Question 1

Suppose that Jacob is going to a buffet restaurant that allows him to eat as many chicken wings as he wants at a fixed price. How would you predict the number of chicken wings that Jack will eat using utility theory?

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Question 2

If you and a group of friends have been consuming large quantities of liquid beverages on a hot summer afternoon and you decide to refrain from any additional consumption, it can be concluded that

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Question 3

What is utility analysis? What is the goal of this analysis?

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Question 4

If marginal utility is positive but diminishing, then

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If marginal utility is positive but diminishing, it means that each additional unit of the good consumed is adding less and less to the total utility, but it's still adding something positive. Therefore, the total utility must be positive. A is incorrect because positive marginal utility means that each additional unit is adding something positive, so the average utility cannot be negative. B and D are incorrect because there is no relation between marginal utility and average/utility.

Question 5

The utility analysis theory assumes that consumers try to

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The utility analysis theory assumes that consumers try to maximize their total utility, which refers to the total satisfaction or enjoyment that a consumer receives from consuming a certain quantity of a good or service. Consumers will continue to consume a good or service until their total utility reaches its maximum level, at which point they will no longer gain any additional satisfaction from consuming more. Therefore, the goal is to maximize the overall level of satisfaction or utility received from consuming a certain quantity of a good or service.

Question 6

What is utility and what are its characteristics?

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Question 7

When total utility is falling,

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When total utility is falling, it means that the additional satisfaction (marginal utility) obtained from consuming one more unit of a good or service is negative. This indicates that consuming more of the good or service decreases overall satisfaction.

Question 8

What do we know about total utility when marginal utility is zero?

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Question 9

If marginal utility is zero, total utility is

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When the marginal utility is zero, the total utility is at its maximum. This is because marginal utility indicates the additional utility obtained from consuming an additional unit of the good or service. When the marginal utility reaches zero, it means that the consumer has consumed the optimal amount of the good or service that provides the highest total utility. Any additional consumption beyond this point would decrease the total utility. Therefore, the answer is (C) at its maximum.

Question 10

If the total utility derived from consuming three oysters was 40 utils and the total utility derived from consuming four oysters was 52 utils, what was the marginal utility derived from the consumption of the fourth oyster?

Accepted Answer

Marginal utility is the additional utility gained from consuming one more unit of a good. Therefore, to calculate the marginal utility derived from the fourth oyster, we need to subtract the total utility of three oysters (40 utils) from the total utility of four oysters (52 utils). 52 - 40 = 12 utils. Therefore, the answer is C) 12 utils.

Question 11

Economists assume that people make decisions regarding consumption based on comparing

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Economists typically assume that people make decisions based on comparing the additional satisfaction they would gain from consuming one more unit of a good or service with the additional cost of doing so. This is known as the marginal analysis or marginal principle, which is a central concept in economics. Choices B and C refer to average measures, which are not typically used in marginal analysis. Choice D combines units and averages inappropriately.

Question 12

What is marginal utility? Why is the term "marginal" important in utility analysis?

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Question 13

Utility analysis is the analysis of

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Utility analysis involves analyzing how consumers make consumption decisions to maximize their utility or satisfaction. This includes analyzing how consumers weigh the costs and benefits of different options and make choices based on their preferences and budget constraints. Options A, B, and D are all related to the study of preferences, but they do not capture the full scope of utility analysis.

Question 14

Assuming that the marginal utility of the first four pieces of candy was 30, 28, 24, and 18 respectively, how much total utility was derived from eating the first three pieces of candy?

Accepted Answer

To calculate the total utility derived from eating the first three pieces of candy, we need to add together the marginal utilities of each piece: 
30 + 28 + 24 = 82. 
Therefore, the best choice is B.

Question 15

If the commercial is correct that every additional bite tastes as good as the first, the marginal utility from consuming more of the advertised product must be

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The answer of If the commercial is correct that every...

Question 16

As marginal utility declines but remains positive, then

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As marginal utility declines but remains positive, total utility continues to increase but at a decreasing rate. This is because each additional unit consumed adds less and less satisfaction or utility, but still adds more overall utility than not consuming the additional unit at all.

Question 17

If marginal utility is positive but decreasing, total utility is

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Question 18

If we are graphing total utility, then the total utility curve will

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The total utility curve will be increasing as long as marginal utility is positive. This is because if each additional unit of a good gives positive marginal utility, then the total utility of consuming that good is increasing. Once marginal utility becomes negative, the total utility curve will start to decrease. Therefore, the total utility curve is not always increasing or always decreasing, and it is not necessarily horizontal if marginal utility is positive.

Question 19

If marginal utility is zero,

Accepted Answer

If the marginal utility is zero, it means that the consumer is no longer gaining any satisfaction from additional units of the good. Therefore, there is no incentive for the consumer to consume additional units beyond this point, and it would be rational to not consume any more units.

Question 20

A certain athlete loves donuts. He receives 100 units of utility for the first donut, an additional 80 for the second, an additional 60 for the third, another 40 for the fourth, and another 20 for the fifth. The marginal utility of the fourth donut is ________ and the total utility from consuming four donuts is ________.

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Quiz 20: Consumer Choice