Question 1

Marginal utility can be thought of as
A)the incremental change in a person's total satisfaction level from the buying of a good.
B)the total change in satisfaction from buying a good.
C)the additional cost of that next good purchased.
D)the opportunity cost of buying the next good.

Accepted Answer

Marginal utility measures the amount of additional satisfaction a consumer derives from consuming an additional unit of a good, and thus it is the incremental change in a person's total satisfaction level from the buying of a good.

Question 2

In economics,utility is defined as
A)the want-satisfying power of a good or service.
B)the usefulness of a good or service.
C)the utilitarian value of a good or service.
D)the objective measure of the desirability of a good or service.

Accepted Answer

Utility is the measure of the satisfaction or pleasure that a consumer derives from a good or service. It is not an objective measure and can vary from person to person. Therefore, option D is incorrect. While option B is close, it does not fully capture the concept of want-satisfying power, which is a defining characteristic of utility. Option C is also incorrect as it implies that there is a single utilitarian value to a good or service, which is not necessarily the case.

Question 3

To calculate marginal utility,divide the change in total utility by
A)the number of units consumed.
B)the price of the product.
C)the change in the number of units consumed.
D)the consumer's subjective level of preference.

Accepted Answer

Marginal utility is the change in total utility obtained from consuming one additional unit of a good. Therefore, to calculate marginal utility, we need to divide the change in total utility by the change in the number of units consumed. Choice A is incorrect because it divides the change in total utility by the total number of units consumed, which is not the appropriate calculation for marginal utility. Choice B is incorrect because the price of the product is not relevant to the calculation of marginal utility. Choice D is incorrect because the consumer's subjective level of preference cannot be quantified and is not relevant to the calculation of marginal utility.

Question 4

Utility analysis helps economists understand
A)how people make decisions about what they buy and how much.
B)how to eliminate opportunity costs.
C)how to eliminate scarcity.
D)none of the above.

Accepted Answer

Utility analysis is the study of how individuals make decisions about what goods and services to consume, and how much of each. Therefore, A is the correct answer. B and C are incorrect as utility analysis does not eliminate opportunity costs or scarcity, but rather, seeks to understand human decision-making in the face of these economic realities.

Question 5

If total utility is decreasing,then marginal utility is
A)negative.
B)positive.
C)zero.
D)increasing.

Accepted Answer

Total utility can only decrease if the additional units of the good consumed bring less pleasure or satisfaction than the previous unit. This means that the marginal utility of each additional unit is negative, indicating a decrease in satisfaction.

Question 6

The amount of pleasure or satisfaction derived from consumption of a good is called
A)elasticity.
B)utility.
C)consumer surplus.
D)demand.

Accepted Answer

The amount of pleasure or satisfaction derived from consumption of a good is known as utility. Elasticity refers to the responsiveness of demand or supply to changes in price or income. Consumer surplus is the difference between the price a consumer is willing to pay and the actual price they pay for a good or service. Demand refers to the quantity of a good or service that consumers are willing and able to buy at a given price.

Question 7

Suppose that Usher derives 45 utils of total utility from eating 6 hotdogs and 55 utils of total utility from eating 7 hotdogs.What is Usher's marginal utility from eating the 7th hotdog?
A)10
B)45
C)55
D)100

Accepted Answer

The answer of Suppose that Usher derives 45 utils of...

Question 8

In economic utility analysis,consumer tastes and preferences are assumed
A)to be determined by income.
B)to be influenced by the prices of goods.
C)given and stable for an individual.
D)given but rapidly changeable.

Accepted Answer

Consumer tastes and preferences are assumed to be given and stable for an individual in economic utility analysis. While they can change over time, for the purpose of economic analysis, they are assumed to be stable for a period of time. Income and prices of goods may influence consumer behavior, but they are not assumed to determine or change a person's tastes and preferences.

Question 9

When economists refer to people making decisions at the margin,they mean that we compare ________ benefits with ________ costs.
A)total; total
B)total; incremental
C)additional; additional
D)additional; marginal

Accepted Answer

Economists use the concept of making decisions at the margin to describe how individuals compare the additional benefits of an action to its additional costs to make decisions.

Question 10

The concept of marginality is important in economics because
A)individuals make decisions at the margin.
B)marginal decisions indicate a lack of importance.
C)individuals make decisions based on tastes only.
D)large expenditures are the only factor influencing consumption.

Accepted Answer

Marginality refers to making decisions at the margin, or the incremental cost or benefit of a decision. Individuals typically do not make decisions based on total cost or benefit, but rather on the additional cost or benefit of a specific action. This is a key principle in microeconomics and is important for understanding how individuals and firms make decisions. Choices B, C, and D are incorrect because they do not accurately describe the role of marginality in economics.

