As long as scarcity exists,
a. product prices play no role in utility maximization
b. income plays no role in utility maximization
c. income and product prices must both be considered in utility maximization
d. consumers maximize utility by consuming all products until their marginal utility is zero
e. product prices will be zero
QUESTION 2Suppose Enid could increase her total utility by purchasing one more book and one less video rental. Which of the following is true?
a. The marginal utility of video rentals exceeds the marginal utility of books.
b. The marginal utility of books exceeds the marginal utility of video rentals.
c. The marginal utility of video rentals is negative.
d. The marginal utility per dollar spent on books exceeds that of video rentals.
e. Total utility is at a maximum.
QUESTION 3If the marginal utility of each good a consumer buys does not diminish but remains constant, we should see consumers
a. buying no goods at all
b. spending all of their income on the good with the highest marginal utility
c. buying one unit of each good
d. buying only the least expensive good
e. leaving the store in total confusion
QUESTION 4If Dalene's marginal benefit from consuming another cookie is greater than the price of the cookie, then
a. Dalene will not purchase any more cookies
b. the opportunity cost of the cookie is lower than the price
c. Dalene's utility will decrease if she purchases the cookie
d. Dalene will increase her total satisfaction by purchasing the additional cookie
e. she has purchased too many cookies
QUESTION 5Suppose you go to a wedding reception that has free drinks. What is likely to be the marginal utility of the last drink you had?
a. infinite
b. 0
c. 1
d. less than 0
e. greater than 1
QUESTION 6If the price of a good is 0, a consumer will
a. consume all units that have positive total utility
b. consume an infinite quantity
c. consume all units with positive marginal utility
d. consume the entire amount supplied
e. consume until total utility becomes 0
QUESTION 7A consumer maximizes utility when the marginal utilities of all goods
a. having positive money prices that are equal to zero
b. are equal
c. are maximized
d. are equal to the opportunity costs for all goods that are considered necessities
e. are exactly proportional to their market prices
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