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Home / Questions / Strictly speaking, interpersonal comparisons of utility a.are valid and irrefutable when

Strictly speaking, interpersonal comparisons of utility a.are valid and irrefutable when

Strictly speaking, interpersonal comparisons of utility

a.are valid and irrefutable when exercised by government

b.may seem to be reasonable, but are nonetheless indefensible

c.are more valid when applied to people of the same ethnic origins than of the same
income class

d.are defensible because we assume people are rational

e.are indefensible because we assume people are rational

102.              A rational consumer would never purchase a good if its

a.marginal utility is falling

b.MU/P is positive

c.MU/P is falling

d.marginal utility is negative

e.contribution to total utility is less than one

103.              Thinks about your own purchases. Consumer surplus

a.exists only rarely

b.exists on every purchase that a consumer makes

c.never exists—it’s only a theoretical concept

d.is received only if a good generates a utility higher than expected

e.is earned on many of the purchases a consumer makes

104.              A utility-maximizing consumer is currently spending all of his/her income on two
                            products, A and B. The MU of the last unit of A consumed is 50, the price of A is $25,
                            and the price of B is $10. The MU of the last unit of B consumed is

a.50

b.5

c.2

d.20

e.100

105.              Pam is determined to lose 10 pounds and plans to adhere to a strict diet. But at the coffee
                            break, she sees tray of glazed donuts and can’t resist. She forgoes the plain bagel and
                            devours a donut. Both the donut and bagel are priced at $0.50. When her office mates
                            tease her, she says matter-of-factly that

a.the MU/P of donuts is higher than that of the bagel, and that’s that

b.the MU/P of bagels is higher than that of the donut, and that’s that

c.the consumer surplus associated with bagels was higher than it was for donuts,
making donuts more attractive

d.when it comes to food, she’s irrational

e.the MU of losing 10 pounds is less than the MU of eating one donut.

106.              John loves to travel. He would never—but absolutely never —turn down the opportunity
                            to go on a trip. This means that, for John,

a.the total utility of travel always increases

b.marginal utility of travel never decreases

c.the law of diminishing marginal utility does not apply to travel

d.marginal utility of travel is always zero

e.for every next trip he takes, consumer surplus increases

107.              Think about indifference analysis. If a consumer is indifferent between 5 units of A and 8
                            units of B, then the consumer would

a.also be indifferent between 4 units of A and 9 units of B

b.also be indifferent between 8 units of A and 5 units of B

c.prefer 6 units of A and 8 units of B

d.give up 1 unit of A to acquire 2 units of B

e.not trade a unit of A for any units of product B

108.              Are we really rational consumers? If so, how do you explain the fact that every
                            Thanksgiving many of us eat until we get sick The answer must be that

a.the negative utility associated with being sick is greater than the positive utility of
getting sick

b.at the time of the eating, the utility of the turkey and stuffing minus the utility of the
anticipated after-eating discomfort is still positive

c.the utility of the turkey and stuffing at the time of eating minus the utility of the
after-eating discomfort felt after the meal was eaten is still negative

d.the total utility of eating the meal far outweighs the marginal utility of the discomfort
felt after the meal

e.the marginal utility of eating the meal far outweighs the total utility of the discomfort
felt after the meal

109.              The marginal rate of substitution is the

a.quantity of a good a consumer receives for $1 payment

b.income a consumer gives up to acquire one unit of the good

c.ratio of the prices of two goods

d.rate at which the consumer is willing to trade one good for another good

e.relative quantity of a good that two consumers trade

110.              Indifference curves

a.are concave to the origin

b.are positively sloped

c.cut through the origin

d.are convex to the origin

e.are always straight lines

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