International School of Business

The collaborative training programme

Between Banking University Ho Chi Minh city and the University
of Bolton (United Kingdom)

ASSIGNMENT - MULTIPLE CHOICE

1 The level of utility a consumer can achieve is limited by
A. Prices only.
B. Income only.
C. The consumer’s preferences.
D. Prices and incomes.
2 The budget line
A. Identifies affordable bundles.
B. Identifies preferred bundles.
C. Identifies the maximum utility which can be achieved from consumption.
D. Identifies the satisfaction received from consumption.
3 Hoa has $50 to spend on pizza and movies. If movies are $5 each and a pizza is $10 then, assuming she
spends all her money, she can buy
A. 6 movies and 2 pizzas.
B. 8 movies and 4 pizzas.
C. 2 movies and 6 pizzas.
D. 6 movies and 4 pizzas.
4 Lily is a college student who likes to buy only two goods: Cheetos and Pepsi. To determine Lily’s budget
line, you need to know
I. Lily’s preferences for Cheetos and Pepsi.
II. The prices of Cheetos and Pepsi.
III. Lily’s income.
A. II only.
B. I and II.
C. II and III.
D. I, II and III.
5 Lily is a college student who likes to buy two goods: Cheetos and Pepsi. Her utility for these two goods
depends on
I. Lily’s preferences for Cheetos and Pepsi.
II. The prices of Cheetos and Pepsi.
III. Lily’s income.
A. II only.
B. I and II.
C. I only.
D. I and III.
6 Suppose Sam plans to buy only popcorn and soda. He has $40 to spend per week. A change in which of
the following variables will change Sam’s consumption possibilities?
I. Price of popcorn.
II. Income.
III. Preferences.
IV. Utility.
A. II only.
B. I and II.
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 C. I, II and III.
D. III and IV.
11 Utility is best defined as
A. The amount one is willing to pay for a good.
B. The price of a good.
C. The satisfaction from consuming a good.
D. The practical usefulness of a good.
12 Utility can best be described as
A. A concept that can be derived from a demand curve.
B. A testable hypothesis about the level of happiness achieved from consumption of goods.
C. An abstract concept useful for obtaining predictions about human behavior.
D. The units that measure a person’s income.
7 Dean spends all his income on movies and soda. Movies cost $6 each and sodas costs $0.5 a can. In a
diagram with movies on the horizontal axis and sodas on the vertical axis, Dean’s budget line
A. Becomes steeper to the right.
B. Becomes shallower to the right.
C. Has a constant positive slope.
D. Has a constant negative slope.
13 As Sean’s consumption of rice goes up, his
A. Average utility from consuming rice increases.
B. Total utility from consuming rice increases.
C. Marginal utility from consuming rice increases.
D. Elasticity of utility from consuming rice increases.
14 Marginal utility
A. Characterizes things of little use.
B. Is the additional utility derived from the last unit of a good consumed.
C. Is an implication of the law of demand.
D. Is always negative when total utility is positive and positive when total utility is negative.
15 Diminishing marginal utility mean
A. Ralph will enjoy his second hamburger less than the first.
B. The total utility from one hamburger exceeds the total utility from two hamburgers.
C. The price of two hamburgers is twice the price of one.
D. Beyond a certain point, total utility decreases as income increases.
8

Give the budget line in the above figure, if income is $60, then the price of a pizza is _____ and the price
of a CD is ____.
A. $5; $20.
B. $6; $4.
C. $15; $15.
D. $10; $15.
9 According to the budget line in the above figure, which of the following combinations is unaffordable?
A. 1 pizza and 3 CDs.
B. 3 pizzas and 2 CDs.
Le Trung Nhan – Saigon International Business School – 0935372222 – [email protected]

 
 C. 2 pizzas and 4 CDs.
D. All of the above are affordable.
10

In the above figure, if income is $45.00, the price of hambugers is $1.50, and the price of gasoline is
$1.00, which is the correct budget line?
A. F
B. G
C. H
D. I
22 Nam’s consumer equilibrium occurs whenever
A. He spends all of his income.
B. He allocates his income such that his utility is maximized.
C. The slopes of all of his demand curves are equal.
D. He purchases the goods he needs.
23 Which of the following occur when a person maximizes utility?
I. The marginal utility of each good bought is equal.
II. The highest level of utility is attained.
III. All of a person’s budget is spent.
A. I and II.
B. I and III.
C. II and III.
D. I, II and III.
Cookies (pounds per week) Homer’s Total Utility
0 0
1 5
2 9
3 12
4 14
5 15
16 The above table gives the total utility that Holmer obtains from consuming various quantities of chocolate
chip cookies. The marginal utility from the fifth pound of cookies is
A. 1 B. 2 C. 3 D. 15
Units consumed Jim’s total utility Sally’s total utility
1 12 16
2 22 26
3 30 34
4 36 35
17 In the above table, which of the following is true?
A. Jim and Sally have increasing marginal utility.
B. Jim has increasing marginal utility and Sally has diminishing marginal utility.
C. Jim has diminishing marginal utility and Sally has increasing marginal utility.
D. Jim and Sally have diminishing marginal utility.
Le Trung Nhan – Saigon International Business School – 0935372222 – [email protected]

 
18 In the figure above, the marginal utility of the third crate of tomatoes for the person with total utility curve
C is
A. 13 units of utility.
B. 16 units of utility.
C. 32 units of utility.
D. 45 units of utility.
19 As consumption of a good decreases, its marginal utility _____ and its total utility _____.
A. Increases; increases
B. Increases; decreases
C. Decreases; increases
D. Decreases; decreases
20 As the quantity of a good consumed increases, its marginal utility _____ and its total utility _____.
A. Increases; increases
B. Increases; decreases
C. Decreases; increases
D. Decreases; decreases
Quantity Total utility Marginal utility
0 0
1 250
2 180
3 580
4 700
5 100
21 The above table gives some of Tam’ total and marginal utilities from comedy videos. Which of the
following statements is true?
A. Tam’s marginal utility from the third comedy video is 150.
B. Tam’s total utility from the five comedy video is 800.
C. Tam’s marginal utility is higher from the first comedy video than from the third comedy video.
D. All of the above answers are correct.
24 When Trinh is in consumer equilibrium,
A. Her total utilities of all goods are equal.
B. She is maximizing her utility, given her income and the prices of goods and services.
C. Her total utility per dollar spent is equal for all goods.
D. Any change in prices would make her worse off.
25 Total utility is maximized when
A. The marginal utility per dollar spent is equal for all goods.
B. The marginal utilities are all zero.
C. The marginal utilities are all maximized.
D. The marginal utilities are all negative.

Le Trung Nhan – Saigon International Business School – 0935372222 – [email protected]