Question : 82) Terence has $50 per week to spend Subway sandwiches : 1387696

 

 

82) Terence has $50 per week to spend on Subway sandwiches and milkshakes. The price of a Subway sandwich is $5 and the price of a milkshake is $4. He buys 6 sandwiches and 5 milkshakes. The marginal utility of the 6th sandwich = 25 and the marginal utility of the 5th milkshake = 24. Which of the following is true?

A) He is not maximizing his utility and should buy more milkshakes.

B) He is maximizing his utility.

C) He is not maximizing his utility and should buy more Subway sandwiches.

D) He is not maximizing his utility because he is not spending all of his income.

 

 

83) Suppose Renee can increase her total utility from consuming video rentals and books by buying one more book and renting one fewer video. Which of the following is true?

A) The marginal utility of video rentals is negative.

B) The marginal utility per dollar spent on books exceeds that of video rentals.

C) The marginal utility of the last book consumed exceeds the marginal utility of the last video rental consumed.

D) The marginal utility of the last video rental consumed exceeds the marginal utility of the last book consumed.

 

Table 10-7

 

Quantity of Beer (glasses)

Total Utility

Quantity of Pizza (slices)

Total Utility

1

25

1

20

2

45

2

35

3

60

3

45

4

65

4

50

5

69

5

52

6

70

6

52

 

Table 10-7 shows Antonio’s utility from beer and pizza.

 

84) Refer to Table 10-7.  What is Antonio’s marginal utility from consuming the fifth beer?

A) 4 utils

B) 13.6 utils

C) 69 utils

D) 134 utils

 

 

85) Refer to Table 10-7.  Suppose Antonio has $10 to spend and the price of beer = $2 per glass and the price of pizza = $2 per slice. How many of each good will he consume when he maximizes his utility?

A) 2 glasses of beer, 1 slice of pizza

B) 2 glasses of beer, 3 slices of pizza

C) 3 glasses of beer, 2 slices of pizza

D) 4 glasses of beer, 5 slices of pizza

 

86) If Lisa spends her income on veggie burgers and pints of soy milk and the price of veggie burgers is three times the price of a pint of soy milk, then when Lisa maximizes her utility she will buy

A) both goods until the marginal utility of veggie burgers is three times the marginal utility of soy milk.

B) three times as many veggie burgers as pints of soy milk.

C) three times as many pints of soy milk as veggie burgers.

D) both goods until the marginal utility of a pint of soy milk is three times the marginal utility of veggie burgers.

 

 

87) The income effect of a price change refers to

A) the change in demand that occurs when consumer income changes.

B) the change in the quantity demanded that results from a change in price, making the good more or less expensive relative to other goods, holding everything else constant.

C) the change in demand that occurs when both income and price change.

D) the change in the quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding everything else constant.

 

 

88) Which of the following describes the substitution effect of a price change?

A) The change in demand that results from a change in price, making the good more or less expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power.

B) The change in quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding everything else constant.

C) The change in quantity demanded of a good that results from the change in the price of a substitute for the good.

D) The change in quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power.

 

89) Which of the following correctly describes the result of a price increase for an inferior good?

A) Both the substitution effect and the income effect cause the consumer to buy less of the good.

B) The substitution effect causes the consumer to buy less of the good, and the income effect causes the consumer to buy more of the good.

C) The substitution effect causes the demand for the good to decrease; the income effect causes the demand for the good to increase.

D) The substitution effect causes the demand for the good to increase; the income effect causes the demand for the good to decrease.

 

 

90) The substitution effect of a decrease in the price of movie tickets results in

A) an increase in the quantity demanded of movie tickets.

B) a decrease in the quantity demanded of movie tickets.

C) an increase in the demand for movie tickets.

D) a decrease in the demand for movie tickets.

 

 

91) The income effect of a decrease in the price of macaroni and cheese (assume this is an inferior good) results in

A) a decrease in the demand for macaroni and cheese.

B) an increase in the quantity demanded of macaroni and cheese.

C) a decrease in the quantity demanded of macaroni and cheese.

D) an increase in the demand for macaroni and cheese.