Quiz on Utility in Economics

What does the concept of utility in economics refer to?

• The price of a product

• The satisfaction derived from a product

• The quantity of a product

• The demand for a product

What type of utility analysis expresses satisfaction in numerical terms?

• Total Utility

• Marginal Utility

• Cardinal Utility

• Ordinal Utility

What is the Law of Diminishing Marginal Utility?

• Utility increases with more consumption

• Utility remains constant with more consumption

• Marginal utility decreases with more consumption

• Marginal utility increases with more consumption

Which of the following is NOT an assumption of the Law of Diminishing Marginal Utility?

• Marginal utility of money remains constant

• Consumption must occur continuously

• Consumer preferences change frequently

• Utility can be measured numerically

What happens to total utility when marginal utility becomes zero?

• Total utility begins to decrease

• Total utility remains constant

• Total utility is at its minimum

• Total utility is at its maximum

What is the Law of Equi-Marginal Utility concerned with?

• Maximizing satisfaction from a single commodity

• Maximizing satisfaction from multiple commodities

• Maximizing total utility from one commodity

• Minimizing expenditure on commodities

In the context of indifference curves, what does a higher curve represent?

• Lower level of satisfaction

• Higher level of satisfaction

• Equal level of satisfaction

• No satisfaction

What does the marginal rate of substitution indicate?

• The quantity of a commodity consumed

• The total utility of a commodity

• The amount of one commodity traded for another

• The price of a commodity

Which of the following is a property of indifference curves?

• They are always straight lines

• They slope upwards to the right

• They can intersect each other

• They slope downwards to the right

What is the main criticism of Cardinal Utility Analysis?

• It is based on realistic assumptions

• Utility cannot be measured numerically

• It is too complex

• It applies only to durable goods