ECO 204
HOMEWORK 5

l.	When the marginal utility of a good becomes zero or negative:

	a.	goods are converted into bads
	b.	total utility reaches a maximum and then declines
	c.	the maximum net benefits have been squeezed from the good
	d.	people are unwilling to pay for the good
	e.	all of the above

2.	Normally, as more of a good is consumed, the total:

	a.	and marginal utility of the good rise
	b.	and marginal utility of the good fall
	c.	utility rises and its marginal utility falls
	d.	utility falls and its marginal utility rises

3.	If Joe Glutton's last hamburger provided no gain in utility, then Joe:

	a.	doesn't like hamburgers
	b.	has reached minimum utility from eating burgers
	c.	gained zero marginal utility from his last burger
	d.	is entering a region of diminishing returns

4.	If Len buys 10 floppy disks which are worth $60 to him, at $2 at disk, how much 
        consumer surplus does he derive?

	a.	$48
	b.	$30
	c.	$40
	d.	$20
	e.	$4 from each floppy disk

5.	If a consumer's total utility changes from 51 to 63 when 1 more unit good is consumed, 
        the marginal utility associated with this last unit:

	a.	6.3 units of utility
	b.	114 units of utility
	c.	12 units of utility
	d.	10 units of utility
	e.	none of the above

6.	An economic good becomes an economic bad when:

	a.	consumption encounters a region of diminishing marginal returns
	b.	production costs exceed the price consumers willing pay
	c.	consumption is extended into a region of negative marginal utility
	d.	the demand curve is consistently below the supply curve
	e.	value judgments change

7.	The law of diminishing marginal utility may be evidenced by a person:

	a.	smoking more but enjoying it less
	b.	buying additional goods after getting a raise
	c.	declining additional food to give it to a starving child
	d.	who studies harder in college than in high school

8.	A reduction in consumer surplus may occur if:

	a.	the consumer is not in equilibrium
	b.	diminishing marginal utility does not hold
	c.	the price of a good is increased
	d.	the government subsidizes the good