1. The price of a hamburger is $1 and the price of a movie is $6 and the consumer has $14. A consumer has purchased 2 hamburgers and 2 movies, receiving 20 units of utility for the second hamburger and 100 units of utility for the second movie. The set of goods:

a. is not an optimum because the marginal utility per dollar spent is greater for hamburgers than for movies and the consumer is not spending all of his income.

b. is an optimum since the entire income is spent and total utility is maximized.

c. is an optimum since the entire income is spent and the marginal utility per dollar spent is the same for the last unit of each good.

d. is not an optimum because the marginal utility for each good is not equal.

2. The price of hamburgers is $2 and the price of movies is $4. The consumer has $14 of income. The consumer is purchasing 3 hamburgers and receiving 20 utils for the last hamburger. He is also purchasing 2 movies and receiving 40 utils for the last movie. This set of goods

a. is an optimum since the entire income is spent and the marginal utility per dollar spent is the same for the last unit of each good.

b. is an optimum since the entire income is spent and total utility is minimized.

c. is not an optimum because the marginal utility per dollar spent is greater for hamburgers than for movies.

d. is not an optimum because the consumer has not spent all of his money.

3. The consumer optimum for consuming two goods is achieved when

a. the total utility from each good is equal.

b. the marginal utility per last dollar spent is equal for the two goods.

c. the price of each good is equal.

d. the price multiplied by the marginal utility is equal for the two goods.

4. Dr. Rodriguez is consuming beer and wine. At his current level of consumption, the marginal utility per dollar is 30 units for beer and 15 units for wine. Dr. Rodriguez should

a. consume twice as much beer as wine.

b. consume twice as much wine as beer.

c. increase his consumption of beer relative to wine.

d. increase his consumption of wine relative to beer.

5. Increases in total utility from the consumption of a good decrease as more is consumed. This statement is

a. the law of diminishing marginal utility.

b. the consumer optimum.

c. the law of average utility.

d. false.

6. A rational individual will never consume a unit of a good if its

a. marginal utility is increasing.

b. marginal utility is diminishing.

c. marginal utility is less than average utility.

d. marginal utility is negative.