CONSUMER'S EQUILIBRIUM

Which of the statements below is correct?

1. Utility means desire-satisfying power 

2. The utility is a function of desire intensity 

3. Consumption desire gives rise to utility

4. All of the above.

• The correct statement is: All statements are false.
• The correct statement is: Every statement is correct.
• The correct statement is: None of the statements are true.
• The correct statement is: [insert correct statement here].

Who was the one who coined the term “utility”?

• 1. Marshall

• Karl Marx
• David Hume
• John Stuart Mill

What is the formula for calculating marginal utility?

• Marginal Utility = ΔTU / ΔQ
• Marginal Utility = ΔQ / ΔTU
• Marginal Utility = TU / Q
• Marginal Utility = Total Utility - Average Utility

Who was the one who first proposed the ordinal utility theory?

• David Ricardo
• Adam Smith
• 1. Hicks and Allen

• John Stuart Mill

When the following conditions are met, total utility is at its peak:

• Marginal utility is negative.
• Marginal utility is zero.
• Total utility is decreasing.
• Marginal utility is at its maximum.

If MU is positive, TU will be

• increasing
• decreasing
• constant
• undefined

A consumer attains equilibrium in case of one commodity, when

• the marginal utility per unit of currency spent is equalized
• the price of the commodity is minimized
• the total utility is maximized
• the consumer has no preferences for the commodity

a rational consumer will be react under MUx> Px

• Stop consuming good X altogether.
• Increase consumption of good X.
• Maintain current consumption of good X.
• Decrease consumption of good X.

law of DMU state that

• As consumption increases, total satisfaction remains constant.
• The law of DMU states that more consumption always leads to more satisfaction.
• Additional units of consumption provide the same level of satisfaction.
• As consumption increases, the additional satisfaction from each unit decreases.

second law of Gossen

• The second law of Gossen is related to supply and demand.
• The second law of Gossen is the law of diminishing marginal utility.
• The second law of Gossen defines the concept of total utility.
• The second law of Gossen states that utility increases with consumption.