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| Question | Answer |
|---|---|
| the utility derived from consuming a good depends on | a. your tastes and preferences. |
| Economists assume that tastes and preferences of individuals are: | Correct. Economists assume that tastes and preferences of individuals are given and are relatively stabl |
| which of the following best describes the economic concept of utility? | Correct. Utility measures the satisfaction, or pleasure, that people receive form consuming a good or service. |
| marginal utility is defined as: | Marginal utility is the change in your total utility from a one unit change in your consumption of a good. |
| Which of the following is true about marginal utility?Correct. Marginal utility is the change in total utility derived from a one–unit change in consumption of a good | ?Correct. Marginal utility is the change in total utility derived from a one–unit change in consumption of a good |
| the law of diminishing marginal utility states that as more and more units of a good or service are consumed, total utility becomes smaller and smaller. | Correct. The law states that as more and more is consumed, marginal utility becomes smaller and smaller. Total utility may still be rising, but at an ever–diminishing rate. |
| Which of the following situations is clearly inconsistent with the law of diminishing marginal utility? | Correct. The consumption of diamond jewelry is clearly inconsistent with the law of diminishing marginal utility. |
| according to the law of diminishing marginal utility, the more of a product a person consumes per time period, other things constant: | Correct. According to the law of diminishing marginal utility, the more of a product a person consumes per time period, other things constant, the smaller the additional utility from an addition unit of consumption. |
| t is possible to compare utility levels across consumers by attaching a numerical measure to utility.Correct. Each person has a uniquely subjective utility scale. Therefore we cannot compare utility levels across consumers. | Correct. Each person has a uniquely subjective utility scale. Therefore we cannot compare utility levels across consumers. |
| developing numerical value for utility allows us to: | Correct. Developing numerical value for utility allows us to be more specific about the utility of consumption. |
| Economists assume that individuals consume products to | :Correct. Economists assume that the purpose of consumption is maximization of total utility. |
| If a good is free, people will continue to increase consumption until total utility is equal to zero. | Correct. People will increase consumption as long as additional units provide positive marginal utility. This way total utility is maximized, not driven down to zero. |
| hich of the following is known to occur when the consumer equilibrium is achieved for someone at a carnival? | ncorrect. This allocation is clearly inconsistent with utility maximization. He should have rode the roller coaster fewer times, and the hammerhead more times, so that the marginal utility per dollar spent is equal across the rides. |
| t is consistent with utility maximization for Juan to buy a $2 strawberry and papaya smoothie, for which he gets 20 units of marginal utility, instead of a $1.50 pizza slice for which he gets 10 units of marginal utility | .Correct. Marginal utility per dollar spent is 10 for the smoothie, but is only 6.67 for the pizza slice. |
| consumer can be said to have achieved equilibrium with respect to. consumption when: | Correct. Equilibrium is achieved when the marginal utility per dollar of each product consumed is the same |
| onsider a conumer of baked bfsteaks n fried fishfillets. pposepriceofplate of baked beefsteak is $8 n fried fish fillets is $10 at a restaurant. If marginal util of baked beefsteak2consumer20 units,find mrg util frd fsh fillts, assum tht cnsumr n equil. | Correct. A consumer is in equilibrium when MUx⁄Px = MUy⁄Py. Therefore, 20⁄8 = MUy⁄10. The marginal utility of fried fish fillets is 25. |
| f a consumer has allocated income between pizzas and movies such that utility is maximized, and the price of pizza falls, when equilibrium is restored this consumer will: | There is not enough information to predict movie consumption |
| consder a consmer of bked bfsteaks n frd fish fillets. gues price ofplatebaked bfsteak $8 and thatfried fish fillets is $10 at a restaurant. If the marginal utility of baked beefsteak to the consumer is 20 units, find marginal util of fried fish fillets | , assuming that the consumer is in equilibrium.Correct. A consumer is in equilibrium when MUx⁄Px = MUy⁄Py. Therefore, 20⁄8 = MUy⁄10. The marginal utility of fried fish fillets is 25. |
| Smoothies cost $0.20/ozSuppose after jog you usually buy an 8 ounce fresh fruit smoothie at your neighborhood juice bar.u recently won a discnt coup n a fund–raiser, which allows u2buy smoothies $0.15 per ounce. after jog u buy 15oz smoothie. wit info | ncorrect. When the price declined you consumed more ounces, implying a downward–sloping demand. |
| Suppose that Pedro buys a mountain bike for $200, for which he was willing to pay up to $300. What is Pedro's consumer surplus in this transaction? | Correct. Consumer surplus is (maximum willingness–to–pay minus price) which in this case is $100 |
| onsumer surplus is represented by the area under the supply curve but above the price. | Correct. Consumer surplus is represented by the area under the demand curve but above the price. |
| he market demand curve shows the total quantity demanded per period by all consumers at various prices.Incorrect. | The given statement is true. |
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