【正文】 e demand for hot coffee? A) The price of coffee. B) The price of tea. C) Consumer ines. D) The weather. E) All the above affect the demand for coffee. Ans: A3. The paradox of value notes that: A) there is no rational explanation why people should set a high value on objects such as diamonds, which have little real usefulness. B) the price obtained from selling any modity may bear little relationship to the cost of producing it. C) supply and demand curves do very little to explain how value (or price) is determined. D) no one consumer has any control over the price (or value) of a modity, but consumers collectively do have such control. E) there is no consistent relationship between the total utility obtained from any modity and the price charged for it. Ans: E4. To be in equilibrium (., to maximize satisfaction), the consumer must: A) purchase no inferior goods. B) equalize the marginal utilities of the last unit purchased of every modity. C) be sure that the prices of all modities purchased are proportional to their total utilities. D) be sure that the price of each good is equal to the marginal utility of money. E) allocate ine so that the last penny spent on any good generates the same increment of utility as the last penny spent on any other good. Ans: E5. If I get 10 units of total utility (TU) from 2 oranges, 14 of TU from 3 oranges, and 17 of TU from 4 oranges, I obey the law of diminishing marginal utility because: A) MU falls as consumption increases. B) TU increases as consumption increases. C) TU MU. D) MU TU. E) MU = TU. Ans: A6. For a normal good, the substitution effect of a price increase: A) pushes the quantity demanded down along with the ine effect. B) pushes the quantity demanded down enough that the ine effect cannot push demand higher. C) pushes the quantity demanded up, but not enough to dominate an ine effect that ultimately pushes demand down. D) has an effect on the quantity demanded that is identical to the ine effect. E) pushes the quantity demanded up along with the ine effect. Ans: A7. Table 51 Total Utility Units 1 2 3 4 5 Good X 120 216 288 336 360 Good Y 90 160 220 270 305Refer to Table 51. If good X costs $6 per unit and good Y costs $5 per unit, at what quantities of X and Y is utility maximized if the budget is $31? A) X = 2, Y = 3 B) X = 4, Y = 5 C) X = 3, Y = 4 D) X = 3, Y = 3 E) None of the above Ans: D8. Refer to Table 51. Suppose now X costs $8 per unit and Y costs $5 per unit. For what amounts of X and Y are (marginal utility)/price equal? A) X = 3, Y = 4 B) X = 4, Y = 5 C) X = 2, Y = 3 D) X = 1, Y = 2 E) None of the above Ans: C9. Refer to Figure 56. What is total market demand at P = 5? A) 0 B) 5 C) 10 D) 15 E) None of the above Ans: B10. Suppose Mary is currently spending all her ine on cookies and milk. The marginal utility of cookies is 15, the price of cookies is $5, the marginal utility of milk is 10, and the price of milk is $1. To increase her total utility, Mary should: A) buy more cookies and less milk. B) buy more milk and fewer cookies. C) buy more of both goods. D) buy less of both goods. E) do nothing. She is currently maximizing utility with her limited budget. Ans: B11. The ine effect describes: A) the percentage change in consumption of a good given some percentage change in the price of another good. B) the fact that when the price of a good falls, consumers will substitute it into their market baskets in place of relatively more expensive goods. C) the fact that when the price of a good falls, consumers will have more purchasing power with the same nominal ine. D) the effect of a change in consumer ine on the quantity of a good demanded. E) an upwardsloping demand curve. Ans: C12. Assume household ine is $30, the price of X is $6 and the price of Y is $3. Refer to table 52. What quantities of X and Y will be purchased by the household? Marginal Utility Units 1 2 3 4 5 6 7 Good X 72 48 30 24 18 12 6 Good Y 60 42 30 15 10 5 2 A) X = 2, Y = 6 B) X = 3, Y = 4 C) X = 3, Y = 3 D) X = 4, Y = 2 E) None of the above Ans: B13. A good which sells for a higher price than one which is more important for welfare reflects the concept of: A) plementarity in demand. B) substitution. C) marginal or total utility. D) the paradox of value. E) law of diminishing marginal utility. Ans: D14. At my equilibrium demand choices for goods 1 and 2: A) MU1 = MU2 B) MU1/Q1 = MU2/Q2 C) MU1/P1 = MU2/P2 D) P1 = P2 E) none of the above. Ans: C15. The rule for rational budget allocation by a consumer is that the marginal utility of each good: A) purchased divided by its price must be equal. B) purchased multiplied by its price must be equal. C) must be zero. D) must be infinite. E) none of the above. Ans: ACHAPTER 61. The marginal product of labor is the: A) output which it could produce unaided by machinery or other factors of production. B) extra revenue which a firm will get by selling the output of one additional worker. C) amount of extra output that is produced when one extra worker is added to a fixed amount of other factors. D) amount of extra output that is produced when one worker is added and other factors of production are increased proportionately. E) none of the above. Ans: CTotal Product with Various Input Combinations LandLabor 10 15 20 0 0 0 0 1 20 2 38 3 54 4 68 5 80 6 90 2. Suppose that production is defined by the function recorded in the table above. The marginal product of the 4th unit of labor, given 20 units of land, is equal to: A) B)