BUSINESS

1

FINAL: MICROECONOMICS

Dr. T. O. Soro

FIRST AND LAST NAME:

1) Suppose that Homer derives 45 utils of total utility from eating 4 donuts and 55 utils of total utility

from eating 5 donuts. What is Homer’s marginal utility from eating the 5th donut?

A) 10

B) 45

C) 55

D) 100

2) Marginal utility is measured as

A) utility per unit of production.

B) extra output divided by extra utility.

C) output of a good or service divided by price.

D) extra utility from each additional good consumed.

3) If total utility is decreasing, then marginal utility is

A) negative.

B) positive.

C) zero.

D) increasing.

4) The total utility from consuming 8 units of a good is 155. The marginal utility of the 8th unit is 7 and

the marginal utility of the 7th unit is 11. The total utility from consuming 6 units of the good is

A) 173.

B) 144.

C) 137.

D) 130.

5) A well-known athlete loves cupcakes. He receives 200 utils for the first cupcake, an additional 160

for the second, an additional 120 for the third, another 80 for the fourth, and another 40 for the fifth.

The marginal utility of the fourth cupcake is ________ and the total utility of consuming four cupcakes

is ________.

A) 40; 80

B) 80; 600

C) 80; 560

D) 40; 402

6) Using the above table, what is the total utility of the third piece of pizza?

A) 75 utils

B) 0 utils

C) 25 utils

D) -25 utils

7) For good A and good B, the consumer maximizes personal satisfaction when

A) MUA/PA = PB/MUB.

B) PA/MUA = PB/MUB.

C) MUA/PA = MUB/PB.

D) MUA/MUB = PA/PB.

8) The price of good “a” is $5 and the price of good “b” is $15. If the marginal utility of good “a” is 20

then the marginal utility of good “b” must be ________ to have an optimum combination of goods

purchased.

A) 4

B) 20

C) 60

D) 80

9) When the marginal utility per dollar of good x exceeds the marginal utility per dollar of good y,

A) the consumer should consume more of good x.

B) the consumer is consuming too much of good x.

C) good y must have a negative marginal utility.

D) the consumer is in an optimal situation if the price of good x exceeds the price of good y.

10) If a consumer is initially at an optimum, and then the price of Y falls, then

A) MUX/ PX < MUY / PY.

B) MUX / PX > MUY / PY.

C) MUX / PX = MUY / PY.

D) MUX / MUY > PY / PX.

11) An indifference curve provides the set of consumption alternatives that

A) yield the same total amount of satisfaction.

B) maximize the utility of the consumer.

C) can be purchased for the same amount of money.

D) yield the same marginal utility for the last unit consumed of each good.

12) A curve where every combination of the two goods being considered yields the same level of

satisfaction is known as

A) a marginal utility curve.

B) a total utility curve.

C) an indifference curve.

D) a budget constraint.3

13) In a map showing three indifference curves a consumer is most well off on

A) the curve which is closest to the origin of the coordinate axes.

B) the curve which is most farther away from the coordinate axes.

C) The curve that is in the middle.

D) none of the above

14) An indifference map shows

A) that money income is constant, but product prices may change.

B) that utility is at a maximum at the origin.

C) that curves closer to the origin represent higher levels of utility.

D) that curves further from the origin represent higher levels of utility.

15) Refer to the above figure. Which point represents the highest level of utility?

A) Point A

B) Point B

C) Point C

D) Point D

16) Refer to the above figure. Which point(s) represents the lowest level of utility?

A) Points A & C

B) Point B

C) Point C only

D) Point D

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