diff: 1 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Recall Learning Obj.: 6-1 Distinguish between marginal and total utility. Category: Qualitative 18\) Which of the following statements is the best description of marginal utility theory? Marginal utility theory is about A\) the consumer behaviour that underlies the theory of demand. B\) proving that demand curves are always downward sloping. C\) the total satisfaction resulting from the consumption of some good by the consumer. D\) how producers allocate their scarce resources. E\) calculating consumer surplus. Answer: A Diff: 1 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Recall Learning Obj.: 6-1 Distinguish between marginal and total utility. Category: Qualitative 19\) *The table below shows the quantities of good X a consumer could consume over a 1-week period.* +-----------------------------------+-----------------------------------+ | **Units** | **TOTAL** | | | | | | **Utility of X** | +-----------------------------------+-----------------------------------+ | **0** | -- | +-----------------------------------+-----------------------------------+ | **1** | **31** | +-----------------------------------+-----------------------------------+ | **2** | **56** | +-----------------------------------+-----------------------------------+ | **3** | **75** | +-----------------------------------+-----------------------------------+ | **4** | **91** | +-----------------------------------+-----------------------------------+ | **5** | **104** | +-----------------------------------+-----------------------------------+ | **6** | **115** | +-----------------------------------+-----------------------------------+ | **7** | **123** | +-----------------------------------+-----------------------------------+ | **8** | **129** | +-----------------------------------+-----------------------------------+ **TABLE 6-1** Refer to Table 6-1. If this consumer buys 6 units of X per week, the marginal utility of the 6th unit will be A\) 6. B\) 11. C\) 31. D\) 104. E\) 115. Answer: B Diff: 1 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 20\) *The table below shows the quantities of good X a consumer could consume over a 1-week period.* +-----------------------------------+-----------------------------------+ | **Units** | **TOTAL** | | | | | | **Utility of X** | +-----------------------------------+-----------------------------------+ | **0** | -- | +-----------------------------------+-----------------------------------+ | **1** | **31** | +-----------------------------------+-----------------------------------+ | **2** | **56** | +-----------------------------------+-----------------------------------+ | **3** | **75** | +-----------------------------------+-----------------------------------+ | **4** | **91** | +-----------------------------------+-----------------------------------+ | **5** | **104** | +-----------------------------------+-----------------------------------+ | **6** | **115** | +-----------------------------------+-----------------------------------+ | **7** | **123** | +-----------------------------------+-----------------------------------+ | **8** | **129** | +-----------------------------------+-----------------------------------+ **TABLE 6-1** Refer to Table 6-1. If this consumer buys 5 units of X per week, the marginal utility of the 5th unit will be A\) 0. B\) 5. C\) 13. D\) 91. E\) 104. Answer: C Diff: 1 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 21\) *The table below shows the quantities of good X a consumer could consume over a 1-week period.* +-----------------------------------+-----------------------------------+ | **Units** | **TOTAL** | | | | | | **Utility of X** | +-----------------------------------+-----------------------------------+ | **0** | -- | +-----------------------------------+-----------------------------------+ | **1** | **31** | +-----------------------------------+-----------------------------------+ | **2** | **56** | +-----------------------------------+-----------------------------------+ | **3** | **75** | +-----------------------------------+-----------------------------------+ | **4** | **91** | +-----------------------------------+-----------------------------------+ | **5** | **104** | +-----------------------------------+-----------------------------------+ | **6** | **115** | +-----------------------------------+-----------------------------------+ | **7** | **123** | +-----------------------------------+-----------------------------------+ | **8** | **129** | +-----------------------------------+-----------------------------------+ **TABLE 6-1** Refer to Table 6-1. If this consumer buys 4 units of X per week, the marginal utility of the 4th unit will be A\) 104. B\) 91. C\) 75. D\) 16. E\) 4. Answer: D Diff: 1 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 22\) *The table below shows the quantities of good X a consumer could consume over a 1-week period.* +-----------------------------------+-----------------------------------+ | **Units** | **MARGINAL** | | | | | | **Utility of X** | +-----------------------------------+-----------------------------------+ | | | +-----------------------------------+-----------------------------------+ | 1 | 58 | +-----------------------------------+-----------------------------------+ | 2 | 43 | +-----------------------------------+-----------------------------------+ | 3 | 31 | +-----------------------------------+-----------------------------------+ | 4 | 25 | +-----------------------------------+-----------------------------------+ | 5 | 19 | +-----------------------------------+-----------------------------------+ | 6 | 15 | +-----------------------------------+-----------------------------------+ | 7 | 11 | +-----------------------------------+-----------------------------------+ | 8 | 8 | +-----------------------------------+-----------------------------------+ **TABLE 6-2** Refer to Table 6-2. If this consumer buys 4 units of X per week, his/her total utility will be A\) 4. B\) 25. C\) 31. D\) 58. E\) 157. Answer: E Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 23\) *The table below shows the quantities of good X a consumer could consume over a 1-week period.* +-----------------------------------+-----------------------------------+ | **Units** | **MARGINAL** | | | | | | **Utility of X** | +-----------------------------------+-----------------------------------+ | | | +-----------------------------------+-----------------------------------+ | 1 | 58 | +-----------------------------------+-----------------------------------+ | 2 | 43 | +-----------------------------------+-----------------------------------+ | 3 | 31 | +-----------------------------------+-----------------------------------+ | 4 | 25 | +-----------------------------------+-----------------------------------+ | 5 | 19 | +-----------------------------------+-----------------------------------+ | 6 | 15 | +-----------------------------------+-----------------------------------+ | 7 | 11 | +-----------------------------------+-----------------------------------+ | 8 | 8 | +-----------------------------------+-----------------------------------+ **TABLE 6-2** Refer to Table 6-2. If this consumer buys 5 units of X per week, his/her total utility will be A\) 5. B\) 19. C\) 58. D\) 176. E\) 220. Answer: D Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 24\) *The table below shows the quantities of good X a consumer could consume over a 1-week period.