34. Fernando allocates his lunch money between pizza and Coke. A Coke has a pric

Question

34. Fernando allocates his lunch money between pizza and Coke. A Coke has a price of $1 and a slice of
pizza has a price of $1.50. The marginal utility of the last slice of pizza Fernando ate today was 30, and
the marginal utility of his last Coke was 25. Fernando spent all of his lunch money. From this information
we can conclude that
a. Fernando's total utility would have been greater if he had purchased more Coke and less
pizza
b. Fernando's total utility would have been greater if he had purchased more pizza and less
Coke
c. Fernando could have increased his total utility by purchasing more pizza but the same
quantity of Coke
d. Fernando could have increased his total utility by purchasing more Coke but the same
quantity of pizza
e. Fernando allocated his money in a way that maximized his total utility


____ 35. Carvel advertises a football-shaped ice cream cake for $7; you can buy a second one for only $4. What do
they know about consumer preferences?
a. Consumers only value the first cake at $4.
b. Marginal utility of ice cream cakes diminishes.
c. Consumers would never buy a second ice cream cake.
d. Consumers value all cakes they eat at $4.
e. Two cakes are worth less to the consumer than one.


____ 36. The value of cross-price elasticity of demand between golf balls and golf clubs is
a. 0
b. greater than 1
c. negative
d. less than 1
e. positive


____ 37. The opportunity cost of going to college includes the costs of tuition, books, fees, and
a. housing, food, and earnings forgone by not working full-time
b. nothing else
c. earnings forgone by not working full-time
d. housing
e. housing and food

Exhibit 5-12 S with tax $2.20 2.00 8 million 10 million 11. Refer to Exhibit 5-12. What can be said of the price elasticity of demand for this good? a. Demand is perfectly elastic. b. Not enough information is given to determine elasticity. c. Demand is inelastic. d. Demand is elastic. e. Demand is unit elastic 2l Pag e

Explanation / Answer

34. Fernando allocates his lunch money between pizza and Coke. A Coke has a price of $1 and a slice of
pizza has a price of $1.50. The marginal utility of the last slice of pizza Fernando ate today was 30, and
the marginal utility of his last Coke was 25. Fernando spent all of his lunch money. From this information
we can conclude that
a. Fernando's total utility would have been greater if he had purchased more Coke and less
pizza




____ 35. Carvel advertises a football-shaped ice cream cake for $7; you can buy a second one for only $4. What do
they know about consumer preferences?
a. Consumers only value the first cake at $4.
b. Marginal utility of ice cream cakes diminishes.
c. Consumers would never buy a second ice cream cake.
d. Consumers value all cakes they eat at $4.
e. Two cakes are worth less to the consumer than one.


____ 36. The value of cross-price elasticity of demand between golf balls and golf clubs is

e. positive


____ 37. The opportunity cost of going to college includes the costs of tuition, books, fees, and

c. earnings forgone by not working full-time

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