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Complete the table below to answer questions 10. through 14.:
Good Y
Good Z
Units Total Marginal Units Total Marginal
ofY Utility Utility of Z Utility Utility
0 0 X 0 0 X
1 20 20 1 10 10
2 36 __ 2 18 __
3 48 __ 3 24 __
4 56 __ 4 28 __
5 60 __ 5 30 __
6 62 __ 6 31 __
___ 10. What is the marginal utility of the 3 rd unit of Good Y?
a. 20
b. 16
c. 12
d. 8
___ 11. What is the marginal utility of the 4 th unit of Good Z?
a. 4
b. 6
c. 8
d. 10
___ 12. Assuming that the price of both goods is $5 per unit and that Consumer has $15 to
spend, what is the utility-maximizing combination of Goods Y and Z?
a. 3-Y, 0-Z
b. 2-Y, 1-Z
c. 1-Y, 2-Z
d. 0-Y, 3-Z
___ 13. Assuming that the price of both Goods is $5 per unit and that Consumer has $30 to
spend, what is the utility-maximizing combination of Goods Y and Z?
a. 5 – Y, 1 – Z
b. 4 – Y, 2 – Z
c. 3 – Y, 3 – Z
d. 2 – Y, 4 – Z
___ 14. Assuming that the price of Good Y increases to $10 per unit and that Consumer still has
$30 to spend, what is the utility-maximizing combination of Goods Y and Z?
a. 3 – Y, 0 – Z
b. 2 – Y, 2 – Z
c. 1 – Y, 4 – Z
d. 0 – Y, 6 – Z
___ 15. If the government provides an essential good (like bread) free of charge:
a. this will be efficient because no one is deprived of bread
b. this will be efficient because everyone can eat as much bread as they like
c. this will be inefficient because bread will be overconsumed
d. Both a. and b. above
___ 16. At the optimal level of any activity:
a. marginal benefit will be greater than marginal cost
b. marginal benefit will be less than marginal cost
c. marginal benefit will be equal to marginal cost
d. Any of the above are possible
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18 - 11 Utility