Lesson 6 Practice Questions (Microecon)
Which of the following economists closely analyzed how consumers behave and why ?
Thorstein Veblen Jeremy Benthem William Jevons All the above*****
These utility concepts can be applied to a decision of what to purchase given utility patterns for two goods as listed in the figure below. If you assume that good R and good S both cost $2 each, how many of each would you purchase if you have an income of $8?
1 R and 3 S
"Time" relative to utility is not a consideration in consumer behavior.
False
In the Indifference Diagram above, Point H has higher satisfaction than position I.
False
In the field of Marketing the concepts of marginal values and marginal utility per dollar are not used for brand comparisons because measuring "pleasure" is difficult.
False
Many individuals receive a higher value of utility from spending rather than saving and therefore choose to save a large amount of money.
False
Savings (non-consumption) can not have a utility function.
False
The utility obtained per unit of consumption will not vary based upon "need at the moment" such as with police or doctor services.
False
The equilibrium utility rule is expressed algebraically as:
MUa/Pa = MUb/Pb = MUc/Pc
Assume you are going to lunch and have a choice of two meals. The first meal would give an increase in marginal utility of 100 with a $25 price. The second meal would give you an increase of only 10 with a $2 price. The third meal will give you an increase of 50 with a $5 price. Which meal should you logically choose ?
Third
Which of the following names would be most closely associated with the idea that pleasure attained by individuals is difficult to measure since it is often subjective and social in nature ?
Thorstein Veblen
_____________ was the founder of the institutionalist school of economics and was also a critic of marginalist theory.
Thorstein Veblen
For an individual at a moment in time, consumer behavior is consistent between paired comparison items.
True
In addition to price, "time" relative to utility is another consideration in consumer behavior.
True
In the field of Marketing the concepts of marginal values and marginal utility per dollar are important ideas for brand comparisons among goods and services.
True
Savings (non-consumption) can have a utility function.
True
The value of "need based" services (such as police or medical) are dependent upon the circumstance of need and these would have little value without the presence of the "need".
True
_________________ developed the algebraic basis of marginal utility theory to find the maximized total utility (pleasure) with a given income.
William Jevons
An example of Consumer Behavior is illustrated along the demand line in Figure 6.1. The amount of money that some consumers would be willing to pay above the equilibrium is called _________________ .
consumer surplus
The diminishing marginal utility effect states that as more of an item is consumed and the amount of additional satisfaction decreases, the seller must ________ price to induce the consumer to buy more.
decrease
The amount of pleasure derived from a product per dollar spent is the marginal utility __________ by the price of the item.
divided by
Price Quanity Demanded Quantity Supplied $9.5 1 5 9 2 4 8.5 3 3 8 4 2 7.5 5 1 In the table above __________ would have been willing to pay $9.50, with the price in equilibrium at $8.50 they will have to pay only $8.50.
one person
The utility functions of individuals __________ according to personal values and tastes.
vary widely
