Quiz #3

When an economist talks about utility, she is talking about

• a company that provides electricity, water, gas, etc

• the satisfaction, in terms of price, that a producer receives from selling his product.

• the satisfaction that results from the consumption of a good.

• the amount of one good that a person is willing to give up in order to get a unit of another good.

• the satisfaction that results from the consumption of a good minus the price that must be paid to get the good.

A util is an artificial construct used as a means of measuring the

• price of a good.

• satisfaction one receives from the consumption of a good.

• costs of producing a good.

• difference between the price and the value of a good.

Suppose Benjamin receives 50 utils from consuming one banana and 92 utils from consuming two bananas. What is the marginal utility of the second banana?

• 92 utils

• 42 utils

• 46 utils

• 58 utils

Suppose Mason is eating slices of pizza and after consuming the first slice he receives 14 utils of total utility, after the second he receives 22 utils of total utility, and after the third 25 utils of total utility. Then

• the law of diminishing marginal utility is not applicable because his total utility is increasing instead of diminishing

• his total utility is 61 utils.

• his total utility is 25 utils, and the marginal utility of the first slice is 8 utils (22 - 14).

• his total utility is 25 utils, and the marginal utility of the third slice is 3 utils.

The law of diminishing marginal utility says that

• the marginal utility gained by consuming equal successive units of a good will decline as the amount consumed increases.

• the more of a particular good one consumes, the greater is the utility received from the consumption of that good.

• the marginal utility gained by consuming equal successive units of a good will increase as the amount consumed increases.

• the more of a particular product one sells, the less utility one receives from selling.

Which of the following is true?

• It is possible for total utility to rise as marginal utility falls.

• Marginal utility is the same as total utility.

• As marginal utility falls, total utility always falls.

Moving along an indifference curve the

• Consumers prefer some of the consumption points to others.

• Marginal rate of substitution for a good increase as more of the good is consumed.

• Marginal rate of substitution is constant.

• Consumers do not prefer one consumption point to another

The slope of the indifference curve is equal to which of the following?

• One

• Marginal utility

• Marginal rate of substitution

• increasing opportunity cost

Which of the following is not the property of indifference curves?

• Higher the indifference curves, higher is the level of satisfaction.

• Indifference curve is downward sloping.

• Indifference curve is concave to origin.

• Two indifference curves cannot intersect each other.

Why is the indifference curve convex to origin?

• Due to continuous decline of marginal rate of substitution

• Due to law of diminishing marginal utility

• Due to monotonic preferences