Ch 4) The Market Economy

An Economic good is a product or service that

• commands a price

• is transferable

• derives utility

• is possible

Which of the following are NOT Economic goods?

• Air

• Phone

• Sunshine

• Beauty

• Book

Which of the following is NOT a role of the consumer:

• determine what goods and services are produced

• provide information about habits, trends and preferences

• pay for economic goods that they demand

• to demand cheap goods

Which of the following is NOT an assumption about consumer behaviour?

• consumers have limited incomes

• consumers seek to get maximum utility from that income

• consumers are subject to the law of diminishing marginal utility

• consumers will act rationally

• consumers go for quality over quantity

The Law of diminishing marginal utility states that

• as more units of a good are consumed, a point will be reached where the marginal (extra) utility eventually begins to decline

• as more units of a good are consumed, a point will be reached where the marginal (extra) utility eventually begins to increase

• as less units of a good are consumed, a point will be reached where the marginal (extra) utility eventually begins to decline

• Mr Cuttle loves dominos

After my first slice of Pizza my utility is 30, after my second slice of Pizza my utility is 42.

What is my Total Utility? What is the Marginal Utility of the second slice?

• 72 & 12

• 12 & 72

• 42 & 12

• 12 & 42

Utility is measured by...

• Utils

• Satisfaction

• Watts

• SHU