ECON 140: CHAPTER 7

REVIEW QUESTIONS

Tutorial session

Question one: MCQS

1-The theory of consumer behavior assumes that consumers attempt to
maximize:
A. The difference between total and marginal
utility.
B. Total utility.
C. Average utility.
D. Marginal utility.

2-Marginal utility can be:

A. Positive, but not negative.
B. Positive or negative, but not zero.
C. Positive, negative, or zero.
D. Decreasing, but not negative.

3-Where total utility is at a maximum, marginal utility is:

A. Negative.

B. Positive and increasing.

C. Zero.

D. Positive but
decreasing.

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4- The first Pepsi yields Craig 18 units of utility and the second yields him an
additional 12 units of utility. His total utility from three Pepsis is 38 units of
utility. The marginal utility of the third Pepsi is:

A. 26 units of utility.

B. 6 units of utility.

C. 8 units of utility.

D. 38 units of utility.

5-Refer to the data. The value for Y is:

A. 25.

B. 30.

C. 40.

D. 45.

6-Refer to the data. The value for X is:

A. 15.

B. 5.

C. 55.

D. 10.

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7-Refer to the data. The value for Z is:

A. -5.

B. +5

C. -10

D. zero

Question two
Fill in the following table on the total and marginal utilities of a product A. Also answer
the questions.
Units of Total Marginal Stages

0 0

1 20 _____

2 35 _____

3 _____ 10

4 _____ 5

5 _____ 0

6 45 _____

7 35 _____

8 _____ −15

Question three

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The table below shows the marginal utility a costumer would get by purchasing various
quantities of A, B, and C. The product prices for A, B, and C are $3, $2, and $1
respectively. The consumer has $20 to spend on the three products.

(1) (2) (3)

Unit of Marginal Marginal Marginal

product utility, A utility, B utility, C

First 30 22 12

Second 27 20 10

Third 24 18 8

Fourth 21 16 6

Fifth 18 14 4

Sixth 15 12 2

What combination of the three products should be purchased in order to maximize

utility?

ANSWERS

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Question one: MCQS
1-The theory of consumer behavior assumes that consumers attempt to
maximize:

A. The difference between total and marginal

utility.

B. Total utility.

C. Average utility.

D. Marginal utility.

2-Marginal utility can be:

A. Positive, but not negative.

B. Positive or negative, but not zero.

C. Positive, negative, or zero.

D. Decreasing, but not negative.

3-Where total utility is at a maximum, marginal utility is:

A. Negative.

B. Positive and increasing.

C. Zero.

D. Positive but
decreasing.

5
4- The first Pepsi yields Craig 18 units of utility and the second yields him an
additional 12 units of utility. His total utility from three Pepsis is 38 units of
utility. The marginal utility of the third Pepsi is:

A. 26 units of utility.

B. 6 units of utility.

C. 8 units of utility.

D. 38 units of utility.

5-Refer to the data. The value for Y is:

A. 25.

B. 30.

C. 40.

D. 45.

6-Refer to the data. The value for X is:

A. 15.

B. 5.

C. 55.

D. 10.

6
7-Refer to the data. The value for Z is:

A. -5.

B. +5

C. -10

D. zero

Question two
Fill in the following table on the total and marginal utilities of a product A. Also answer
the questions.

Units of Total Marginal Stages

product A utility utility of Utility

0 0 Stage I

1 20 _20

2 35 15

3 45 10

4 50 5

5 50 0 Stage II

6 45 -5 Stage III

7 35 -10

8 20 −15

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Question three
The table below shows the marginal utility a costumer would get by purchasing various
quantities of A, B, and C. The product prices for A, B, and C are $3, $2, and $1
respectively. The consumer has $20 to spend on the three products.

(1) MUA/PA (2) MUB/PB (3) MUC/PC

Unit of Marginal Marginal Marginal

product utility, A utility, B utility, C

First 30 10 22 11 12 12

Second 27 9 20 10 10 10

Third 24 8 18 9 8 8

Fourth 21 7 16 8 6 6

Fifth 18 6 14 7 4 4

Sixth 15 5 12 6 2 2

What combination of the three products should be purchased in order to maximize

utility?

MUA/PA= MUB/PB= MUC/PC= 8

Optimal Choice is 3 units of good A, 4 units of good B and 3 units of good C

Where we will pay :

Units Price Total payment

Good A 3 $3 $9
Good B 4 $2 $8
Good C 3 $1 3
Total $20 = income