consumer choice

According to MU theory, consumers maximize satisfaction when they

• can get much more of one good than another.

• can get credit and spend beyond their income levels.

• equalize marginal utility per dollar of all goods consumed.

• are completely satisfied with all goods consumed.

A sushi roll costs $8 and gives 25 utils; sashimi costs $4 and gives 10 utils. Which item should we consumer next?

• sushi

• sashimi

• both

The principle of diminishing marginal utility can be used to explain:

• Why Todd's 2nd soda is more enjoyable than his 1st.

• Why Todd's 2nd soda is less enjoyable than his 1st.

• Why Amy's 1st soda is more enjoyable than Todd's 1st soda.

A budget constraint shows us

• the different combinations of 2 goods that we can produce with a given income.

• the different combinations of 2 goods that we can consume with a given income.

• the different combinations of 2 goods that are available for purchase.

• nothing.

When marginal utility is falling but positive, total utility will:

• Decrease at an increasing rate
• Remain constant
• Increase at an increasing rate
• Increase at a decreasing rate

Assume Pat spends all of her $ on 4 apples & 4 candy bars. Her MU of the 4th apple is 20 utils, and her MU of the 4th candy bar is 40 utils. If an apple costs $1.00 and a candy bar $0.50, to maximize utility Pat should: 

• Purchase more of both goods
• Maintain the current purchase of 4 of each
• Buy more apples and fewer candy bars
• Buy fewer apples and more candy bars

Which of the following is true if consuming one unit of a good yields 100 utils and consuming the second unit of the good increases satisfaction by 20 utils?

• The total utility of consuming two units is 120

• The marginal utility of the first unit is 20

• The marginal utility of the second unit is 120

• The marginal utility of the second unit is 80 utils

Assume that good X is a normal good. Which of the following helps to explain why a decrease in the price of good X increases the quantity demanded of good X? 

• Good X becomes relatively less expensive than its substitutes, so consumers buy more of good X and fewer of the substitutes 
• The marginal utility of consuming good X increases as more of good X is consumed
• The lower price of good X decreases the marginal utility per dollar; therefore, consumers buy more of good X
• The demand curve for good X shifts to the left 

Which of the following helps explain why the demand curve for a normal good is downward sloping? 

• The income effect moves the quantity demanded in the opposite direction of the substitution effect 
• The income effect dominates the substitution effect 
• The income and substitution effects move the quantity demanded in the same direction 
• With an increase in income, the consumer decreases consumption of the good

According to the law of diminishing marginal utility, which of the following is true? 

• The additional satisfaction received from consuming extra units of a good decreases as consumption of the good increases 
• Total satisfaction decreases as more units of a good are consumed 
• The additional satisfaction received from consuming extra units of a good decreases as consumption of the good decreases 
• When marginal utility is decreasing, total utility is decreasing