Economics 06/11/24

Which of the following best defines marginal utility?

• The total satisfaction from consuming a good

• The satisfaction gained from consuming one additional unit of a good

• The satisfaction from the first unit of consumption only

• The average satisfaction per unit consumed

When total utility reaches its maximum, marginal utility is:

• Positive

• Negative

• Zero

• Equal to total utility

An indifference curve is convex to the origin because:

• Consumers prefer more to less

• Marginal rate of substitution decreases as one moves down the curve

• Utility is constant along the curve

• Price of one good increases

A budget line shows the:

• Various combinations of goods that can be purchased given prices and income

• Level of satisfaction from all combinations of two goods

• Maximum utility that a consumer can achieve

• Level of consumer income and savings

If a consumer moves from one point to another along an indifference curve, it indicates:

• An increase in total utility

• A change in income

• No change in total utility

• A shift in the budget line

If the price of one good decreases, the budget line:

• Rotates outward on the axis of the cheaper good

• Shifts parallel outward

• Rotates inward on the axis of the cheaper good

• Becomes steeper

The point where the budget line is tangent to the indifference curve represents:

• A maximum point of utility

• A minimum expenditure point

• The equilibrium consumption bundle

• The income elasticity of demand

As a consumer moves down along an indifference curve, the marginal rate of substitution:

• Increases

• Remains constant

• Decreases

• Is undefined

When two goods are perfect substitutes, their indifference curves are:

• Convex to the origin

• L-shaped

• Downward-sloping straight lines

• Horizontal lines

Utility maximization requires that the:

• Marginal utility per dollar is equal for all goods consumed

• Total utility is maximized for one good only

• Budget line is steeper than the indifference curve

• Consumer spends income on only one good