ECO chp.2

What does utility analysis help us understand?

• How companies set prices

• How to reduce production costs

• How consumers make choices to maximize satisfaction

• How goods are transported

Which concept explains that utility depends on time and place

• Subjective concept

• Relative concept

• Ethical neutrality

• Intensity of want

What is an example of utility being ethically neutral?

• A student drinking water

• A knife used to cut vegetables or hurt someone

• A doctor using a stethoscope

• Electricity running appliances

What type of utility is created when a buyer purchases goods from a seller?

• Time utility

• Place utility

• Service utility

• Possession utility

A mountaineer using an oxygen cylinder at high altitude is an example of:

• Form utility

• Possession utility

• Time utility

• Place utility

What type of utility is created when clay is turned into toys?

• Form Utility

• Place Utility

• Time Utility

• Possession Utility

What is Marginal Utility?

• Utility gained from the first unit only

• Total benefit from all units

• Additional benefit from one more unit

• Decrease in price with more consumption

When a person keeps consuming more of a product, marginal utility usually:

• Increases

• Stays the same

• Doubles

• Decreases

When a consumer consumes the first unit of a commodity, the Total Utility and Marginal Utility are:

• Different

• Equal

• Zero

• Negative

What is the point called where Total Utility is maximum and Marginal Utility is zero?

• Point of satisfaction

• Point of utility

• Point of saturation

• Point of satiety