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Frank is purchasing products C and D in utility-maximizing amounts. If the price of C is $4 and the price of D is $2, then


A) the marginal utility of D is twice that of C.
B) the marginal utility of D is the same as that of C.
C) the marginal utility of C is twice that of D.
D) the relationship between the marginal utility of C and D cannot be determined.

E) B) and D)
F) B) and C)

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Frank is purchasing products C and D in utility-maximizing amounts. If the price of C is $6 and the price of D is $3, then


A) the marginal utility of D is twice that of C.
B) the marginal utility of D is the same as that of C.
C) the marginal utility of C is twice that of D.
D) the relationship between the marginal utility of C and D cannot be determined.

E) None of the above
F) A) and B)

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Refer to the diagram. The equilibrium points shown in the diagram, along with the price change that produced the shift of the budget line from ab to ac, A) are consistent with a downsloping demand curve for product K. B) imply that the consumer's money income has declined, but his or her real income has increased. C) imply consumer irrationality since the dearer product is being substituted for the cheaper product. D) suggest that K is an inferior good. Refer to the diagram. The equilibrium points shown in the diagram, along with the price change that produced the shift of the budget line from ab to ac,


A) are consistent with a downsloping demand curve for product K.
B) imply that the consumer's money income has declined, but his or her real income has increased.
C) imply consumer irrationality since the dearer product is being substituted for the cheaper product.
D) suggest that K is an inferior good.

E) A) and B)
F) A) and C)

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In spending all his income on beer and pizza, Fred finds that the marginal utility of the last pizza he consumed is 8, and the marginal utility of the last bottle of beer is 4. The price of a bottle of beer is $1.50. If Fred has maximized his utility, the price of pizza must be


A) $0.75.
B) $1.00.
C) $3.00.
D) $4.50.

E) B) and C)
F) A) and C)

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Refer to the diagram. Marginal utility A) increases at an increasing rate. B) becomes negative after consuming 4 units of output. C) is found by dividing total utility by the number of units purchased. D) cannot be calculated from the total utility information. Refer to the diagram. Marginal utility


A) increases at an increasing rate.
B) becomes negative after consuming 4 units of output.
C) is found by dividing total utility by the number of units purchased.
D) cannot be calculated from the total utility information.

E) A) and B)
F) A) and C)

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Answer the question based on the table below showing the marginal utility schedules for product X and product Y for a hypothetical consumer. The price of product X is $4, and the price of product Y is $2. The income of the consumer is $20. Answer the question based on the table below showing the marginal utility schedules for product X and product Y for a hypothetical consumer. The price of product X is $4, and the price of product Y is $2. The income of the consumer is $20. If the consumer buys product X or product Y one unit at a time, which of the following will the consumer's first two purchases be? A) a first unit of X followed by a first unit of Y B) a first unit of X followed by a second unit of X C) a first unit of Y followed by a first unit of X D) a first unit of Y followed by a second unit of Y If the consumer buys product X or product Y one unit at a time, which of the following will the consumer's first two purchases be?


A) a first unit of X followed by a first unit of Y
B) a first unit of X followed by a second unit of X
C) a first unit of Y followed by a first unit of X
D) a first unit of Y followed by a second unit of Y

E) C) and D)
F) B) and D)

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Refer to the table and graph. Suppose that the price of X falls from $2 to $1, while the price of Y remains at $4. Which of the following represents the demand curve for X if the consumer has money income of $10 to spend on X and Y? A) D₁ B) D₂ C) D₃ D) D₄ Refer to the table and graph. Suppose that the price of X falls from $2 to $1, while the price of Y remains at $4. Which of the following represents the demand curve for X if the consumer has money income of $10 to spend on X and Y? A) D₁ B) D₂ C) D₃ D) D₄ Refer to the table and graph. Suppose that the price of X falls from $2 to $1, while the price of Y remains at $4. Which of the following represents the demand curve for X if the consumer has money income of $10 to spend on X and Y?


A) D₁
B) D₂
C) D₃
D) D₄

E) A) and B)
F) C) and D)

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Why are indifference curves downsloping?

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An indifference curve slopes downward be...

