Question 1

When total utility is falling,

Accepted Answer

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 2

As marginal utility declines but remains positive, then

Accepted Answer

Marginal utility measures the additional utility gained from consuming one more unit of a good. As more units are consumed, the marginal utility generally declines. However, as long as the marginal utility remains positive (i.e. the additional unit of the good provides some level of satisfaction), the total utility will continue to increase. However, this increase in total utility will occur at a decreasing rate because the additional satisfaction gained from each additional unit of the good is declining. Therefore, choice A is the best answer.

Question 3

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

Accepted Answer

Total utility curve will be increasing as long as the marginal utility is positive. Once the marginal utility becomes zero or negative, the total utility starts to increase at a slower rate or decrease, respectively. Therefore, the curve will reach its maximum point where marginal utility becomes zero or negative.

Question 4

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

Accepted Answer

The answer of What do we know about total utility...

Question 5

If marginal utility is zero, total utility is

Accepted Answer

When marginal utility is zero, total utility is at its maximum because the consumer has consumed the optimal amount of the good where any additional unit would not add to their satisfaction. Therefore, the total utility curve reaches its peak, indicating maximum satisfaction.

Question 6

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

Accepted Answer

The answer of What is utility analysis? What is the...

Question 7

Utility analysis is the analysis of

Accepted Answer

Utility analysis is the study of how consumers make consumption decisions based on maximizing their utility. It involves analyzing how consumers assign values to different goods and services based on their needs and preferences and how they make choices based on the maximization of their overall utility. Therefore, option C, "the consumption decisions of people based on utility maximization," is the best choice.

Question 8

Economists assume that people make decisions regarding consumption based on comparing

Accepted Answer

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 9

The utility analysis theory assumes that consumers try to

Accepted Answer

The utility analysis theory assumes that consumers try to maximize their total utility, which is the sum of the marginal utilities of each unit consumed. Maximizing marginal utility or the difference between total and marginal utility may be important considerations, but the ultimate goal is to maximize overall satisfaction or utility.

Question 10

If marginal utility is positive but decreasing, total utility is

Accepted Answer

When marginal utility is positive, total utility is increasing, even if the marginal utility is decreasing.

Question 11

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 of the first three pieces of candy, we add the marginal utilities of the first three pieces: 30 + 28 + 24 = 82. Therefore, the best choice is B.

Question 12

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?

Accepted Answer

The answer of Suppose that Jacob is going to a...

Question 13

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

Accepted Answer

The answer of If you and a group of friends...

Question 14

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

To find the marginal utility derived from consuming the fourth oyster, we need to calculate the difference in total utility between consuming three and four oysters.

Total utility of three oysters = 40 utils
Total utility of four oysters = 52 utils

Marginal utility of the fourth oyster = Total utility of four oysters - Total utility of three oysters 
= 52 - 40 
= 12 utils

Therefore, the answer is choice letter C) 12 utils.

Question 15

If marginal utility is zero,

Accepted Answer

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

Question 16

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

Accepted Answer

If every additional bite tastes as good as the first, the marginal utility remains constant with each additional unit consumed.

Question 17

What is utility and what are its characteristics?

Accepted Answer

The answer of What is utility and what are its...

Question 18

If marginal utility is positive but diminishing, then

Accepted Answer

If marginal utility is positive, then each additional unit consumed is providing additional satisfaction to the consumer. However, if it is diminishing, this means that each additional unit provides less satisfaction than the previous one. As long as marginal utility remains positive, total utility will continue to increase. Therefore, total utility must be positive.

Question 19

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

Accepted Answer

The answer of What is marginal utility? Why is the...

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 ________.

Accepted Answer

The marginal utility of the fourth donut is 40, and the total utility from consuming four donuts is 280 (100 + 80 + 60 + 40).

Quiz 20: Consumer Choice