Econ test 6 part 1

An item has utility for a consumer if it

generates enjoyment or satisfaction

Marginal utility can be

positive, negative or zero

If a consumer receives 22 units of marginal utility for consuming the first can of soda, 20 units from consuming the second, and 15 from the third, the total utility of consuming the three units is

5 utility units

If a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars, the marginal utility of the third candy bar is

57 utility units

As a consumer consumes more and more of a product in a particular time period, eventually marginal utility

declines

Marginal utility is the

extra satisfaction received from consuming one more unit of a product.

If total utility increases at a decreasing rate as a consumer consumes more of a product, then marginal utility must be

increasing

Total utility

is equal to the sum of the marginal utilities of all units consumed

Consumers have to make tradeoffs in deciding what to consume because

they are limited by a budget constraint

If a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars, the marginal utility of the second candy bar is

unknown as more information is needed to determine the answer

If your total satisfaction increases when you consume another unit, your marginal utility must be

positive

Utility is

subjective and is difficult to measure.

The law of diminishing marginal utility states that

the additional satisfaction from consuming a good diminishes as more of a good is consumed in a given period of time

If, when you consume another unit of a good, your marginal utility is zero then

you have maximized your total utility from consuming the good

Over the years, Coca-Cola has used celebrities to advertise its products. Most recently, it hired rapper Shawn "Jay-Z" Carter to appear in television commercials as part of the marketing campaign to re-launch Cherry Coke. What is the rationale for using "expensive" celebrities?

By linking the product to a famous person, Coca Cola hopes to create a positive image of the product in the consumer's mind.

Which of the following is likely to occur as the result of the law of diminishing marginal utility?

Wesley enjoyed his second bottle of iced tea less than his first bottle.

Consumers maximize total utility within their budget constraint by

buying the goods with the largest marginal utility per dollar spent

Economists assume that the goal of consumers is to

make themselves as well off as possible.

Suppose your marginal utility from consuming a third slice of cake is zero, then your total utility from consuming cake is

maximized

If a consumer always buys goods rationally, then

the marginal utility per dollar spent on each good will be equal