Econ 101 - Microeconomics » Summer 2021 » iVAT Chapter 19

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Question #1
One of the main determinants of prices is:
A.   Utility or the satisfaction that one receives from consuming a good/service.
B.   Investment, which in the long-run determines the overall price level.
C.   Consumption expenditures, which drives prices.
D.   Utility or the usefulness that one derives from consuming a good/service.
Question #2
Marginal utility is the:
A.   Minimum satisfaction one gets from consumption
B.   Total satisfaction one gets from one's consumption of a product
C.   Satisfaction one gets from the consumption of an additional unit of a product times its price
D.     
E.   Maximum satisfaction one gets from consumption
F.   Additional satisfaction one gets from the consumption of another unit of a product.
Question #3
After eating your twelfth pizza you begin to feel pain in your stomach. This is an example of:
A.   Positive marginal utility
B.   Total utility
C.   All of the available answers
D.   Disequilibrium
E.   Negative marginal utility
Question #4
If eating the first burrito gives you 10 units of utility and eating the second burrito gives you 5 additional units of utility, then the:
A.   Total utility of the two burritos is 10.
B.   Marginal utility of the first burrito is 15
C.   Total utility of two burritos is 15
D.   Marginal utility of the second burrito is 15
Question #5
Suppose that the total utility curve becomes steeper along the upward sloping portion of the total utility curve. This means that:
A.   Marginal utility is increasing.
B.   Total Utility is decreasing.
C.   Marginal utility has turned negative.
D.   Marginal utility is decreasing.
Question #6
If the marginal utility line is above the horizontal axis, this means that:
A.   Total utility is decreasing.
B.   Marginal utility is positive.
C.   Total utility is increasing and at an increasing rate.
D.   Marginal utility is negative.
Question #7
Economists make the assumption that consumers will choose to purchase and consume the good or service that:
A.   Gives them the greatest additional satisfaction.
B.   Costs the least, but is still high quality.
C.   Is of the highest quality.
D.   Gives them the greatest additional satisfaction per dollar spent.
E.   Costs the least.
Question #8
The principle of rational choice makes the assumption that individuals:
A.   Consume until marginal utility begins to fall.
B.   Maximize total utility.
C.   Maximize consumption.
D.   Maximize disutility.
E.   Maximize marginal utility.
Question #9
Assuming diminishing marginal utility, if the marginal utility per dollar of Red Bull is greater than the marginal utility per dollar of coffee, you can increase total utility without spending more money by:
A.   Switching to water because it is healthier for you.
B.   Not changing the combination of Red Bulls and coffees consumed.
C.   Consuming more cups of coffee and fewer Red Bulls.
D.   Consuming more Red Bulls and fewer coffees.
E.   Consuming less of both goods.
Question #10
Use the following information to answer the following question: MU(Surfing): 1,000 P(Surfing): $5 MU(Snowboarding): 10,000 P(Snowboarding): $400 Question: Which activity should this individual choose?
A.   Neither.
B.   Snowboarding.
C.   Surfing.
D.   The individual is indifferent.
Question #11
A consumer is following the utility-maximizing rule if:
A.   Her total utility for each good is identical to its price.
B.   Her total utility per dollar spent is the same for all goods.
C.   Her marginal utility per dollar spent is the same for all goods.
D.   The marginal utility is the same for each item purchased.
E.     
F.   Her total marginal utility for each good is identical to its price.
Question #12
Suppose an individual's consumption of Red Bull and coffee is in equilibrium: MUREDBULLPREDBULL=MUCOFFEEPCOFFEEMUREDBULLPREDBULL=MUCOFFEEPCOFFEE Now Suppose that the price of coffee of declines. Which of the following could bring the consumption back to an equilibrium point based on the tenets of utility maximization?
A.   An increase in the consumption of coffee will reduce the marginal utility of coffee, which will equate the two marginal utility to price ratios.
B.   A decrease in the consumption of coffee will increase the marginal utility of coffee, which will equate the two marginal utility to price ratios.
C.   An increase in the consumption of Red Bull will increase the marginal utility of Red Bull, which will equate the two marginal utility to price ratios.
D.   An increase in the consumption of Red Bull will decrease the marginal utility of Red Bull, which will equate the two marginal utility to price ratios.
Question #13
The income effect occurs due to the fact that:
A.   As the price of a good varies, an individual's real income changes, or the amount of that good that they can purchase with their budget varies.
B.   As the price of a good declines, an individual's real income declines, or the amount of that good that they can purchase with their budget declines.
C.   None of the available answers.
D.   As the price of a good increases, individual's real incomes increase, or the amount of goods that they can purchase with their budget increases.
Question #14
Theoretically, you can isolate the substitution effect by:
A.   Compensating people with money as the price of a good decreases.
B.   Reducing people's substitution constraint.
C.   Substituting money with consumption.
D.   Compensating people with money as the price of a good increases.
Question #15
Utilize the following information to answer the following question: MUBURGERPBURGER> MUHOTDOGPHOTDOGMUBURGERPBURGER>MUHOTDOGPHOTDOG Question: Which good has the lower opportunity cost if consumed? Why does it have the lowest opportunity cost?
A.   Consuming a burger has the lowest opportunity cost because if you consume a burger you are foregoing the consumption of a hot dog, which has a lower marginal utility per dollar compared to a burger.
B.   Consuming a burger has the lowest opportunity cost because if you consume a burger you are foregoing the consumption of a hot dog, which has a higher marginal utility per dollar compared to a burger.
C.   Consuming a hot dog has the lowest opportunity cost because if you consume a hot dog you are foregoing the consumption of a burger, which has a higher marginal utility per dollar compared to a hot dog.
D.   Consuming a burger has the lowest opportunity cost because you are foregoing the least in terms of dollars spent on consumption.
Question #16
Conspicuous consumption can create extrinsic utility:
A.   Due to the fact that extrinsic utility can create innate pleasure, which is innately stronger than intrinsic utility.
B.   Due to the fact that individuals derive innate pleasure from consuming a good.
C.   Due to the fact that individuals derive pleasure from consuming services.
D.   Due to the fact that individuals derive pleasure from having other people know or view what they are consuming.

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