Question 1

Marginal utility can be
A)positive, but not negative.
B)positive or negative, but not zero.
C)positive, negative, or zero.
D)decreasing, but not negative.

Accepted Answer

Marginal utility represents the additional satisfaction a consumer gets from consuming one more unit of a good or service. It can be positive if the additional unit increases total satisfaction, negative if it decreases total satisfaction, or zero if it does not change total satisfaction.

Question 2

The first Pepsi yields Craig 18 units of utility and the second yields him an additional 12 units of utility. His total utility from threecans of Pepsi is 38 units of utility. The marginal utility of the third Pepsi is
A)26 units of utility.
B)6 units of utility.
C)8 units of utility.
D)38 units of utility.

Accepted Answer

The answer of The first Pepsi yields Craig 18 units...

Question 3

The utility of a good or service
A)is synonymous with usefulness.
B)is the satisfaction or pleasure one gets from consuming it.
C)is easy to quantify.
D)rarely varies from person to person.

Accepted Answer

Utility refers to the satisfaction or pleasure derived from the consumption of a good or service, rather than its mere usefulness, ease of quantification, or uniformity across individuals.

Question 4

The ability of a good or service to satisfy wants is called
A)utility maximization.
B)opportunity cost.
C)revenue potential.
D)utility.

Accepted Answer

Utility is the term used in economics to describe the measure of satisfaction or value that a consumer receives from consuming a good or service.

Question 5

Refer to the data. The value for X is
A)15.
B)5.
C)55.
D)10.

Accepted Answer

The answer of  Refer to the data. The value...

Question 6

Refer to the data. The value for Z is
A)−5.
B)+5.
C)−10.
D)zero.

Accepted Answer

The answer of  Refer to the data. The value...

Question 7

Refer to data. Marginal utility becomes negative beginning with the
A)first unit.
B)second unit.
C)third unit.
D)fourth unit.

Accepted Answer

The answer of  Refer to data. Marginal utility becomes...

Question 8

The table shows an indifference schedule for several combinations of X and Y.  In moving from combination a to b, the consumer
A)gets 8 units of X for 2 units of Y.
B)gets 1 unit of X for 4 units of Y.
C)gives up 4 units of X for 2 units of Y.
D)gives up 4 units of X for 1 unit of Y.

Accepted Answer

The answer of The table shows an indifference schedule for...

Question 9

Refer to the data. The value for Y is
A)25.
B)30.
C)40.
D)45.

Accepted Answer

The answer of  Refer to the data. The value...

Question 10

Marginal utility is the
A)sensitivity of consumer purchases of a good to changes in the price of that good.
B)change in total utility obtained by consuming one more unit of a good.
C)change in total utility obtained by consuming another unit of a good divided by the change in the price of that good.
D)total utility associated with the consumption of a certain number of units of a good divided by the number of units consumed.

Accepted Answer

Marginal utility refers to the change in total utility that a consumer experiences as a result of consuming one additional unit of a good. It measures the additional satisfaction or benefit that a consumer derives from consuming an extra unit of a good.

Question 11

Refer to the data. The value for W is
A)15.
B)20.
C)25.
D)30.

Accepted Answer

The answer of  Refer to the data. The value...

Question 12

The income of a consumer is $40, the price of A is $2, and the price of B is $6. If the quantity of A is measured vertically, then the slope of the budget line is
A)-3.0.
B)-0.5.
C)-0.33.
D)-2.5.

Accepted Answer

The slope of the budget line is calculated by dividing the negative of the price of the good on the x-axis (B) by the price of the good on the y-axis (A). Thus, the slope = -($6/$2) = -3.0.

Question 13

The table shows an indifference schedule for several combinations of X and Y.  Approximately how much of Y is the consumer willing to give up to obtain the tenth unit of X?
A)5
B)1
C)4
D)1/4

Accepted Answer

The answer of The table shows an indifference schedule for...