* +-----------------------------------+-----------------------------------+ | **Units** | **MARGINAL** | | | | | | **Utility of X** | +-----------------------------------+-----------------------------------+ | | | +-----------------------------------+-----------------------------------+ | 1 | 58 | +-----------------------------------+-----------------------------------+ | 2 | 43 | +-----------------------------------+-----------------------------------+ | 3 | 31 | +-----------------------------------+-----------------------------------+ | 4 | 25 | +-----------------------------------+-----------------------------------+ | 5 | 19 | +-----------------------------------+-----------------------------------+ | 6 | 15 | +-----------------------------------+-----------------------------------+ | 7 | 11 | +-----------------------------------+-----------------------------------+ | 8 | 8 | +-----------------------------------+-----------------------------------+ **TABLE 6-2** Refer to Table 6-2. If this consumer buys 6 units of X per week, his/her total utility will be A\) 191. B\) 176. C\) 85. D\) 15. E\) 6. Answer: A Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 25\) *The table below shows the quantities of good X a consumer could consume over a 1-week period.* +-----------------------+-----------------------+-----------------------+ | **Units** | **Total** | **Marginal Utility** | | | | | | | **Utility** | | +-----------------------+-----------------------+-----------------------+ | 0 | 0 | | +-----------------------+-----------------------+-----------------------+ | | | **A** | +-----------------------+-----------------------+-----------------------+ | 1 | 30 | | +-----------------------+-----------------------+-----------------------+ | | | 12 | +-----------------------+-----------------------+-----------------------+ | 2 | **B** | | +-----------------------+-----------------------+-----------------------+ | | | 5 | +-----------------------+-----------------------+-----------------------+ | 3 | **C** | | +-----------------------+-----------------------+-----------------------+ | | | **D** | +-----------------------+-----------------------+-----------------------+ | 4 | 50 | | +-----------------------+-----------------------+-----------------------+ | | | **E** | +-----------------------+-----------------------+-----------------------+ | 5 | **F** | | +-----------------------+-----------------------+-----------------------+ | | | 1 | +-----------------------+-----------------------+-----------------------+ | 6 | 53 | | +-----------------------+-----------------------+-----------------------+ **TABLE 6-3** Refer to Table 6-3. The missing value of **A** is: A\) 0 B\) 5 C\) 12 D\) 30 E\) 42 Answer: D Diff: 1 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 26\) *The table below shows the quantities of good X a consumer could consume over a 1-week period.* +-----------------------+-----------------------+-----------------------+ | **Units** | **Total** | **Marginal Utility** | | | | | | | **Utility** | | +-----------------------+-----------------------+-----------------------+ | 0 | 0 | | +-----------------------+-----------------------+-----------------------+ | | | **A** | +-----------------------+-----------------------+-----------------------+ | 1 | 30 | | +-----------------------+-----------------------+-----------------------+ | | | 12 | +-----------------------+-----------------------+-----------------------+ | 2 | **B** | | +-----------------------+-----------------------+-----------------------+ | | | 5 | +-----------------------+-----------------------+-----------------------+ | 3 | **C** | | +-----------------------+-----------------------+-----------------------+ | | | **D** | +-----------------------+-----------------------+-----------------------+ | 4 | 50 | | +-----------------------+-----------------------+-----------------------+ | | | **E** | +-----------------------+-----------------------+-----------------------+ | 5 | **F** | | +-----------------------+-----------------------+-----------------------+ | | | 1 | +-----------------------+-----------------------+-----------------------+ | 6 | 53 | | +-----------------------+-----------------------+-----------------------+ **TABLE 6-3** Refer to Table 6-3. The missing value of **B** is: A\) 0 B\) 5 C\) 12 D\) 30 E\) 42 Answer: E Diff: 1 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 27\) *The table below shows the quantities of good X a consumer could consume over a 1-week period.* +-----------------------+-----------------------+-----------------------+ | **Units** | **Total** | **Marginal Utility** | | | | | | | **Utility** | | +-----------------------+-----------------------+-----------------------+ | 0 | 0 | | +-----------------------+-----------------------+-----------------------+ | | | **A** | +-----------------------+-----------------------+-----------------------+ | 1 | 30 | | +-----------------------+-----------------------+-----------------------+ | | | 12 | +-----------------------+-----------------------+-----------------------+ | 2 | **B** | | +-----------------------+-----------------------+-----------------------+ | | | 5 | +-----------------------+-----------------------+-----------------------+ | 3 | **C** | | +-----------------------+-----------------------+-----------------------+ | | | **D** | +-----------------------+-----------------------+-----------------------+ | 4 | 50 | | +-----------------------+-----------------------+-----------------------+ | | | **E** | +-----------------------+-----------------------+-----------------------+ | 5 | **F** | | +-----------------------+-----------------------+-----------------------+ | | | 1 | +-----------------------+-----------------------+-----------------------+ | 6 | 53 | | +-----------------------+-----------------------+-----------------------+ **TABLE 6-3** Refer to Table 6-3. The missing value of **C** is: A\) 10 B\) 25 C\) 47 D\) 50 E\) 52 Answer: C Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 28\) *The table below shows the quantities of good X a consumer could consume over a 1-week period.* +-----------------------+-----------------------+-----------------------+ | **Units** | **Total** | **Marginal Utility** | | | | | | | **Utility** | | +-----------------------+-----------------------+-----------------------+ | 0 | 0 | | +-----------------------+-----------------------+-----------------------+ | | | **A** | +-----------------------+-----------------------+-----------------------+ | 1 | 30 | | +-----------------------+-----------------------+-----------------------+ | | | 12 | +-----------------------+-----------------------+-----------------------+ | 2 | **B** | | +-----------------------+-----------------------+-----------------------+ | | | 5 | +-----------------------+-----------------------+-----------------------+ | 3 | **C** | | +-----------------------+-----------------------+-----------------------+ | | | **D** | +-----------------------+-----------------------+-----------------------+ | 4 | 50 | | +-----------------------+-----------------------+-----------------------+ | | | **E** | +-----------------------+-----------------------+-----------------------+ | 5 | **F** | | +-----------------------+-----------------------+-----------------------+ | | | 1 | +-----------------------+-----------------------+-----------------------+ | 6 | 53 | | +-----------------------+-----------------------+-----------------------+ **TABLE 6-3** Refer to Table 6-3. The missing value of **D** is: A\) 1 B\) 2 C\) 3 D\) 4 E\) 5 Answer: C Diff: 3 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 29\) *The table below shows the quantities of good X a consumer could consume over a 1-week period.