Utility

In an economic context, Utility means…

• Sadness

• Satisfaction

• Demand

How many more does “marginal” utility refer to?

• Smores

• Some more

• 2 more

• 1 more

The Law of Diminishing Marginal Utility state that:

• As an increasing amount of a good is consumed eventually a point will be reached where the total utility will start to decline

• As an increasing amount of a good is consumed eventually a point will be reached where the marginal utility will start to decline

• As a decreasing amount of utility is increased eventually an increase will decrease its increase

• As you eat more and more of a cake the better life gets

Calculate the utility

• 6

• 6 utils

• 5

• 5 utils

What set of calculated numbers in the correct set?

• 25, 20, 20, 5, 2

• 130, 255, 400, 550,690

• 35, 20, 15, 10, 5

• 2, 3, 4, 5, 6

At what point does diminishing Marginal utility set in?

• On unit 1

• On unit 2

• On unit 3

• On unit 4

Which 3 of these are assumptions underlying the Law of Diminishing Marginal utility?

• No time has elapsed between consumption of units

• A minimum amount of time must have elapsed

• A certain minimum must be consumed

• It only applies on Wednesdays

• It doesn’t apply to addictive goods

State one characteristic of an economic good

Why is important to assume that consumers have limited incomes?

• Because it’s nice to not be broke on my own

• It means that choices must be made leading to opportunity cost

• Because millionaires are pretentious and I’m not

• Because you can’t just buy a crown and call yourself a king!!