UTILITY ANALYSIS

Utility is the

• benefit or satisfaction that a person gets from the consumption of a good or service
• measure of how useful a resource is in the production process
• measure of productivity associated with a good or service
• economic term for consumption possibilities

The first four dinner rolls Joan consumes have total utility of 15, 27, 37, and 45 respectively. What is the marginal utility of the 4th dinner roll?

• 124 units of utility
• 45 units of utility
• 11.25 units of utility
• 8 units of utility

In a given time period, a person consumes more and more of a good and enjoys each additional unit less and is willing to pay less for it, because of:

• diminishing returns
• diminishing marginal product
• diminishing marginal utility
• increasing costs

Chris spent his entire income on two goods. At his current consumption, the marginal utility of Y is 12 and the marginal utility of Z is 4. If the price of Y is $2.00 and the price of Z is $1, then to what should he do to maximize utility?

• consume more Y and Z
• consume more Z and less Y
• consumer more Y and less Z
• maintain his consumption

Which of the following is true if consuming one unit of a good yields 100 utils and consuming the second unit of the good increases satisfaction by 20 utils?

• the MU of the 1st unit is 20
• the MU of the 2nd unit is 80
• the MU of the 2nd unit is 120
• the total utility of consuming 2 units is 120

When a consumer consumes two goods X and Y , she will attain equilibrium when

• MUx = MUy
• MUx/Px = MUy/Py
• Px/MUx = Py/MUy
• None of these

In which analysis Utility can be measured in numbers?

• Ordinal Analysis
• Cardinal Analysis
• Utility Analysis
• None of these

Marginal Utility

• is always positive
• is always negative
• can be positive or negative but not zero
• can be positive or negative or zero

Equation of Budget Line is

• P1X1+P2X2 <M
• P1X1+P2X2 = M
• P1X1+P2X2 >M
• P1X1+P2X2 <= M

Which of the following is correct?

• MU(₹) > price when consumer is said to be in equilibrium

• MU(₹) < price when consumer is said to be in equilibrium

• MU(₹) = price when consumer is said to be in equilibrium

• All of the above