* +-----------------------+-----------------------+-----------------------+ | **Units** | **Total** | **Marginal Utility** | | | | | | | **Utility** | | +-----------------------+-----------------------+-----------------------+ | 0 | 0 | | +-----------------------+-----------------------+-----------------------+ | | | **A** | +-----------------------+-----------------------+-----------------------+ | 1 | 30 | | +-----------------------+-----------------------+-----------------------+ | | | 12 | +-----------------------+-----------------------+-----------------------+ | 2 | **B** | | +-----------------------+-----------------------+-----------------------+ | | | 5 | +-----------------------+-----------------------+-----------------------+ | 3 | **C** | | +-----------------------+-----------------------+-----------------------+ | | | **D** | +-----------------------+-----------------------+-----------------------+ | 4 | 50 | | +-----------------------+-----------------------+-----------------------+ | | | **E** | +-----------------------+-----------------------+-----------------------+ | 5 | **F** | | +-----------------------+-----------------------+-----------------------+ | | | 1 | +-----------------------+-----------------------+-----------------------+ | 6 | 53 | | +-----------------------+-----------------------+-----------------------+ **TABLE 6-3** Refer to Table 6-3. The missing value of **E** is: A\) 1 B\) 2 C\) 3 D\) 4 E\) 5 Answer: B Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 30\) *The table below shows the quantities of good X a consumer could consume over a 1-week period.* +-----------------------+-----------------------+-----------------------+ | **Units** | **Total** | **Marginal Utility** | | | | | | | **Utility** | | +-----------------------+-----------------------+-----------------------+ | 0 | 0 | | +-----------------------+-----------------------+-----------------------+ | | | **A** | +-----------------------+-----------------------+-----------------------+ | 1 | 30 | | +-----------------------+-----------------------+-----------------------+ | | | 12 | +-----------------------+-----------------------+-----------------------+ | 2 | **B** | | +-----------------------+-----------------------+-----------------------+ | | | 5 | +-----------------------+-----------------------+-----------------------+ | 3 | **C** | | +-----------------------+-----------------------+-----------------------+ | | | **D** | +-----------------------+-----------------------+-----------------------+ | 4 | 50 | | +-----------------------+-----------------------+-----------------------+ | | | **E** | +-----------------------+-----------------------+-----------------------+ | 5 | **F** | | +-----------------------+-----------------------+-----------------------+ | | | 1 | +-----------------------+-----------------------+-----------------------+ | 6 | 53 | | +-----------------------+-----------------------+-----------------------+ **TABLE 6-3** Refer to Table 6-3. The missing value of **F** is: A\) 49 B\) 50 C\) 51 D\) 52 E\) 53 Answer: D Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 31\) *The table below shows the quantities of good X a consumer could consume over a 1-week period.* +-----------------------+-----------------------+-----------------------+ | **Units** | **Total** | **Marginal Utility** | | | | | | | **Utility** | | +-----------------------+-----------------------+-----------------------+ | 0 | 0 | | +-----------------------+-----------------------+-----------------------+ | | | **A** | +-----------------------+-----------------------+-----------------------+ | 1 | 30 | | +-----------------------+-----------------------+-----------------------+ | | | 12 | +-----------------------+-----------------------+-----------------------+ | 2 | **B** | | +-----------------------+-----------------------+-----------------------+ | | | 5 | +-----------------------+-----------------------+-----------------------+ | 3 | **C** | | +-----------------------+-----------------------+-----------------------+ | | | **D** | +-----------------------+-----------------------+-----------------------+ | 4 | 50 | | +-----------------------+-----------------------+-----------------------+ | | | **E** | +-----------------------+-----------------------+-----------------------+ | 5 | **F** | | +-----------------------+-----------------------+-----------------------+ | | | 1 | +-----------------------+-----------------------+-----------------------+ | 6 | 53 | | +-----------------------+-----------------------+-----------------------+ **TABLE 6-3** Refer to Table 6-3. The missing values for **A** and **C** are: A\) A = 0 and C = 5. B\) A = 42 and C = 3. C\) A = 5 and C = 47. D\) A = 30 and C = 47. E\) A = 42 and C = 30. Answer: D Diff: 3 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 32\) *The table below shows the quantities of good X a consumer could consume over a 1-week period.* +-----------------------+-----------------------+-----------------------+ | **Units** | **Total** | **Marginal Utility** | | | | | | | **Utility** | | +-----------------------+-----------------------+-----------------------+ | 0 | 0 | | +-----------------------+-----------------------+-----------------------+ | | | **A** | +-----------------------+-----------------------+-----------------------+ | 1 | 30 | | +-----------------------+-----------------------+-----------------------+ | | | 12 | +-----------------------+-----------------------+-----------------------+ | 2 | **B** | | +-----------------------+-----------------------+-----------------------+ | | | 5 | +-----------------------+-----------------------+-----------------------+ | 3 | **C** | | +-----------------------+-----------------------+-----------------------+ | | | **D** | +-----------------------+-----------------------+-----------------------+ | 4 | 50 | | +-----------------------+-----------------------+-----------------------+ | | | **E** | +-----------------------+-----------------------+-----------------------+ | 5 | **F** | | +-----------------------+-----------------------+-----------------------+ | | | 1 | +-----------------------+-----------------------+-----------------------+ | 6 | 53 | | +-----------------------+-----------------------+-----------------------+ **TABLE 6-3** Refer to Table 6-3. The missing values for **B** and **D** are: A\) B = 47 and D = 5. B\) B = 12 and D = 7. C\) B = 42 and D = 3. D\) B = 30 and D = 12. E\) B = 12 and D = 5. Answer: C Diff: 3 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 33\) *The table below shows the quantities of good X a consumer could consume over a 1-week period.