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If a consumer is initially in equilibrium, an increase in money income will


A) move the consumer to a new equilibrium on a lower indifference curve.
B) move the consumer to a new equilibrium on a higher indifference curve.
C) make the slope of the consumer's indifference curves steeper.
D) have no effect on the equilibrium position.

E) A) and B)
F) A) and C)

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How did Apple overcome consumers' diminishing marginal utility for iPads?


A) Apple lowered the price of iPads so that previous buyers would purchase another unit.
B) Apple introduced new features to entice previous buyers to purchase new models.
C) Apple ignored the problem and focused solely on attracting new buyers.
D) Apple was unable to overcome the problem and has faced steadily declining sales.

E) B) and D)
F) B) and C)

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Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer would get from successive quantities of products J and K. Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer would get from successive quantities of products J and K. What level of total utility is realized from the equilibrium combination of J and K, if the consumer has a money income of $26 and the prices of J and K are $8 and $2, respectively? A) 190 utils B) 168 utils C) 220 utils D) 60 utils What level of total utility is realized from the equilibrium combination of J and K, if the consumer has a money income of $26 and the prices of J and K are $8 and $2, respectively?


A) 190 utils
B) 168 utils
C) 220 utils
D) 60 utils

E) A) and D)
F) All of the above

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Use marginal-utility analysis to explain the growing popularity of iPads and other tablets over laptops and desktop computers.

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Apple's introduction of the iPad disrupt...

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A budget line shows the


A) alternative combinations of two goods that a consumer can purchase with a given money income.
B) alternative combinations of two goods that will yield the same level of total utility to a consumer.
C) quantities of a particular good that a consumer will buy at various prices.
D) ratio of money income to product price.

E) A) and B)
F) A) and C)

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If the total utility from consuming five units of a product is 245 and the marginal utility of a sixth unit is 5, then the total utility from consuming six units would be


A) 240.
B) 250.
C) 49.
D) 1,225.

E) C) and D)
F) B) and D)

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The table shows an indifference schedule for several combinations of X and Y. The table shows an indifference schedule for several combinations of X and Y. In moving from combination a to b, the consumer A) gets 8 units of X for 2 units of Y. B) gets 1 unit of X for 4 units of Y. C) gives up 4 units of X for 2 units of Y. D) gives up 4 units of X for 1 unit of Y. In moving from combination a to b, the consumer


A) gets 8 units of X for 2 units of Y.
B) gets 1 unit of X for 4 units of Y.
C) gives up 4 units of X for 2 units of Y.
D) gives up 4 units of X for 1 unit of Y.

E) A) and B)
F) A) and C)

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A graph that shows the maximum combinations of two goods which a consumer can purchase with a given money income is


A) the production possibilities curve.
B) an indifference curve.
C) a demand curve.
D) a budget line.

E) C) and D)
F) B) and D)

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Most people do not steal, because


A) stolen goods are subject to the law of diminishing marginal utility.
B) the marginal utilities of stolen goods are negative.
C) their marginal costs, including guilt costs, are too high.
D) stolen goods can only be sold at deep discounts.

E) B) and D)
F) A) and D)

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Refer to the data. The value for Z is A) −5. B) +5. C) −10. D) zero. Refer to the data. The value for Z is


A) −5.
B) +5.
C) −10.
D) zero.

E) A) and B)
F) B) and D)

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Assume the price of product Y (the quantity of which is plotted on the vertical axis) is initially $15 and the price of X (the quantity of which is plotted on the horizontal axis) is initially $3. Assume money income is initially $60. If the prices of Y and X now increase to $30 and $6, respectively, and money income increases to $120, then the budget line will


A) shift rightward and become steeper.
B) shift rightward and become flatter.
C) shift rightward, but its slope will not change.
D) be unchanged.

E) A) and C)
F) All of the above

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Refer to the diagram. Total utility A) increases so long as additional units of Y are purchased. B) becomes negative at 4 units. C) increases at a diminishing rate, reaches a maximum, and then declines. D) is maximized at 2 units. Refer to the diagram. Total utility


A) increases so long as additional units of Y are purchased.
B) becomes negative at 4 units.
C) increases at a diminishing rate, reaches a maximum, and then declines.
D) is maximized at 2 units.

E) All of the above
F) A) and C)

Correct Answer

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