Question 11

Which of the following is NOT true of utility?
A)It represents the want-satisfying power of a good.
B)It is measured using a representative unit called a util.
C)The utility that a good provides depends on a consumer's preferences.
D)Utility can be measured objectively.

Accepted Answer

Utility is a subjective concept and varies based on individual preferences. It cannot be measured objectively.

Question 12

Which English philosopher set out to develop an arithmetic formula for measuring happiness and along the way invented the util?
A)John Maynard Keynes
B)Milton Friedman
C)Jeremy Bentham
D)Adam Smith

Accepted Answer

Jeremy Bentham set out to develop a formula for measuring happiness, which he called the "greatest happiness principle." As part of this effort, he developed the concept of "utility," which became a central idea in economics and ethics.

Question 13

If total utility is increasing,then marginal utility is
A)negative.
B)positive.
C)zero.
D)decreasing.

Accepted Answer

If total utility is increasing, it means that the addition of each additional unit of the good is providing satisfaction to the consumer. This implies that the marginal utility of each additional unit is positive. Therefore, the correct choice is B) positive.

Question 14

A representative unit that measures the want-satisfying power of a good is
A)a margin.
B)purchasing power.
C)income.
D)a util.

Accepted Answer

A util is a representative unit used in utility analysis to measure the level of utility or satisfaction a consumer gains from the consumption of a good or service. It is used to gauge the relative importance and want-satisfying power of different goods and services.

Question 15

Marginal utility is
A)the utility received from consuming one unit of a good.
B)the change in total utility due to a one-unit change in the quantity of a good consumed.
C)the total utility received from consuming a certain quantity of a good divided by the quantity.
D)the utility received by the last consumer of a good.

Accepted Answer

Marginal utility is the additional utility gained from consuming one more unit of a good. Therefore, it is the change in total utility due to a one-unit change in the quantity of a good consumed. A is incorrect because it refers to the utility received from consuming a single unit, not the additional utility gained from consuming an additional unit. C is incorrect because it refers to average utility, which is the total utility divided by the quantity consumed, not the additional utility gained from an additional unit. D is incorrect because it is not a concept related to marginal utility.

Question 16

Marginal utility is measured as
A)utility per unit of production.
B)extra output divided by extra utility.
C)output of a good or service divided by price.
D)extra utility from each additional good consumed.

Accepted Answer

Marginal utility is the additional benefit or satisfaction gained from consuming one extra unit of a good or service. Therefore, the correct choice is D - extra utility gained from each additional unit consumed.

Question 17

The utility that people experience from the consumption of a good depends on
A)their income level.
B)their tastes and preferences.
C)total sales of the good.
D)how much shopping time they spent obtaining the good.

Accepted Answer

People's tastes and preferences play a crucial role in determining the utility they experience from consuming a good. Different people have different preferences and may derive varying levels of satisfaction from the same good, regardless of their income level or the amount of shopping time spent obtaining the good. Total sales of the good may reflect the popularity of the product, but do not necessarily determine individual utility.

Question 18

Economists use what term to describe the want-satisfying power of a good?
A)Demand
B)Utility
C)Marginal propensity to consume
D)Income elasticity

Accepted Answer

Utility refers to the satisfaction or usefulness that a consumer derives from consuming a good or service. It measures the want-satisfying power of a good or service.

Question 19

The term marginal means
A)total.
B)cumulative.
C)subjective.
D)additional.

Accepted Answer

The term marginal refers to something additional or incremental.

Question 20

In economics,another term for satisfaction is
A)income elasticity.
B)price elasticity.
C)utility.
D)marginal productivity.

Accepted Answer

In economics, satisfaction is often measured by the concept of utility. Utility refers to the satisfaction or happiness that a consumer obtains from consuming a good or service. It is based on individual preferences and varies from person to person.

Quiz 7: Consumer Choice

Marginal utility can be thought of as

In economics,utility is defined as

To calculate marginal utility,divide the change in total utility by

Utility analysis helps economists understand

If total utility is decreasing,then marginal utility is

The amount of pleasure or satisfaction derived from consumption of a good is called

Suppose that Usher derives 45 utils of total utility from eating 6 hotdogs and 55 utils of total utility from eating 7 hotdogs.What is Usher's marginal utility from eating the 7th hotdog?

In economic utility analysis,consumer tastes and preferences are assumed

When economists refer to people making decisions at the margin,they mean that we compare benefits with costs.

The concept of marginality is important in economics because

Which of the following is NOT true of utility?

Which English philosopher set out to develop an arithmetic formula for measuring happiness and along the way invented the util?

If total utility is increasing,then marginal utility is

A representative unit that measures the want-satisfying power of a good is

Marginal utility is

Marginal utility is measured as

The utility that people experience from the consumption of a good depends on

Economists use what term to describe the want-satisfying power of a good?

The term marginal means

In economics,another term for satisfaction is