* +-----------------------+-----------------------+-----------------------+ | **Units** | **Total** | **Marginal Utility** | | | | | | | **Utility** | | +-----------------------+-----------------------+-----------------------+ | 0 | 0 | | +-----------------------+-----------------------+-----------------------+ | | | **A** | +-----------------------+-----------------------+-----------------------+ | 1 | 30 | | +-----------------------+-----------------------+-----------------------+ | | | 12 | +-----------------------+-----------------------+-----------------------+ | 2 | **B** | | +-----------------------+-----------------------+-----------------------+ | | | 5 | +-----------------------+-----------------------+-----------------------+ | 3 | **C** | | +-----------------------+-----------------------+-----------------------+ | | | **D** | +-----------------------+-----------------------+-----------------------+ | 4 | 50 | | +-----------------------+-----------------------+-----------------------+ | | | **E** | +-----------------------+-----------------------+-----------------------+ | 5 | **F** | | +-----------------------+-----------------------+-----------------------+ | | | 1 | +-----------------------+-----------------------+-----------------------+ | 6 | 53 | | +-----------------------+-----------------------+-----------------------+ **TABLE 6-3** Refer to Table 6-3. The missing values for **E** and **F** are: A\) E = 3 and F = 51. B\) E = 2 and F = 52. C\) E = 0 and F = 30. D\) E = 27 and F = 14. E\) E = 9 and F = 47. Answer: B Diff: 3 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 34\) *The table below shows the quantities of toffee bars and bags of cashews that a consumer could consume over a 1-week period.* **Toffee (bars) Cashews (bags)** +-------------+-------------+-------------+-------------+-------------+ | **Units** | **Marginal | **Total** | **Marginal* | **Total** | | | Utility** | | * | | | | | **Utility** | | **Utility** | | | | | **Utility** | | +-------------+-------------+-------------+-------------+-------------+ | 1 | 10 | 10 | 12 | 12 | +-------------+-------------+-------------+-------------+-------------+ | 2 | 8 | 18 | 10 | 22 | +-------------+-------------+-------------+-------------+-------------+ | 3 | 5 | 23 | 7 | 29 | +-------------+-------------+-------------+-------------+-------------+ | 4 | 3 | 26 | 5 | 34 | +-------------+-------------+-------------+-------------+-------------+ | 5 | 1 | 27 | 2 | 36 | +-------------+-------------+-------------+-------------+-------------+ | 6 | 0 | 27 | 1 | 37 | +-------------+-------------+-------------+-------------+-------------+ | 7 | 0 | 27 | 0 | 37 | +-------------+-------------+-------------+-------------+-------------+ **TABLE 6-4** Refer to Table 6-4. If this consumer purchases 3 toffee bars and 4 bags of cashews per week, his/her total utility will be A\) 7. B\) 23. C\) 31. D\) 54. E\) 57. Answer: E Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 35\) *The table below shows the quantities of toffee bars and bags of cashews that a consumer could consume over a 1-week period.* **Toffee (bars) Cashews (bags)** +-------------+-------------+-------------+-------------+-------------+ | **Units** | **Marginal | **Total** | **Marginal* | **Total** | | | Utility** | | * | | | | | **Utility** | | **Utility** | | | | | **Utility** | | +-------------+-------------+-------------+-------------+-------------+ | 1 | 10 | 10 | 12 | 12 | +-------------+-------------+-------------+-------------+-------------+ | 2 | 8 | 18 | 10 | 22 | +-------------+-------------+-------------+-------------+-------------+ | 3 | 5 | 23 | 7 | 29 | +-------------+-------------+-------------+-------------+-------------+ | 4 | 3 | 26 | 5 | 34 | +-------------+-------------+-------------+-------------+-------------+ | 5 | 1 | 27 | 2 | 36 | +-------------+-------------+-------------+-------------+-------------+ | 6 | 0 | 27 | 1 | 37 | +-------------+-------------+-------------+-------------+-------------+ | 7 | 0 | 27 | 0 | 37 | +-------------+-------------+-------------+-------------+-------------+ **TABLE 6-4** Refer to Table 6-4. The maximum utility that a consumer can obtain from toffee bars and bags of cashews per week is A\) 22. B\) 54. C\) 56. D\) 64. E\) 74. Answer: D Diff: 2 Type: MC Topic: 6.1a. marginal utility and total utility Skill: Applied Learning Obj.: 6-1 Distinguish between marginal and total utility. Graphics: Table Category: Quantitative 36\) *The table below shows the quantities of toffee bars and bags of cashews that a consumer could consume over a 1-week period.* **Toffee (bars) Cashews (bags)** +-------------+-------------+-------------+-------------+-------------+ | **Units** | **Marginal | **Total** | **Marginal* | **Total** | | | Utility** | | * | | | | | **Utility** | | **Utility** | | | | | **Utility** | | +-------------+-------------+-------------+-------------+-------------+ | 1 | 10 | 10 | 12 | 12 | +-------------+-------------+-------------+-------------+-------------+ | 2 | 8 | 18 | 10 | 22 | +-------------+-------------+-------------+-------------+-------------+ | 3 | 5 | 23 | 7 | 29 | +-------------+-------------+-------------+-------------+-------------+ | 4 | 3 | 26 | 5 | 34 | +-------------+-------------+-------------+-------------+-------------+ | 5 | 1 | 27 | 2 | 36 | +-------------+-------------+-------------+-------------+-------------+ | 6 | 0 | 27 | 1 | 37 | +-------------+-------------+-------------+-------------+-------------+ | 7 | 0 | 27 | 0 | 37 | +-------------+-------------+-------------+-------------+-------------+ **TABLE 6-4** Refer to Table 6-4. If the prices of toffee bars and bags of cashews are both \$1 and this consumer has \$7 per week to spend on these two snacks, how many of each will he/she purchase to maximize utility? A\) 2 toffee bars and 5 bags of cashews B\) 3 toffee bars and 4 bags of cashews C\) 4 toffee bars and 3 bags of cashews D\) 5 toffee bars and 2 bags of cashews E\) 6 toffee bars and 1 bag of cashews Answer: B Diff: 3 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Graphics: Table Category: Quantitative 37\) *The table below shows the quantities of toffee bars and bags of cashews that a consumer could consume over a 1-week period.* **Toffee (bars) Cashews (bags)** +-------------+-------------+-------------+-------------+-------------+ | **Units** | **Marginal | **Total** | **Marginal* | **Total** | | | Utility** | | * | | | | | **Utility** | | **Utility** | | | | | **Utility** | | +-------------+-------------+-------------+-------------+-------------+ | 1 | 10 | 10 | 12 | 12 | +-------------+-------------+-------------+-------------+-------------+ | 2 | 8 | 18 | 10 | 22 | +-------------+-------------+-------------+-------------+-------------+ | 3 | 5 | 23 | 7 | 29 | +-------------+-------------+-------------+-------------+-------------+ | 4 | 3 | 26 | 5 | 34 | +-------------+-------------+-------------+-------------+-------------+ | 5 | 1 | 27 | 2 | 36 | +-------------+-------------+-------------+-------------+-------------+ | 6 | 0 | 27 | 1 | 37 | +-------------+-------------+-------------+-------------+-------------+ | 7 | 0 | 27 | 0 | 37 | +-------------+-------------+-------------+-------------+-------------+ **TABLE 6-4** Refer to Table 6-4. If the price of toffee bars is \$1 each, bags of cashews are \$2 each, and this consumer has \$7 per week to spend on these two snacks, how many of each will he/she purchase to maximize utility? A\) 0 toffee bars and 3 bags of cashews B\) 1 toffee bars and 3 bags of cashews C\) 2 toffee bars and 2 bags of cashews D\) 3 toffee bars and 2 bags of cashews E\) 7 toffee bars and 0 bags of cashews Answer: D Diff: 3 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Graphics: Table Category: Quantitative 38\) *The table below shows the quantities of toffee bars and bags of cashews that a consumer could consume over a 1-week period.