Question : Table 7-1 Quantity of Pita Wraps Total Utility Quantity of Bubble Tea : 1267111

 

Table 7-1

 

Quantity of Pita Wraps

Total Utility

Quantity of Bubble Tea

Total Utility

1

  60

1

  40

2

102

2

  70

3

132

3

  91

4

144

4

106

5

144

5

112

6

138

6

115

7

128

7

115

 

Keegan has $30 to spend on Pita Wraps and Bubble Tea.  The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3.  Table 7-1 shows his total utility from different quantities of the two items.

 

21) Refer to Table 7-1. What is Keegan’s optimal consumption bundle?

A) 3 pita wraps and 3 bubble teas

B) 3 pita wraps and 4 bubble teas

C) 4 pita wraps and 2 bubble teas

D) 5 pita wraps and 0 bubble teas

22) Refer to Table 7-1.  If Keegan can drink all the bubble tea he wants for free, how many glasses will he consume?

A) 4 glasses

B) 5 glasses

C) 6 glasses

D) 7 glasses

23) 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.

24) Suppose Joe is maximizing total utility within his budget constraint.  If the price of the last pair of jeans purchased is $25 and it yields 100 units of extra satisfaction and the price of the last shirt purchased is $20, then, using the rule of equal marginal utility per dollar spent, the extra satisfaction received from the last shirt must be

A) 2,000 units of utility.

B) 500 units of utility.

C) 100 units of utility.

D) 80 units of utility.

25) Avner is maximizing total utility by buying sports magazines and protein supplements. For him to buy more sports magazines,

A) the price of protein supplements. has to fall.

B) the price of sports magazines has to fall.

C) the price of sports magazines has to rise.

D) Since Avner is maximizing his utility, nothing can change the consumption of sports magazines.

26) Most people would prefer to drive a luxury car that has all the options, but more people buy less expensive cars even though they could afford the luxury car because 

A) car buyers are irrational.

B) the total utility of less expensive cars is greater than that of luxury cars.

C) the marginal utility per dollar spent on the less expensive car is higher than that spent on luxury cars.

D) luxury cars cost a lot more than non-luxury cars.

27) If Valerie purchases ankle socks at $5 and gets 25 units of marginal utility from the last unit, and bandanas at $3 and gets 12 units of marginal utility from the last bandana purchased, she

A) is maximizing total utility and does not want to change their consumption of ankle socks or bandanas.

B) wants to consume more ankle socks and fewer bandanas.

C) wants to consume more of bandanas and fewer ankle socks.

D) wants to consume less of both ankle sock and bandanas. 

28) If Marlowe obtains 9 units of utility per dollar spent on apples and 6 units of utility per dollar spent on oranges, then Marlowe

A) is maximizing total utility.

B) should buy more apples and fewer oranges.

C) should buy more oranges and fewer apples.

D) should buy fewer oranges and fewer apples.

29) If Callum is consuming his utility maximizing bundle and the price of one good rises, what happens to the marginal utility per dollar spent on this good (MU/P), and what should Callum do?

A) MU/P has increased and Callum should buy more of this good.

B) MU/P has increased and Callum should buy less of this good.

C) MU/P has decreased and Callum should buy more of this good.

D) MU/P has decreased and Callum should buy less of this good.

30) If Ewan is consuming his utility maximizing bundle and the price of one good falls, what happens to the marginal utility per dollar spent on this good (MU/P), and what should Ewan do?

A) MU/P has increased and Ewan should buy more of this good.

B) MU/P has increased and Ewan should buy less of this good.

C) MU/P has decreased and Ewan should buy more of this good.

D) MU/P has decreased and Ewan should buy less of this good.