Question 1

The only goods you don't purchase are those for which you expect the marginal utility to be zero or negative.

Accepted Answer

The answer of The only goods you don't purchase are...

Question 2

When marginal utility is negative, total utility declines.

Accepted Answer

When marginal utility is negative, consuming an additional unit of a good decreases total utility, leading to a decline in total utility.

Question 3

Everyone who views the latest adventure movie in theaters will derive the same utility from seeing it.

Accepted Answer

Utility is subjective and varies from person to person based on individual preferences, experiences, and expectations.

Question 4

The price you are willing to pay for a good depends on the amount of marginal utility you expect to derive from consuming it.

Accepted Answer

The price a consumer is willing to pay is often linked to the marginal utility, which is the additional satisfaction or benefit derived from consuming one more unit of a good.

Question 5

If goods were characterized by increasing marginal utility, we would observe consumers spending all of their income on one good.

Accepted Answer

If goods had increasing marginal utility, consumers would gain more satisfaction from consuming additional units, leading them to allocate all their income to that good to maximize utility.

Question 6

If you derive 80 units of total utility from playing 5 video games and 90 units of total utility from playing 6 video games, then the sixth video game provided you with 10 units of marginal utility.

Accepted Answer

Marginal utility is the additional utility gained from consuming one more unit of a good or service. The difference in total utility from playing 5 to 6 video games is 90 - 80 = 10 units, which is the marginal utility of the sixth video game.

Question 7

Luxury items, such as fine jewelry and collectible pieces of artwork, are not subject to the law of diminishing marginal utility.

Accepted Answer

The law of diminishing marginal utility applies to all goods, including luxury items, as the satisfaction gained from consuming additional units of the same good decreases over time.

Question 8

The more you are willing to pay for an item, the more marginal utility you derive from it.

Accepted Answer

The more you are willing to pay for an item, the more marginal utility you derive from it. This is because marginal utility is the additional satisfaction you get from consuming one more unit of a good. If you are willing to pay more for an item, it means that you value it more and therefore derive more satisfaction from it.

Question 9

If the price of movie admission declines and in response you attend twice as many movies as you would otherwise, then your expected marginal utility from the last movie you choose to see will be zero.

Accepted Answer

Marginal utility is the additional satisfaction gained from consuming one more unit of a good or service. Even if you attend more movies due to a price decline, the marginal utility from the last movie is not necessarily zero; it may decrease but still be positive.

Question 10

Economic theory asserts that people will buy more of an item when its price rises, because they derive more utility from high-price items.

Accepted Answer

Economic theory, specifically the law of demand, states that people will buy less of an item when its price rises, as higher prices typically lead to lower quantity demanded.

Question 11

The price elasticity of demand becomes relatively greater as more substitutes are easily available.

Accepted Answer

When more substitutes are available, consumers can easily switch to alternatives if the price of a good rises, making demand more elastic.

Question 12

If demand for a good is unit elastic, then an increase in price will reduce total consumer spending on the good.

Accepted Answer

When demand is unit elastic, a change in price does not affect total consumer spending because the percentage change in quantity demanded is equal to the percentage change in price.

Question 13

If demand for a good is elastic, then an increase in price reduces demand for the good.

Accepted Answer

The answer of If demand for a good is elastic,...

Quiz 4: Consumer Decision Making and Consumer Reaction to Price Changes