* **Toffee (bars) Cashews (bags)** +-------------+-------------+-------------+-------------+-------------+ | **Units** | **Marginal | **Total** | **Marginal* | **Total** | | | Utility** | | * | | | | | **Utility** | | **Utility** | | | | | **Utility** | | +-------------+-------------+-------------+-------------+-------------+ | 1 | 10 | 10 | 12 | 12 | +-------------+-------------+-------------+-------------+-------------+ | 2 | 8 | 18 | 10 | 22 | +-------------+-------------+-------------+-------------+-------------+ | 3 | 5 | 23 | 7 | 29 | +-------------+-------------+-------------+-------------+-------------+ | 4 | 3 | 26 | 5 | 34 | +-------------+-------------+-------------+-------------+-------------+ | 5 | 1 | 27 | 2 | 36 | +-------------+-------------+-------------+-------------+-------------+ | 6 | 0 | 27 | 1 | 37 | +-------------+-------------+-------------+-------------+-------------+ | 7 | 0 | 27 | 0 | 37 | +-------------+-------------+-------------+-------------+-------------+ **TABLE 6-4** Refer to Table 6-4. If the prices of toffee bars and bags of cashews are both \$1 and this consumer has \$11 per week to spend on snacks, how many of each will he/she purchase? A\) 3 toffee bars and 8 bags of cashews B\) 4 toffee bars and 7 bags of cashews C\) 5 toffee bars and 5 bags of cashews D\) 5 toffee bars and 6 bags of cashews E\) 6 toffee bars and 5 bags of cashews Answer: D Diff: 3 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Graphics: Table Category: Quantitative 39\) *The table below shows the quantities of toffee bars and bags of cashews that a consumer could consume over a 1-week period.* **Toffee (bars) Cashews (bags)** +-------------+-------------+-------------+-------------+-------------+ | **Units** | **Marginal | **Total** | **Marginal* | **Total** | | | Utility** | | * | | | | | **Utility** | | **Utility** | | | | | **Utility** | | +-------------+-------------+-------------+-------------+-------------+ | 1 | 10 | 10 | 12 | 12 | +-------------+-------------+-------------+-------------+-------------+ | 2 | 8 | 18 | 10 | 22 | +-------------+-------------+-------------+-------------+-------------+ | 3 | 5 | 23 | 7 | 29 | +-------------+-------------+-------------+-------------+-------------+ | 4 | 3 | 26 | 5 | 34 | +-------------+-------------+-------------+-------------+-------------+ | 5 | 1 | 27 | 2 | 36 | +-------------+-------------+-------------+-------------+-------------+ | 6 | 0 | 27 | 1 | 37 | +-------------+-------------+-------------+-------------+-------------+ | 7 | 0 | 27 | 0 | 37 | +-------------+-------------+-------------+-------------+-------------+ **TABLE 6-4** Refer to Table 6-4. If the prices of both toffee bars and bags of cashews are \$2 and this consumer has \$14 per week to spend on these two snacks, what is the maximum total utility achievable? A\) 10 B\) 15 C\) 33 D\) 45 E\) 57 Answer: E Diff: 3 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Graphics: Table Category: Quantitative 40\) A consumer maximizes his or her utility when expenditures are allocated such that A\) the total utility from each good is equal. B\) the total number of dollars spent on each good is equal. C\) the utility received from the last unit of each good is equal. D\) the utility received per dollar spent on the last unit of each good is equal. E\) the marginal utility is zero for each good consumed utility. Answer: D Diff: 2 Type: MC Topic: 6.1b. utility maximization Skill: Recall Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Category: Qualitative 41\) The condition required for a consumer to be maximizing utility, for any pair of products, X and Y, is A\) *P*X(*MU*X) = *P*Y(*MU*Y). B\) *MU*X = *MU*Y. C\) *MU*X*/P*X *= MU*Y*/P*Y*.* D\) *MU*X*/P*Y *= MU*Y*/P*X*.* E\) *P*X = *P*Y. Answer: C Diff: 2 Type: MC Topic: 6.1b. utility maximization Skill: Recall Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Category: Qualitative 42\) If a consumer is faced with a choice of products *A, B, C,* \..., and has a given money income, the consumer\'s utility will be maximized when A\) *MUA/PA = MUB/PB = MUC/PC = \...* B\) *P*A = *P*B = *P*C = \... C\) *MU*A = *MU*B = *MU*C = \... D\) *TU*A = *TU*B = *TU*C = \... E\) *MU*A = *P*A; *MU*B = *P*B; *MU*C = *P*C; \... Answer: A Diff: 2 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Category: Qualitative 43\) Consider marginal utility theory. If all consumers in an economy have maximized their utility, and they face a given set of market prices, then each consumer will have identical A\) total utilities for each good. B\) marginal utilities for each good. C\) marginal utilities per unit of each good. D\) ratios of marginal utility to price for each good. E\) consumption of each good. Answer: D Diff: 2 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Category: Qualitative 44)  **FIGURE 6-2** Refer to Figure 6-2. If the price of X is \$2 and the price of Y is \$1 and the consumer is buying 4 units of X and 2 units of Y, the consumer\'s total utility is A\) 8. B\) 10. C\) 52. D\) 56. E\) 69. Answer: E Diff: 2 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Graphics: Graph Category: Quantitative 45) Short description: Four graphs. The first two graphs represent good X and the next two represent good Y. Long description: The first two graphs represent good X. In the first graph, the horizontal axis representing units of good X ranges from 0 to 10, in increments of 1. The vertical axis representing M U subscript X ranges from 0 to 18, in increments of 2. Graph (a) shows a line that passes through the following points: (1, 16), (4, 10), and (9, 0). In the second graph, the horizontal axis representing units of good X ranges from 0 to 10, in increments of 1. The vertical axis representing T U subscript X ranges from 0 to 80, in increments of 10. Graph (b) shows a curve that passes through the following points: (1, 15), (3, 40), (4, 52), and (9, 75). In the third graph, the horizontal axis representing units of good Y ranges from 0 to 10, in increments of 1. The vertical axis representing M U subscript Y ranges from 0 to 10, in increments of 2. Graph (c) shows a line that passes through the following points: (1, 9), (2, 8), (4, 6), (6, 4), and (9, 1). In the fourth graph, the horizontal axis representing units of good Y ranges from 0 to 10, in increments of 1. The vertical axis representing T U subscript Y ranges from 0 to 50, in increments of 5. Graph (d) shows a curve that passes through the following points: (1, 10), (2, 17), (4, 30), and (9, 45). Note: all values are approximate. **FIGURE 6-2** Refer to Figure 6-2. Suppose the price of X is \$2, the price of Y is \$1, and the consumer\'s income is \$10. The consumer is currently buying 4 units of good X and 2 units of good Y. In order to maximize his utility, he should A\) make no changes -- he is already maximizing his total utility. B\) buy the same amount