Suppose that Fernando allocates his lunch money to pizza and Coke. A Coke costs 1 and a slice of ...

Suppose that Fernando allocates his lunch money to pizza and Coke. A Coke costs 1 and a slice of pizza costs 1.50 . The marginal utility of the last slice of pizza Fernando ate today was 30, and the marginal utility of his last Coke was 25 . Fernando spent all of his lunch money. From this information, we can conclude that:
 a. Fernando allocated his money in a way that maximized his total utility.
  b. Fernando's total utility would have been higher if he had purchased more Coke and less pizza.
  c. Fernando's total utility would have been higher if he had purchased more pizza and less Coke.
  d. Fernando could have increased his total utility by purchasing more Coke but the same quantity of pizza.
  e. Fernando could have increased his total utility by purchasing more pizza but the same quantity of Coke.

QUESTION 2

The profit-maximizing output level for a monopolist is where the:
 a. price is maximized.
  b. output sold is maximized.
  c. ATC curve is minimized.
  d. maximum efficiency is achieved.
  e. MR = MC.

QUESTION 3

Carla is spending all her income on only two goods: apples and bananas. The price of an apple is 2 and the price of a banana is 1 . If Carla's marginal utility of an apple is 4 and her marginal utility of a banana is 3, she should consume:
 a. more apples and fewer bananas to maximize total utility.
  b. more bananas and fewer apples to maximize total utility.
  c. more apples and more bananas to maximize total utility.
  d. fewer apples and fewer bananas to maximize total utility.
  e. her current amounts of apples and bananas to maximize total utility.

QUESTION 4

A monopoly firm can sell its fourth unit of output for a price of 250 . In order to sell more than five units, it must expect to receive a price:
 a. equal to 250.
  b. greater than 250.
  c. less than 250.
  d. equal to 340.
  e. the price is impossible to calculate with the information given.

QUESTION 5

If I buy 3 cups of coffee, paying 1 for each cup, and I would have been willing to pay up to 3 for the first cup, up to 2 for the second cup, and up to 1 for the third cup, then my consumer surplus is:
 a. 6.
  b. 5.
  c. 3.
  d. 2.
  e. 1.

QUESTION 6

If marginal costs increase, a monopolist will:
 a. decrease price and increase output.
  b. decrease both price and output.
  c. increase price and decrease output.
  d. increase both price and output.
  e. keep both price and output at the same level.

QUESTION 7

If Allison's marginal utility of her 100th dollar of income is greater than Brad's marginal utility of his 10th dollar, then we can conclude:
 a. money means more to Allison.
  b. money means more to Brad.
  c. Brad is richer than Allison.
  d. Allison is richer than Brad.
  e. nothing, since we can't make interpersonal utility comparisons.

QUESTION 8

A monopolist earning economic profit in the short run determines that at its present level of output, marginal revenue is 23 and marginal cost is 30 . Which of the following should the firm do to increase profit?
 a. Raise price and lower output.
  b. Lower price and lower output.
  c. Raise price and raise output.
  d. Lower price and raise output.
  e. Lower output, but leave price unchanged.

QUESTION 9

Greg spends his entire budget on two goods: he plays video games at the mall arcade and he buys pizza. He discovers that his MU/P of video games is lower than his MU/P of pizza. From this, we know that he would be:
 a. happier eating less pizza and playing fewer video games.
  b. happier eating less pizza and playing more video games.
  c. happier eating more pizza and playing fewer video games.
  d. indifferent to which selection he makes.
  e. as happy as possible, since he is already maximizing total utility.