# ECO 101 - If the price of one good changes while other prices

Question # 00633735 Posted By: dr.tony Updated on: 01/04/2018 05:00 AM Due on: 01/04/2018
Subject Economics Topic Microeconomics Tutorials:
Question
QUESTION 1
1. If the price of one good changes while other prices are held constant,
2. A.there is an income effect as real income changes.
3. B.there is a substitution effect as relative prices change.
4. C.the marginal utility per dollar spent on that good will change.
5. D.the quantity demanded of that good will change.
6. E.All of the above.

QUESTION 2
1. The substitution effect occurs because when the price of one good increases, consumers will buy fewer substitute goods.
2. A.True
3. B.False

QUESTION 3
1. If X and Y are any two goods or services and MUx/Px= MUy/Pyand all income is spent, then:
2. A.Px is less than all other product prices.
3. B.the consumer could increase his or her satisfaction by purchasing less of X.
4. C.the consumer could increase his or her satisfaction by purchasing more of X.
5. D.Pxis greater than all other product prices.
6. E.the consumer is in equilibrium.

QUESTION 4
1. If a consumer is purchasing three goods, as long as the marginal utility per dollar for at least two of the goods is equal, the consumer will be in equilibrium.
2. A.True
3. B.False

QUESTION 5
1. Assume MUx = 1,000, MUy = 200, Px= \$50, and Py= \$20. This consumer
2. A.should buy less of X and less of Y.
3. B.should buy more of X and less of Y.
4. C.is in equilibrium.
5. D.should buy more of X and more of Y.
6. E.should buy more Y because MUx > MUy

QUESTION 6
1. In order to maximize utility, consumers
2. A.will continue to make purchases until the marginal utility of each good is zero.
3. B.compare the marginal utilities of the last dollar spent on each good.
4. C.equate the total utilities of each good consumed.
5. D.continue to purchase a good until total utility is equal to zero.
6. E.None of the above.

QUESTION 7

Number of             Utility from             Number of ice                Utility from ice
Bundle     pepsicles               pepsictes                cream cones                    cream cones

A            10                         700                             0                                    0

B              8                         720                             1                                   500

C              6                        650                              2                                   700

D              4                        550                              3                                   750

E              2                         400                              4                                   760

F              0                            0                               5                                   760

Considering the information in the table shown, Jack's total utility from consuming bundle D would be:

A.1,160.

B.1,300.

C.950.

D.2,220.

QUESTION 8
1. A price change triggers the income effect but not the substitution effect.
2. A.True
3. B.False

QUESTION 9
1. Suppose that wrenches cost twice as much as pliers. When will the consumer be in equilibrium?
2. A.When the quantity of pliers is twice that of wrenches
3. B.When the price of wrenches is twice as much as pliers
4. C.When the total utility of pliers is twice that of wrenches
5. D.When the marginal utility of wrenches is twice that of pliers
6. E.When the marginal utility of pliers is twice that of wrenches

QUESTION 10
1. The law of diminishing marginal utility explains why the demand curve is downward sloping.
2. A.True
3. B.False

QUESTION 11

Quantity Total Utility of X Total Utility of Y

1 24 85

2 42 130

3 56 160

4 66 185

5 74 200

6 80 210

7 84 215

Refer to the table above. Assume that the price of good X is \$2 per unit, that the price of good Y is \$5 per unit, and that the consumer has \$14 to spend buying X and Y. Under the circumstances, a utility-maximizing consumer should buy

A.7 units of X.

B.2.8 units of Y.

C.2 units of X and 2 units of Y.

D.anything she wants because it is not possible to determine the utility-maximizing combination.

E.6 units of X and 7 of Y.

QUESTION 12
1. Which of the following statements is true for a consumer in equilibrium?

2. A.The marginal utilities of the last dollars spent on goods and services are equal to one another.
3. B.The total utility is the same for every good and service consumed.
4. C.MUa = MUb = MUc = ... = MUz
5. D.The total utility for the last good or service purchased is zero.
6. E.Total utility is decreasing at an increasing rate.
Tutorials for this Question
1. ## Solution: ECO 101 - If the price of one good changes while other prices

Tutorial # 00632550 Posted By: dr.tony Posted on: 01/04/2018 05:01 AM
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