Consumer behavior

University of Belize FMSS Belize City ECON 222- Principles of Microeconomics Quiz #8

1. Total utility is defined as (a) the change in marginal utility a person derives from the consumption of a good (b) the change in total utility a person derives from the consumption of a good divided by the price that good (c) the change in total utility a person derives from the consumption of a good divided by the change in the consumption of that good (d) the sum of the amounts of satisfaction a person receives from consuming a good (e) the change in total utility a person derives from the consumption of a good divided by the value in exchange for that good

2. Suppose Alice receives 123 utils from consuming one hamburger and 50 utils from consuming a second hamburger. What is the marginal utility of the second hamburger? (a) 173 utils (b) 73 utils (c) 50 utils (d) 0 utils (e) None of the above

3. We would expect that the total utility of water to be high but its marginal utility to be low. Why? (a) because water I a fluid and we don’t need fluids to live as much as we need food (b) because we need water to live and there is so much of it (c) because we need water to live and there is very little of it (d) because water’s price is love (e) none of the above

4. Suppose the marginal utility (MU) of paperback books is 40 utils and each each cost $4 while the MU of video movies is 50 utils and each rents for $4. if you consume one movie and one book per week, are you attaining consumer equilibrium? (a) Yes, so there is no need to change (b) No. You need to buy more books and rent fewer videos (c) No. You need to rent more videos and buy fewer books (d) There is not enough information to answer the question

5. A product’s utility to a buyer is measured by

a. its usefulness b. its price c. how much the buyer is willing to pay for it d. none of the above

6. Marginal utility is most accurately defined as

a. total utility divided by the amount of a good consumed b. what a consumer would pay for one more unit of a good c. the change in satisfaction due to a change in the amount of a good consumed d. a good that gives no more satisfaction if more is consumed

7. If a commodity gives less additional satisfaction for each additional unit consumed, that commodity

a. will not be purchased whatever the price b. displays diminishing marginal utility c. has zero marginal utility d. will only be consumed if provided free of charge

8. In maximizing utility, a household will allocate its budget among commodities

a. so that there is an equal amount of income allocated to each commodity b. so that the utility of the last dollar spent on each commodity is equal c. so that the marginal utility of each commodity is the same d. so that the marginal utility of each dollar spent is zero

9. Given an initial equilibrium position for a household, a decline in the price of one good, X, given constant income and constant prices of other commodities

a. requires a decrease in purchases of X to maintain equilibrium b. implies that the marginal utility of X must fall to ensure equilibrium c. results in an increase in the quantity demanded of all commodities except X d. implies that the marginal utility of commodities other than X will be less at the new equilibrium

10. PRICE QUANTITY MU

Good A 10¢ 6  ? Good B 25¢ 10 100

If the consumer is maximizing his utility from the consumption of good A & B, the marginal utility of good A is:

a. 10 b. 25 c. 40 d. 6 e. 60

11. In the consumption of which of the following goods does the consumer NOT experience diminishing marginal utility?

# of Units Good A Good B Good C 0 0 0 0 1 10 20 20 2 18 40 38 3 24 60 54 4 28 80 68

a. good A only b. good B only c. good C only d. goods A & B only e. goods A & C only

END OF QUIZ. GOOD LUCK!!!!!!!!