Question 14

The law of diminishing marginal utility states that
A)total utility is maximized when consumers obtain the same amount of utility per unit of each product consumed.
B)beyond some point, additional units of a product will yield less and less extra satisfaction to a consumer.
C)price must be lowered to induce firms to supply more of a product.
D)it will take larger and larger amounts of resources beyond some point to produce successive units of a product.

Accepted Answer

The law of diminishing marginal utility posits that as a person consumes more units of a good or service, the additional satisfaction (marginal utility) gained from consuming each additional unit decreases.

Question 15

If the price of product X rises, then the resulting decline in the amount purchased will
A)necessarily increase the consumer's total utility from his total purchases.
B)increase the marginal utility of the last unit consumed of this good.
C)increase the total utility from purchases of this good.
D)reduce the marginal utility of the last unit consumed of this good.

Accepted Answer

When the price of a product increases, consumers tend to buy less of it. According to the law of diminishing marginal utility, as the quantity consumed of a good decreases, the marginal utility (satisfaction) derived from the last unit consumed increases because the consumer is now getting less of that good, making each unit more valuable to them.

Question 16

Which of the following statements about utility is true?
A)It is the same as usefulness.
B)Total utility diminishes as soon as additional units of a good are consumed.
C)Utility is objectively determined, meaning a good should provide the same satisfaction to whomever consumes it.
D)Utility is difficult to measure quantitatively.

Accepted Answer

Utility is a subjective measure of satisfaction or pleasure derived from consuming goods and services, making it difficult to quantify precisely.

Question 17

The table shows an indifference schedule for several combinations of X and Y.  How much of X is the consumer willing to give up to obtain the second unit of Y?
A)2
B)4
C)6
D)7

Accepted Answer

The answer of The table shows an indifference schedule for...

Question 18

Mary says, "You would have to pay me $50 to attend that pro wrestling event." For Mary, the marginal utility of the event is
A)zero.
B)positive, but declines rapidly.
C)negative.
D)positive, but less than the ticket price.

Accepted Answer

Mary's statement implies that she perceives attending the event as a negative experience, hence the marginal utility for her is negative.

Question 19

The data illustrate the
A)law of comparative advantage.
B)utility-maximizing rule.
C)law of diminishing marginal utility.
D)law of increasing opportunity costs.

Accepted Answer

The answer of  The data illustrate the
A)law of comparative...

Question 20

A product has utility if it
A)takes more and more resources to produce successive units of it.
B)violates the law of demand.
C)satisfies consumer wants.
D)is useful.

Accepted Answer

Utility in economics refers to the satisfaction or benefit that consumers derive from consuming a product or service, thus a product has utility if it satisfies consumer wants.

Quiz 7: Utility Maximization

Marginal utility can be

The first Pepsi yields Craig 18 units of utility and the second yields him an additional 12 units of utility. His total utility from threecans of Pepsi is 38 units of utility. The marginal utility of the third Pepsi is

The utility of a good or service

The ability of a good or service to satisfy wants is called

Refer to the data. The value for X is

Refer to the data. The value for Z is

Refer to data. Marginal utility becomes negative beginning with the

The table shows an indifference schedule for several combinations of X and Y. In moving from combination a to b, the consumer

Refer to the data. The value for Y is

Marginal utility is the

Refer to the data. The value for W is

The income of a consumer is $40, the price of A is $2, and the price of B is $6. If the quantity of A is measured vertically, then the slope of the budget line is

The table shows an indifference schedule for several combinations of X and Y. Approximately how much of Y is the consumer willing to give up to obtain the tenth unit of X?

The law of diminishing marginal utility states that

If the price of product X rises, then the resulting decline in the amount purchased will

Which of the following statements about utility is true?

The table shows an indifference schedule for several combinations of X and Y. How much of X is the consumer willing to give up to obtain the second unit of Y?

Mary says, "You would have to pay me $50 to attend that pro wrestling event." For Mary, the marginal utility of the event is

The data illustrate the

A product has utility if it