Question : 5.2  Putting It All Together 1) While making a purchase decision : 1377344

 

5.2  Putting It All Together

 

1) While making a purchase decision using marginal thinking, a buyer should buy the good that yields the:

A) highest marginal benefit per dollar spent.

B) lowest marginal benefit per dollar spent.

C) highest average benefit plus marginal benefit per dollar spent.

D) lowest average benefit plus marginal benefit per dollar spent.

 

The following table shows the total benefit that Jenny derives from consuming different quantities of chocolate.

 

Quantity of Chocolate Consumed

Total Benefit ($)

0

0

1

10

2

18

3

24

4

29

5

30

 

2) Refer to the table above. What is the marginal benefit that Jenny derives from the 2nd unit of chocolate?

A) $0

B) $8

C) $9

D) $18

 

3) Refer to the table above. What is the marginal benefit that Jenny derives from the 5th unit?

A) $0

B) $1

C) $6

D) $30

4) Refer to the table above. If there is a sixth unit that Jenny consumes, and the marginal benefit derived from that unit is -1, the total benefit derived when the sixth unit has been consumed is:

A) $0.

B) $3.

C) $29.

D) $39.

 

5) Refer to the table above. If the price of one chocolate is $2, the marginal benefit per dollar spent of the 4th unit will equal:

A) $4.

B) $2.

C) $2.5.

D) $5.

 

6) An optimizing consumer makes her purchase decisions based on:

A) the total benefits at various levels of consumption.

B) benefits per dollar spent at the margin.

C) the total benefits per dollar spent at various levels of consumption.

D) the benefits from the first dollar spent on consumption.

 

7) An optimizing consumer has to choose between two goods–Good A priced at PA and Good B priced at PB. Given that MBA is the marginal benefit from consuming Good A and MBB is the marginal benefit from consuming Good B, the consumer’s well-being will be maximized at the point where:

A) MBA = MBB.

B) MBA/PB=MBB/PA.

C) MBA/PA = MBB/PB.

D) MBA = MBB/PB.

8) The general rule for welfare maximization suggests that in personal equilibrium:

A) the ratio of total benefits to price should be identical across all goods.

B) the ratio of total benefits to income should be identical across all goods.

C) the ratio of marginal benefits to price should be identical across all goods.

D) the ratio of marginal benefits to income should be identical across all goods.

 

The following table shows the marginal benefit that a consumer derives by consuming different quantities of juice and milk.

 

Quantity

(Liters)

Juice ($4/liter)

Milk ($2/liter)

 

Marginal Benefits ($)

Marginal Benefits ($)

0

–

–

1

12

10

2

8

7

3

6

5

4

4

2

5

3

1

 

9) Refer to the table above. What is the total benefit that the consumer derives when he consumes 4 liters of milk?

A) $8

B) $22

C) $24

D) $25

 

10) Refer to the table above. If the income of the consumer is $24, the optimal choice contains:

A) 1 liter of juice and 1 liter of milk.

B) 3 liters of juice and 4 liters of milk.

C) 4 liters of juice and 4 liters of milk.

D) 4 liters of juice and 5 liters of milk.