of X but less Y. C\) buy more of X but the same amount Y. D\) buy more of X and less Y. E\) buy more Y and less X. Answer: E Diff: 3 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Graphics: Graph Category: Quantitative 46)  **FIGURE 6-2** Refer to Figure 6-2. Suppose the price of Y is \$1, the consumer\'s income is \$10, and the consumer is currently buying 3 units of good X and 4 units of good Y. If this consumer is maximizing her utility, then the price of X must be A\) \$1. B\) \$2. C\) \$3. D\) \$4. E\) Impossible to tell with the given information. Answer: B Diff: 3 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Graphics: Graph Category: Quantitative 47) Short description: Four graphs. The first two graphs represent good X and the next two represent good Y. Long description: The first two graphs represent good X. In the first graph, the horizontal axis representing units of good X ranges from 0 to 10, in increments of 1. The vertical axis representing M U subscript X ranges from 0 to 18, in increments of 2. Graph (a) shows a line that passes through the following points: (1, 16), (4, 10), and (9, 0). In the second graph, the horizontal axis representing units of good X ranges from 0 to 10, in increments of 1. The vertical axis representing T U subscript X ranges from 0 to 80, in increments of 10. Graph (b) shows a curve that passes through the following points: (1, 15), (3, 40), (4, 52), and (9, 75). In the third graph, the horizontal axis representing units of good Y ranges from 0 to 10, in increments of 1. The vertical axis representing M U subscript Y ranges from 0 to 10, in increments of 2. Graph (c) shows a line that passes through the following points: (1, 9), (2, 8), (4, 6), (6, 4), and (9, 1). In the fourth graph, the horizontal axis representing units of good Y ranges from 0 to 10, in increments of 1. The vertical axis representing T U subscript Y ranges from 0 to 50, in increments of 5. Graph (d) shows a curve that passes through the following points: (1, 10), (2, 17), (4, 30), and (9, 45). Note: all values are approximate. **FIGURE 6-2** Refer to Figure 6-2. Suppose the price of X is \$2, the price of Y is \$1, the consumer\'s income is \$10, and the consumer is buying 3 units of good X and 4 units of good Y. What is the total utility the consumer obtains from this combination of X and Y? A\) 18 B\) 30 C\) 40 D\) 60 E\) 70 Answer: E Diff: 3 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Graphics: Graph Category: Quantitative 48)  **FIGURE 6-2** Refer to Figure 6-2. Suppose the price of X is \$2, the price of Y is \$1, and the consumer\'s income is \$10. The consumer is currently buying 3 units of good X and 4 units of good Y. In order to maximize his/her utility, the consumer should A\) not change his/her behaviour. B\) buy the same amount of X but less Y. C\) buy more of X but the same amount Y. D\) buy more of X and less Y. E\) buy less of X and more Y. Answer: A Diff: 3 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Graphics: Graph Category: Quantitative 49) Short description: Four graphs. The first two graphs represent good X and the next two represent good Y. Long description: The first two graphs represent good X. In the first graph, the horizontal axis representing units of good X ranges from 0 to 10, in increments of 1. The vertical axis representing M U subscript X ranges from 0 to 18, in increments of 2. Graph (a) shows a line that passes through the following points: (1, 16), (4, 10), and (9, 0). In the second graph, the horizontal axis representing units of good X ranges from 0 to 10, in increments of 1. The vertical axis representing T U subscript X ranges from 0 to 80, in increments of 10. Graph (b) shows a curve that passes through the following points: (1, 15), (3, 40), (4, 52), and (9, 75). In the third graph, the horizontal axis representing units of good Y ranges from 0 to 10, in increments of 1. The vertical axis representing M U subscript Y ranges from 0 to 10, in increments of 2. Graph (c) shows a line that passes through the following points: (1, 9), (2, 8), (4, 6), (6, 4), and (9, 1). In the fourth graph, the horizontal axis representing units of good Y ranges from 0 to 10, in increments of 1. The vertical axis representing T U subscript Y ranges from 0 to 50, in increments of 5. Graph (d) shows a curve that passes through the following points: (1, 10), (2, 17), (4, 30), and (9, 45). Note: all values are approximate. **FIGURE 6-2** Refer to Figure 6-2. Suppose the price of Y is \$1 and the consumer\'s income is \$10. Initially, the price of X is \$2 and the consumer is buying 3 units of good X and 4 units of good Y. If the price of X then falls to \$1, what quantities of X and Y will he/she now purchase in order to maximize total utility? A\) 2 X and 8 Y. B\) 3 X and 7 Y. C\) 4 X and 6 Y. D\) 5 X and 5 Y. E\) 6 X and 4 Y. Answer: E Diff: 3 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Graphics: Graph Category: Quantitative 50)  **FIGURE 6-2** Refer to Figure 6-2. Suppose the price of Y is \$1 and the consumer\'s income is \$10. Initially, the price of X is \$2 and the consumer is buying 4 units of good Y. If the price of X then falls to \$1, which of the following pairs of quantities of X correctly completes the demand schedule below? Price of X: \$1 \$2 Quantity Demanded of X: \_\_\_\_\_\_\_\_ \_\_\_\_\_\_\_\_ A\) 2; 4 B\) 4; 4 C\) 4; 3 D\) 6; 3 E\) 6; 4 Answer: D Diff: 3 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Graphics: Graph Category: Quantitative 51\) Christine is allocating her household expenditure between cleaning services and gardening services in order to maximize the household\'s total utility. For the quantities of cleaning and gardening services she has chosen, an increase in the price of cleaning service will, *ceteris paribus*, A\) increase the marginal utility of a unit of cleaning service. B\) reduce the marginal utility per dollar spent on cleaning service. C\) reduce the marginal utility of a unit of cleaning service. D\) increase the marginal utility per dollar spent on cleaning service. E\) have no effect on the marginal utility per dollar spent on cleaning service. Answer: B Diff: 3 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Category: Qualitative 52\) John is allocating his household expenditure between groceries and housing in order to maximize total utility. For the quantities of groceries and housing he has chosen, an increase in the price of housing will, *ceteris paribus*, A\) increase the marginal utility of a unit of housing. B\) increase the marginal utility per dollar spent on housing. C\) reduce the marginal utility of a unit of housing. D\) reduce the marginal utility per dollar spent on housing. E\) have no effect on the marginal utility per dollar spent on housing. Answer: D Diff: 3 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Category: Quantitative 53\) Consider a consumer who divides his income between spending on good X and good Y. The opportunity cost of good X in terms of good Y is reflected by the A\) absolute price of good X. B\) absolute price of good Y. C\) ratio of the price of X to the price of Y. D\) ratio of the price of Y to the price of X. E\) price of good X relative to the prices of all other goods. Answer: C Diff: 2 Type: MC Topic: 6.1b. utility maximization Skill: