CH. 7 Quiz

Marginal utility is the:

change in total utility obtained by consuming one more unit of a good

To maximize utility a consume should allocate money income so that the:

marginal utility obtained form the last dollar spent on teach product is the same

Suppose that Ms. Thomson is currently exhausting her money income by purchasing 10 units of A and 8 units of B at prices of $2 and $4 respectively. The marginal utility of the last units of A and B are 16 and 24 respectively these data suggest that Ms. Thomson:

should buy less B and more A

Which of the following is not an assumption of the marginal-utility theory of consumer behavior

the consumer's tastes and preferences change within the period studied

Suppose the price of an iced coffee is $4 and the price of a candy bar is $2. In order to maximize total utility, a consumer who buys some of each should allocate purchases such that:

the marginal utility of an iced coffee is twice that of a candy bar

The satisfaction or pleasure one gets from consuming a good or service is:

Utility

Which best expresses the law of diminishing marginal utility?

The more of a product is consumed, the smaller is the total utility from the product