Question 1

-Refer to the above table. What is the marginal utility for the 3rd unit for Michelle and for Robert?

Accepted Answer

The marginal utility for the 3rd unit is calculated by subtracting the total utility of the 2nd unit from the total utility of the 3rd unit. For Michelle, it is 270 - 195 = 75. For Robert, it is 270 - 190 = 80.

Question 2

As more of a product is consumed, total utility increases up to a point at which

Accepted Answer

According to the law of diminishing marginal utility, as more of a product is consumed, the marginal utility (the additional satisfaction gained from consuming one more unit) decreases. This ultimately leads to a point at which the marginal utility becomes negative, meaning that consuming one more unit actually decreases total utility. Therefore, choice C is the correct answer.

Question 3

Marginal utility

Accepted Answer

Marginal utility is the additional satisfaction or benefit that a person derives from consuming one additional unit of a good or service. At first, as a person consumes more of a good or service, the marginal utility increases (because they are getting more satisfaction from each additional unit). However, eventually, the marginal utility begins to decline, as the person becomes less and less satisfied with each additional unit consumed. This is known as the law of diminishing marginal utility. Therefore, choice A is correct. Choices B, C, and D are all incorrect.

Question 4

Total satisfaction is maximized when

Accepted Answer

Total satisfaction is maximized when marginal utility is zero because it indicates that any additional consumption would not increase total satisfaction further.

Question 5

Utility analysis assumes that the consumer's tastes and preferences are

Accepted Answer

Utility analysis assumes that the consumer's tastes and preferences are predetermined and stable, indicating that they remain constant over time, regardless of changes in income, education or any other factors.

Question 6

-Refer to the above table. In examining the utility schedules for Michelle and Robert, we can conclude that

Accepted Answer

Michelle and Robert both received 10 utils from watching the fourth movie.

Question 7

At the point at which total utility is at a maximum,

Accepted Answer

At the point where total utility is at a maximum, marginal utility is zero. This is because at this point, any additional unit consumed would bring no increase or decrease in the total utility. Once marginal utility becomes negative, it means that the additional unit consumed decreases the total utility. Therefore, the correct choice is C) marginal utility is zero.

Question 8

In economics, the term "marginal" refers to

Accepted Answer

The term "marginal" in economics refers to the change in the total. Marginal cost, for example, is the additional cost of producing one more unit of a good or service. Marginal revenue is the additional revenue earned from selling one more unit of a good or service. Therefore, choice B is the correct answer.

Question 9

The additional utility or satisfaction that one derives from consuming one more unit of any good or service is referred to as

Accepted Answer

Marginal utility refers to the additional satisfaction that is derived from consuming one more unit of a good or service. Total utility is the overall amount of satisfaction that is derived from consuming all units of a good or service. Substantive utility is not a term commonly used in economics. Average utility is the total utility divided by the number of units consumed.

Question 10

When you buy something, you do so because of the satisfaction you expect to receive from having and using that good. Another term that can be used for satisfaction is

Accepted Answer

Utility refers to the satisfaction or benefit a consumer receives from a good or service. It is the driving force behind consumer demand and influences purchasing decisions. Needs are the basic requirements for survival, while purchasing power refers to the amount of goods and services that can be purchased with a given amount of money. Price elasticity is a measure of how much the demand for a good or service changes in response to a change in its price.

Question 11

When marginal utility is zero, total utility is

Accepted Answer

When marginal utility is zero, total utility is at its maximum. This means that the consumer is not gaining any additional satisfaction from consuming additional units of the good, but the satisfaction he/she has gained so far is at its highest point. Any additional unit beyond this point will result in a decrease in total utility as marginal utility becomes negative.

Question 12

The change in total utility derived when a customer consumes one more unit of a good or service is called

Accepted Answer

The change in total utility derived when a customer consumes one more unit of a good or service is called marginal utility. Total utility refers to the overall satisfaction derived from consuming a certain quantity of a good or service. Average utility refers to the average level of satisfaction derived from consuming each unit of a good or service. Final utility is not a commonly used term in economics.

Question 13

The marginal utility derived from viewing the next movie DVD is the

Accepted Answer

Marginal utility refers to the additional satisfaction or usefulness that a consumer derives from consuming one additional unit of a good or service. In this case, the marginal utility derived from viewing the next movie DVD refers to the additional satisfaction that a consumer obtains from watching one more DVD, compared to the previous DVD they watched. Therefore, the correct answer is B, which is the additional utility from viewing the DVD.

Question 14

The total utility of consuming 6 units of a good is 255. The marginal utility of the 6th unit is 45 and the marginal utility of the 5th unit is 60. The total utility of consuming 5 units of the good is

Accepted Answer

The total utility of consuming 6 units of the good is 255, which means the total utility of consuming the first five units must be 255 - 45 = 210.
Therefore, the total utility of consuming 5 units of the good is 210.

Question 15

When marginal utility is positive, total utility is

Accepted Answer

When marginal utility is positive, it means that each additional unit of a good consumed is adding to the total satisfaction or utility received by the consumer. Therefore, the total utility is increasing.

Question 16

When marginal utility is negative, total utility is

Accepted Answer

When marginal utility is negative, it means that consuming an additional unit of a good is actually making the total utility decrease. Therefore, the total utility is decreasing.

Question 17

Economists once believed utility could be measured. The philosophical school based on the thought known as utilitarianism was developed by the English philosopher

Accepted Answer

Jeremy Bentham developed the philosophical school of thought known as utilitarianism, which proposed that the best course of action is the one that maximizes overall happiness or "utility." This school of thought initially believed that utility could be measured, but later developments in economics have debunked this idea.

Question 18

The equation for the calculation of marginal utility is

Accepted Answer

Marginal utility is the change in total utility as a result of consuming one additional unit of a good or service. Therefore, the equation for the calculation of marginal utility is the change in total utility divided by the change in the number of units consumed, which is represented by choice C.

Question 19

A rational consumer will NEVER purchase a product when its

Accepted Answer

A rational consumer will always try to maximize their utility. When the marginal utility of a product is negative, it means that the additional satisfaction received from consuming one more unit of the product is less than the satisfaction received from the previous unit. This decreases the overall utility and makes it irrational for the consumer to purchase more of the product. Therefore, a rational consumer will never purchase a product when its marginal utility is negative.

Question 20

Kathleen eats three TV dinners. The third TV dinner makes Kathleen sick. This means that for Kathleen

Accepted Answer

Negative utility refers to the satisfaction or usefulness derived from consuming a good or service that is below zero or negative. When Kathleen gets sick from the third TV dinner, it means that the utility derived from consuming the third TV dinner is negative, and it is not worth consuming.

Quiz 20: Consumer Choice