Recall Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Category: Qualitative 54\) The Smith family is allocating its monthly household expenditure between only two goods, food and clothing. Suppose the price of food is \$5 per unit, the price of clothing is \$10 per unit, and the marginal utility the family is receiving from its consumption of food is currently 25. What is the family\'s marginal utility from its consumption of clothing if it is maximizing its utility? A\) 5 B\) 10 C\) 12.5 D\) 25 E\) 50 Answer: E Diff: 3 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Category: Quantitative 55\) The Smith family is allocating its monthly household expenditure between only two goods, food and clothing. Suppose the price of food is \$12 per unit, the price of clothing is \$16 per unit, and the marginal utility the family is receiving from its consumption of clothing is currently 200. What is the family\'s marginal utility from its consumption of food if it is maximizing its utility? A\) 200 B\) 150 C\) 75 D\) 16 E\) 12 Answer: B Diff: 3 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Category: Quantitative 56\) Bjorn is a student with a monthly budget of \$500, which he allocates between transportation services and \"all other goods.\" Suppose the price of transportation is \$5 per unit, and the price of \"all other goods\" is \$20 per unit. The marginal utility he currently receives from his consumption of transportation services is 60. What is his marginal utility from the consumption of \"all other goods\" if he is maximizing his utility? A\) 5 B\) 20 C\) 25 D\) 200 E\) 240 Answer: E Diff: 3 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Category: Quantitative 57\) Bjorn is a student with a monthly budget of \$500, which he allocates between transportation services and \"all other goods.\" Suppose the price of transportation is \$5 per unit, and the price of \"all other goods\" is \$20 per unit. The marginal utility he currently receives from his consumption of transportation services is 60. How many units of \"all other goods\" is he consuming if he is maximizing his utility? A\) 25 B\) 60 C\) 200 D\) 240 E\) There is not enough information to determine. Answer: E Diff: 3 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Category: Quantitative 58\) Laurie spends all of her money buying bread and cheese. The marginal utility she receives from the last loaf of bread is 60 and from the last block of cheese is 30. The price of bread is \$3 and the price of cheese is \$2. Laurie A\) is buying bread and cheese in utility-maximizing amounts. B\) should buy more bread and less cheese in order to maximize her utility. C\) should buy more cheese and less bread in order to maximize her utility. D\) is spending too much money on bread and cheese. E\) should buy more bread and more cheese in order to maximize her utility. Answer: B Diff: 2 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Category: Quantitative 59\) Marginal utility analysis predicts a downward-sloping demand curve for good X because A\) as PX falls, the ratio MUX/PX becomes smaller, causing the consumer to purchase more of good X. B\) as PX rises, the consumer increases purchases of X such that MUX/PX is equal to MU/P for all other products. C\) utility-maximizing consumers equate marginal utility received for each product consumed. D\) all demand curves are downward sloping, regardless of the behaviour of consumers. E\) as PX falls, the consumer increases purchases of X until MUX/PX is equal to MU/P for all other products. Answer: E Diff: 2 Type: MC Topic: 6.1b. utility maximization Skill: Recall Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Category: Qualitative 60\) If John consumes only two goods, A and B, and he is maximizing his utility subject to his budget constraint, A\) MUA/MUB is at a maximum. B\) MUA/MUB equals the ratio of the total utility of A to the total utility of B. C\) MUA/MUB equals 1. D\) MUA/MUB equals zero. E\) MUA/MUB equals the ratio of the price of A to the price of B. Answer: E Diff: 2 Type: MC Topic: 6.1b. utility maximization Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Category: Qualitative 61\) The market demand curve is derived from A\) the vertical summation of individual demand curves. B\) the average quantity demanded of all individuals in the economy. C\) a weighted average of the quantity demanded of all individuals in the economy at each price. D\) the horizontal summation of individual demand curves. E\) market data provided by Statistics Canada. Answer: D Diff: 1 Type: MC Topic: 6.1c. market demand curve Skill: Recall Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Category: Qualitative 62\) *Diagrams A, B, and C show 3 individual consumers\' demand curves for cement. Consumers A, B, and C constitute the entire monthly cement market in this region.* Short description: Three graphs, A to C plot cubic metres of cement per month against price. Long description: In each graph, the horizontal axis representing cubic metres of cement per month ranges from 2000 to 8000, in increments of 2000. The vertical axis representing price in dollars ranges from 10 to 100, in increments of 10. The first graph, A shows a line that passes through (0, 100), (1000, 80), (2000, 60), (3000, 40), (4000, 20), and (5000, 0). The second graph, B shows a line that passes through (0, 30), (5000, 25), and (8000, 20). The third graph, C shows a line that passes through (0, 70), (1000, 60), (2000, 50), (3000, 40), (4000, 30), (5000, 20), (6000, 10), and (7000, 0). Note: all values are approximate. **FIGURE 6-3** Refer to Figure 6-3. What is the market demand (in cubic metres per month) for cement at a price of \$80 per cubic metre? A\) 0 B\) 1000 C\) 2000 D\) 3000 E\) 4000 Answer: B Diff: 2 Type: MC Topic: 6.1c. market demand curve Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Graphics: Graph Category: Quantitative 63\) *Diagrams A, B, and C show 3 individual consumers\' demand curves for cement. Consumers A, B, and C constitute the entire monthly cement market in this region.*  **FIGURE 6-3** Refer to Figure 6-3. What is the market demand (in cubic metres per month) for cement at a price of \$60 per cubic metre? A\) 0 B\) 1000 C\) 2000 D\) 3000 E\) 4000 Answer: D Diff: 2 Type: MC Topic: 6.1c. market demand curve Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Graphics: Graph Category: Quantitative 64\) *Diagrams A, B, and C show 3 individual consumers\' demand curves for cement. Consumers A, B, and C constitute the entire monthly cement market in this region.* Short description: Three graphs, A to C plot cubic metres of cement per month against price. Long description: In each graph, the horizontal axis representing cubic metres of cement per month ranges from 2000 to 8000, in increments of 2000. The vertical axis representing price in dollars ranges from 10 to 100, in increments of 10. The first graph, A shows a line that passes through (0, 100), (1000, 80), (2000, 60), (3000, 40), (4000, 20), and (5000, 0). The second graph, B shows a line that passes through (0, 30), (5000, 25), and (8000, 20). The third graph, C shows a line that passes through (0, 70), (1000, 60), (2000, 50), (3000, 40), (4000, 30), (5000, 20), (6000, 10), and (7000, 0). Note: all values are approximate. **FIGURE 6-3** Refer to Figure 6-3. What is the market demand (in cubic metres per month) for cement at a price of \$20 per cubic metre? A\) 0 B\) 4000 C\) 5000 D\) 10 000 E\) 14 000 Answer: E Diff: 2 Type: MC Topic: 6.1c. market demand curve Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Graphics: Graph Category: Quantitative 65\) *Diagrams A, B, and C show 3 individual consumers\' demand curves for cement. Consumers A, B, and C constitute the entire monthly cement market in this region.