31) The price of a magazine is $2, the price of a paperback book is $5, and the consumer has $33. According to the above table, the rational consumer will purchase
A) 1 magazine and 2 books.
B) 2 magazines and 3 books.
C) 4 magazines and 5 books.
D) 5 magazines and 6 books.
32) Refer to the above table. If a consumer’s optimum consists of 3 magazines and 6 books, then
A) the price of a magazine is six times more than the price of a book.
B) the price of a magazine is three times more than the price of a book.
C) the price of a book is more than five times more than the price of a magazine.
D) the price of a book is six times more than the price of a magazine.
33) According to utility theory, consumer purchase decisions are made such that
A) the value of the ratio of marginal utility to price for the last units purchased and consumed is equal.
B) the difference between the value of the marginal utility of the last unit purchased and the price paid is maximized.
C) the total utility of the last unit purchased is equal to the price of that unit.
D) the total utility from consuming the good is less than the marginal utility of the last unit consumed.
34) Consumers usually buy fewer units of a good than the quantity that would maximize total utility from consuming the good because
A) they are not rational.
B) of the law of demand.
C) they have limited incomes.
D) marginal utility becomes zero after just a few units of the good.
35) The consumer optimum is defined as
A) the set of goods and services that maximizes marginal utility for each good.
B) the set of goods and services such that the marginal utility of each good equals zero.
C) the set of goods and services that maximizes the marginal utility of each good consumed.
D) the set of goods and services, subject to the limited income of the consumer, that maximizes the total utility of the consumer.
36) The set of goods and services that maximizes the level of satisfaction for each consumer subject to limited income is
A) the consumer optimum.
B) diminishing marginal utility.
C) increasing marginal utility.
D) substitution effect.
37) A consumer’s optimum is found when
A) the marginal utility of the last dollar spent equals zero for each good.
B) the marginal utility of each good is increasing and the total income is spent.
C) the total utility of each good is the same and the total income is spent.
D) the marginal utility of the last dollar spent on each good is the same and all income is spent.
38) A consumer’s optimum is found when
A) prices of goods go down.
B) the consumer is achieving the maximum level of utility given market prices and their limited income.
C) the marginal utility of the last dollar spent equals 0 for every good.
D) the consumer saves part of their income.
39) A consumer has spent all of his income on hamburgers and movies. The price of a hamburger is $1 and the price of a movie is $6. The marginal utility of the last hamburger is 5 and the marginal utility of the last movie is 24. The consumer has
A) maximized utility.
B) not maximized utility. He should cut back on movies and buy more hamburgers.
C) not maximized utility. He should cut back on hamburgers and buy more movies.
D) not maximized utility. He should cut back consumption of each good.
40) The price of a hamburger is $1, and the price of a movie is $6. The consumer has purchased 2 hamburgers and 2 movies, and her marginal utility from the second hamburger is 20 and from the second movie is 120. The consumer has an income of $21. This combination of goods
A) maximizes utility and is an optimum because the marginal utility of the last dollar spent on each good is the same.
B) maximizes utility because the marginal utility of the last dollar spent on each good is the same, but it is not an equilibrium because marginal utility is not zero.
C) is not an optimum because the consumer has not spent all of her money.
D) is not an optimum because the marginal utility of the last dollar spent on each good is not the same.
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