ECON 101 Quiz: ECON 101 IA State Quiz7 S2001

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turquoisegnu128

31 Jan 2019

School

Iowa State University

Department

Economics

Course

ECON 101

Professor

All

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Document Summary

Jeff spends all his income on gore-tex running suits and running shoes. The price of a gore-tex suit is twice as large as the price for a pair of running shoes. In an equilibrium for an individual consumer, a. the slope of the budget line and the slope of the indifference curve are equal. p2 p1 (cid:2) mrsq1 q2. Muq1 b. c. d. e. p1 p2 (cid:2) Muq1 both a and b a, b, and c: use the following table to answer question 4 where the data in the table gives the cost per unit for each item. Which of the following combinations of goods maximizes utility? q1 q2. The consumer has an income of . 00 and the price of both goods is. The consumer maximizes utility at point a in the diagram. Now consider a rise in the price of good 1 to. 60 q2: below is some data on use of an input and total product.

Related Questions

14. A consumer has $52 per week to spend on commodities A and B. The prices of the commodities, the quantities she now buys and her evaluation of the utility provided by these quantities are as follows Price Units Bought Total Utility Marginal Utility A $1.70 20 500 в $0.50 1000 12 14 Given this information, we can definitely say a. the consumer is currently maximizing utility given her income. b. the consumer could increase her utility by buying more of A and more of B without exceeding her budget. c. to maximize utility, the consumer must buy less of A and more of B. d. the consumer's utility will be maximized when MUB/MUA = 17/4. e. both a and d.

1. Dianna has a choice between lobster and steak for dinner. The lobster dinner costs $30, and gives her utility of 60, while the steak dinner costs $20 and gives her utility of 50. Which should Dianna choose?

Select one:

a. Dianna would be indifferent between the two choices.

b. The steak

c. The lobster

d. Dianna should have both dinners.

e. The answer cannot be determined without knowing Dianna's utility function.

2. Robert spends all his income on dancing shoes and CDs. The price of the shoes is three times the price of CDs. What should Roger do to maximize his utility?

Select one:

a. Robert should buy shoes and CDs until the total utility from shoes is three times the marginal utility from CDs.

b. Robert should buy shoes and CDs until the marginal utility from shoes is three times the marginal utility from CDs.

c. Robert should buy three times as many CDs as shoes.

d. Robert should buy equal amounts of shoes and CDs.

e. Robert should buy three times as many shoes as CDs.

3. You are currently trying to maximize your utility by buying 10 candy bars and 20 glasses of milk. The marginal utility of the 10th candy bar is 150, and the marginal utility of the 20th glass of milk is 200. You are spending all your income. The price of milk is $1 per glass, and the price of candy bars is $1.50 per bar. Are you maximizing your utility?

Select one:

a. No, the marginal utility of milk is greater than the marginal utility of candy, so you should consume more milk and less candy.

b. No, the marginal utility per dollar spent on the last unit of milk is greater than the marginal utility per dollar spent on the last unit of candy, so you should consume more milk and less candy.

c. No, the price of milk is less than the price of candy, so you should consume more milk and less candy.

d. Yes, and thus you should not change your choice.

e. No, the marginal utility per dollar spent on the last unit of candy is greater than the marginal utility per dollar spent on the last unit of milk, so you should consume more candy and less milk.

amaranthelk680

1. Economists use ____________ as a measure of the relative level of satisfaction when someone consumes a good or service.

2. Sue likes brownies. However, Sue notices that the more brownies she eats the less satisfaction she receives from each extra brownie. We can say that Sue is experiencing ___________________ from each extra brownie.

sugar sickness

total utility

diminishing marginal utility

increasing marginal utility

3. When total utility is maximized, the marginal utility will be

4. Consider Dirk and Lee. They are both eating pizza. Which of the following statements is true regarding their satisfaction and utility?

Dirk and Lee both receive 10 utils from eating pizza.

Dirk and Lee both receive the same level of satisfaction from eating pizza.

Dirk gets more twice as much satisfaction as Lee from eating pizza.

It is difficult to determine because the utility is subjective.

5. For many products, the total utility curve is

strictly increasing because of increasing marginal utility.

strictly decreasing because of diminishing marginal utility.

increasing initially because of increasing marginal utility, but eventually decreases.

increasing initially at a decreasing rate because of diminishing marginal utility but eventually decreases.

6. When consumers get the biggest bang for the buck, we say they

used the loudest gun in hunting season.

reached a consumer optimum.

minimized consumer satisfaction.

maximized marginal utility.

7. By choosing to consume at the consumer optimum, consumers will

maximize their total utility.

minimize their total utility.

maximize the amount they spend on each good.

minimize the amount they spend on each good.

8. A consumer is in equilibrium when consuming two goods when which of the following holds?

MU_a/ P_a = MU_b/ P_b

MU_a/ P_h =MU_b/ P_a

P_a/ MU_a = P_b/ MU_b

MU_a x P_a = MU_bxP_b

9. If the marginal utility of good 1 is 15 and its price is $3, and the marginal utility of good 2 is 12, and its price is $4, then the consumer

has achieved a consumer optimum.

should increase his or her consumption of good 1.

should increase his or her consumption of good 2.

should decrease his or her consumption of good 1.

10.Suppose the price of an iPod decrease and the price of HD TVs remains the same; what noticeable effect(s) occur(s)?

the substitution effect only

the real-income effect only

the substitution effect and real-income effect, if there is a noticeable change in purchasing power

the substitution effect and real-income effect, if there isnât a noticeable change in purchasing power

11. The ______________ paradox was described by Adam Smith in 1776.

12. What is the key to solving the diamond-water paradox?

more water and fewer diamonds

marginal utility

total utility

consumer demand

13. When solving the diamond-water paradox we notice that the marginal utility of

diamonds are equal to the marginal utility of water.

diamonds are greater than the marginal utility of water.

diamonds are less than the marginal utility of water.

water is equal to its price, and therefore lower than the marginal utility of diamonds.

14. The consumer surplus for water is

greater than that for diamonds because water is nonessential.

greater than that for diamonds because water is essential.

less than that for diamonds because water is nonessential.

less than that for diamonds because water is essential.

15. Suppose a consumer consumes only diamonds and water, and the price of diamonds increases. All else being equal, a consumerâs marginal utility for diamonds

decreases and the marginal utility for water stays the same.

increases and the marginal utility for water decreases.

decreases and the marginal utility for water increases.

increases and the marginal utility for water stays the same.

tansnake161

ECON 101 Quiz: ECON 101 IA State Quiz7 S2001

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