*  **FIGURE 6-3** Refer to Figure 6-3. On the regional market demand curve for cement (not shown), at which price level(s) is there a \"kink\" in the demand curve? A\) \$10 B\) \$20 and \$30 C\) \$30 and \$70 D\) \$40 and \$70 E\) \$80 Answer: C Diff: 3 Type: MC Topic: 6.1c. market demand curve Skill: Applied Learning Obj.: 6-2 Explain how utility‐maximizing consumers adjust their expenditure until the marginal utility per dollar spent is equalized across products. Graphics: Graph Category: Qualitative 6.2 Income and Substitution Effects of Price Changes 1\) Consider the income and substitution effects of price changes. The substitution effect is the change in quantity demanded that occurs A\) as a result of a change in absolute prices, with real income held constant. B\) as a result of a change in relative prices, with money income held constant. C\) as a result of a change in relative prices, with real income held constant. D\) when one good is substituted for another. E\) with a change in the relative prices of two or more goods. Answer: C Diff: 2 Type: MC Topic: 6.2. income and substitution effects Skill: Recall Learning Obj.: 6-3 Explain how the income and substitution effects of a price change determine the slope of a demand curve. Category: Qualitative 2\) Consider the income and substitution effects of price changes. The income effect refers to the change in quantity demanded that occurs as a result of a change in A\) money income, with relative prices held constant. B\) real income, with relative prices held constant. C\) relative prices, with real income held constant. D\) marginal utility, with real income held constant. E\) preferences, with real income held constant. Answer: B Diff: 2 Type: MC Topic: 6.2. income and substitution effects Skill: Recall Learning Obj.: 6-3 Explain how the income and substitution effects of a price change determine the slope of a demand curve. Category: Qualitative 3\) Consider the income and substitution effects of price changes. If the price of a normal good changes, the income effect of the price change will A\) always be larger than the substitution effect. B\) always be to increase quantity demanded. C\) reinforce the substitution effect. D\) produce a positively sloped demand curve. E\) oppose the substitution effect. Answer: C Diff: 2 Type: MC Topic: 6.2. income and substitution effects Skill: Recall Learning Obj.: 6-3 Explain how the income and substitution effects of a price change determine the slope of a demand curve. Category: Qualitative 4\) Suppose a consumer can purchase only two goods, soap and apples. If the price of soap falls and the consumption of apples increases, we can conclude that the increased consumption of apples is due to A\) neither the income effect nor the substitution effect. B\) both the income effect and the substitution effect. C\) the income effect only. D\) the substitution effect only. E\) the deflation effect. Answer: C Diff: 3 Type: MC Topic: 6.2. income and substitution effects Skill: Applied Learning Obj.: 6-3 Explain how the income and substitution effects of a price change determine the slope of a demand curve. Category: Qualitative 5\) Suppose there are only two goods, A and B, and that consumer income is constant. If the price of good A falls and the consumption of good B rises, we can conclude that A\) A is a normal good. B\) B is a normal good. C\) A is an inferior good. D\) B is an inferior good. E\) both A and B are normal goods. Answer: B Diff: 2 Type: MC Topic: 6.2. income and substitution effects Skill: Applied Learning Obj.: 6-3 Explain how the income and substitution effects of a price change determine the slope of a demand curve. Category: Qualitative 6\) A demand curve for a normal good is downward sloping due to A\) the income effect. B\) the substitution effect. C\) the combination of income and substitution effects. D\) neither the substitution effect nor the income effect. E\) the Giffen effect. Answer: C Diff: 1 Type: MC Topic: 6.2. income and substitution effects Skill: Recall Learning Obj.: 6-3 Explain how the income and substitution effects of a price change determine the slope of a demand curve. Category: Qualitative 7\) Consider the income and substitution effects of price changes. For a product with an income elasticity greater than one, a price increase will cause the consumer\'s real income to A\) rise and the quantity purchased to fall. B\) fall and the quantity purchased to fall. C\) rise and the quantity purchased to rise. D\) fall and the quantity purchased to rise. E\) remain constant. Answer: B Diff: 3 Type: MC Topic: 6.2. income and substitution effects Skill: Applied Learning Obj.: 6-3 Explain how the income and substitution effects of a price change determine the slope of a demand curve. Category: Qualitative 8\) Consider the income and substitution effects of price changes. Suppose the price of potatoes falls and we observe a decrease in an individual\'s purchases of potatoes. Which of the following can we infer? A\) The income effect is negative and outweighs the substitution effect. B\) The income effect is negative and reinforces the substitution effect. C\) The income effect just offsets the substitution effect. D\) The income effect is positive and exceeds the substitution effect. E\) The substitution effect outweighs the income effect. Answer: A Diff: 3 Type: MC Topic: 6.2. income and substitution effects Skill: Applied Learning Obj.: 6-3 Explain how the income and substitution effects of a price change determine the slope of a demand curve. Category: Qualitative 9\) The substitution effect of a price change A\) will result in the consumer buying less of a good at a lower price. B\) will result in the consumer buying less of a good at a higher price. C\) outweighs the income effect for Giffen goods. D\) is equal to the income effect for normal goods. E\) is equal to the income effect for inferior goods. Answer: B Diff: 1 Type: MC Topic: 6.2. income and substitution effects Skill: Applied Learning Obj.: 6-3 Explain how the income and substitution effects of a price change determine the slope of a demand curve. Category: Qualitative 10\) If the income effect of a price change is negative and larger in absolute terms than the substitution effect, then the demand curve will be A\) upward sloping. B\) downward sloping. C\) vertical. D\) horizontal. E\) of indeterminate slope. Answer: A Diff: 2 Type: MC Topic: 6.2. income and substitution effects Skill: Applied Learning Obj.: 6-3 Explain how the income and substitution effects of a price change determine the slope of a demand curve. Category: Qualitative 11\) The demand curve for a good with an income elasticity of less than one A\) must be downward sloping. B\) must be upward sloping. C\) will be upward sloping only if the substitution effect outweighs the income effect. D\) will be upward sloping only if the income effect outweighs t