Chapter 6 Tutorial Consumer Choice Theory. ©2000 South-Western College Publishing. 1. As an individual consumes more of a given good, the marginal utility of that good to the consumer a. rises at an increasing rate. b. rises at a decreasing rate. c. falls. d. rises.
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©2000 South-Western College Publishing
a. rises at an increasing rate.
b. rises at a decreasing rate.
C. As a consumer consumes more and more of anything, the satisfaction received on the last unit becomes less and less with each unit.
a. incremental utility.
b. total utility.
c. diminishing utility.
d. marginal utility.
D. The word “margin” means that last unit or the last increment.
a. fall relative to the marginal utility of compact
b. rise relative to the marginal utility of compact discs.
c. rise, but not as fast as the marginal utility of compact discs falls.
d. fall, but not as fast as the marginal utility of compact discs falls.
A. As more units of food are purchased, the marginal utility diminishes, while that of compact disks remains the same.
a. the marginal utility per dollar’s worth of the two goods is the same.
b. the marginal utility is the same for each good.
c. the prices of the two goods are equal.
d. the prices of the two goods are unequal.
A. If a consumer can raise his/her marginal utility by purchasing more of a good, more units of that good will be purchased. At the point that marginal utility cannot be increased by purchasing more units of either good, the consumer will stop purchasing.
a. marginal utility of pork must equal the marginal utility of chicken.
b. price of pork must equal the price of chicken.
c. ratio of marginal cost to price must be the same in both the pork and the chicken markets.
d. ratio of marginal utility to price must be the same for pork and chicken.
D. In terms of satisfaction, the two goods become identical at the point of equilibrium.
a. consumer should consume less milk and
b. price of milk is too high relative to doughnuts.
c. consumer should consume more milk and fewer doughnuts.
d. consumer is in equilibrium.
D. At this point, the ratio of utils to price is the same.
a. price paid for the two goods is the same.
b. marginal utility of the two goods is equal.
c. ratio of marginal utility to price is the same for both goods.
d. ratio of marginal utility of cola to marginal utility of pizza is 1.
C. When the ratio of utils to price is the same for two goods, the consumer cannot increase his/her satisfaction by buying more of either.
a. marginal utility of all goods is the same.
b. marginal utility per dollar’s worth of two goods is the same.
c. price of two goods is the same.
d. marginal cost per dollar spent on two goods is the same.
B. When the marginal utility of two goods is the same, the consumer cannot increase his/her level of satisfaction by purchasing more of either good.
a. income effect.
b. substitution effect.
c. law of demand.
d. consumer equilibrium effect.
A. When prices decline the purchasing power of the consumer increases, and vice versa. Therefore, a change in prices has the same effect on the buying power of the consumer as if his/her income had changed.
Total Utility from Multiplex Tickets
Total Utility from Video Rentals
Total Utility from Popcorn
1 bag (8 utils)
2 bags (13 utils)
3 bags (15 utils)
4 bags (16 utils)
1 movie (30 utils)
2 movies (54 utils)
3 movies (72 utils)
4 movies (84 utils)
1 video (14 utils)
2 videos (24 utils)
3 videos (30 utils)
4 videos (32 utils)
a. 6 utils.
b. 8 utils.
c. 10 utils.
d. 30 utils.
A. If the total utility for 2 videos is 24 utils and the total utility for 3 videos is 30 utils, the additional utils added by the third video is 6.
a. 1 movie, 3 video, and no popcorn.
b. 1 movie, 2 videos, and 2 bags of popcorn.
c. 1 movie, 1 video, and 4 bags of popcorn.
d. 2 movies, no video, and no bags of popcorn.
B. 67 total utils are achieved with this combination, a yields 60 utils, c yields 60 utils and d yields 54 utils.