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| 1.
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Sam experiences 21, 39, and 54 units of utility when he consumes 1, 2, and 3 double meat and cheese hamburgers. Sam's marginal utilities for the first, second, and third burger are |
| | A) | undefined, 18, and 15. |
| | B) | 21, 60, and 114. |
| | C) | 21, 39, and 54. |
| | D) | 21, 18, and 15. |
| | E) | 21, 18, and undefined. |
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| 2.
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Sam experiences 21, 39, and 54 units of utility when he consumes 1, 2, and 3 double meat and cheese hamburgers. From the data, one can infer that Sam |
| | A) | really likes double meat and cheese hamburgers. |
| | B) | is not experiencing diminishing marginal utility to burgers. |
| | C) | is likely to suffer from heart disease. |
| | D) | is experiencing diminishing marginal utility to burgers. |
| | E) | will choose to consume two burgers. |
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| 3.
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If the marginal utility of the 3rd unit of Good X is 20, the price of X is $4, the marginal utility of the 6th unit of Good Z is 65 and the price of Z is $13, then to comply with the Rational Spending Rule, the consumer should |
| | A) | purchase more than 3 units of X and less than 6 units of Z. |
| | B) | purchase 3 units of X and 6 units of Z. |
| | C) | purchase less than 3 units of X and more than 6 units of Z. |
| | D) | purchase more than 3 units of X and more than 6 units of Z. |
| | E) | purchase less than 3 units of X and less than 6 units of Z. |
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| 4.
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Carol's quantity of romance novels demanded is 30 when the price is $5, Jennifer's quantity demanded at $5 is 3, and Alan's quantity demanded is 43 at a $5 price. The market demand for romance novels at a price of $5 is |
| | A) | 76. |
| | B) | 43. |
| | C) | 30. |
| | D) | 3 |
| | E) | unknown; insufficient information. |
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| 5.
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The ________ states that people do less of what they want to do as the cost of doing it rises. |
| | A) | law of supply |
| | B) | law of demand |
| | C) | law of wants |
| | D) | law of needs |
| | E) | law of cost |
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| 6.
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The law of diminishing marginal utility states that |
| | A) | marginal utility of consumption tends to diminish beyond some point. |
| | B) | marginal utility of consumption can never be negative. |
| | C) | marginal utility of consumption can never be positive. |
| | D) | marginal utility of consumption is always diminishing. |
| | E) | marginal utility initially diminishes, but ultimately rises with consumption. |
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| 7.
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The difference between a buyer's reservation price and the price actually paid is called |
| | A) | producer surplus. |
| | B) | consumer benefit. |
| | C) | consumer surplus. |
| | D) | net surplus. |
| | E) | reservation surplus. |
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| 8.
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The ______ is the absolute price of a good in dollar terms, while the ______ is the dollar price of a good relative to the average dollar price of all other goods. |
| | A) | Real price, nominal |
| | B) | Nominal price, real price |
| | C) | Real price, deflated price |
| | D) | Nominal price, inflated price |
| | E) | Deflated price, inflated price |
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| 9.
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The rational spending rule states that spending should be allocated across goods so that the ____________ is the same for each good. |
| | A) | marginal utility |
| | B) | total utility |
| | C) | marginal utility per dollar |
| | D) | total utility per dollar |
| | E) | diminishing marginal utility |
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| 10.
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Hakeem spends all of his income on two goods: CDs and DVDs. The price of a CD is $10 and the price of a DVD is $20. At his current consumption levels, his marginal utilities for the two goods are 20 utils/CD and 10 utils/DVD. To maximize his utility, Hakeem should buy |
| | A) | more CDs. |
| | B) | more DVDs. |
| | C) | fewer DVDs. |
| | D) | fewer CDs. |
| | E) | either A or C or both. |
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