iVAT Chapter 19

A  Due to the fact that extrinsic utility can create innate pleasure, which is innately stronger than intrinsic utility.

B  Due to the fact that individuals derive innate pleasure from consuming a good.

C  Due to the fact that individuals derive pleasure from consuming services.

D  Due to the fact that individuals derive pleasure from having other people know or view what they are consuming.

A  Consuming a burger has the lowest opportunity cost because if you consume a burger you are foregoing the consumption of a hot dog, which has a higher marginal utility per dollar compared to a burger.

B  Consuming a hot dog has the lowest opportunity cost because if you consume a hot dog you are foregoing the consumption of a burger, which has a higher marginal utility per dollar compared to a hot dog.

C  Consuming a burger has the lowest opportunity cost because you are foregoing the least in terms of dollars spent on consumption.

D  Consuming a burger has the lowest opportunity cost because if you consume a burger you are foregoing the consumption of a hot dog, which has a lower marginal utility per dollar compared to a burger.

A  Compensating people with money as the price of a good decreases.

B  Reducing people’s substitution constraint.

C  Compensating people with money as the price of a good increases.

D  Substituting money with consumption.

A  None of the available answers.

B  As the price of a good varies, an individual’s real income changes, or the amount of that good that they can purchase with their budget varies.

C  As the price of a good declines, an individual’s real income declines, or the amount of that good that they can purchase with their budget declines.

D  As the price of a good increases, individual’s real incomes increase, or the amount of goods that they can purchase with their budget increases.

A  A decrease in the consumption of coffee will increase the marginal utility of coffee, which will equate the two marginal utility to price ratios.

B  An increase in the consumption of Red Bull will increase the marginal utility of Red Bull, which will equate the two marginal utility to price ratios.

C  An increase in the consumption of Red Bull will decrease the marginal utility of Red Bull, which will equate the two marginal utility to price ratios.

D  An increase in the consumption of coffee will reduce the marginal utility of coffee, which will equate the two marginal utility to price ratios.

A  The marginal utility is the same for each item purchased.

B  Her total marginal utility for each good is identical to its price.

C  Her marginal utility per dollar spent is the same for all goods.

D    

E  Her total utility for each good is identical to its price.

F  Her total utility per dollar spent is the same for all goods.

A  Surfing.

B  The individual is indifferent.

C  Snowboarding.

D  Neither.

A  Not changing the combination of Red Bulls and coffees consumed.

B  Consuming more cups of coffee and fewer Red Bulls.

C  Switching to water because it is healthier for you.

D  Consuming more Red Bulls and fewer coffees.

E  Consuming less of both goods.

A  Maximize consumption.

B  Maximize disutility.

C  Consume until marginal utility begins to fall.

D  Maximize marginal utility.

E  Maximize total utility.

A  Costs the least, but is still high quality.

B  Costs the least.

C  Gives them the greatest additional satisfaction.

D  Gives them the greatest additional satisfaction per dollar spent.

E  Is of the highest quality.

A  Total utility is decreasing.

B  Marginal utility is negative.

C  Total utility is increasing and at an increasing rate.

D  Marginal utility is positive.

A  Marginal utility is decreasing.

B  Marginal utility is increasing.

C  Marginal utility has turned negative.

D  Total Utility is decreasing.

A  Marginal utility of the first burrito is 15

B  Total utility of two burritos is 15

C  Marginal utility of the second burrito is 15

D  Total utility of the two burritos is 10.

A  Positive marginal utility

B  Disequilibrium

C  Total utility

D  Negative marginal utility

E  All of the available answers

A  Satisfaction one gets from the consumption of an additional unit of a product times its price

B  Total satisfaction one gets from one’s consumption of a product

C  Additional satisfaction one gets from the consumption of another unit of a product.

D    

E  Minimum satisfaction one gets from consumption

F  Maximum satisfaction one gets from consumption

A  Consumption expenditures, which drives prices.

B  Investment, which in the long-run determines the overall price level.

C  Utility or the usefulness that one derives from consuming a good/service.

D  Utility or the satisfaction that one receives from consuming a good/service.