Micro Chapter 7 Quiz

The below table shows the average utility (in utils) obtained from the consumption of goods A and B. Refer to Table 7.3. The marginal utility of the fourth unit of B is _____ utils.

1

The table given below records the total utility derived from the consumption of avocados. According to Table 7.2, the marginal utility of the third avocado is _____ utils.

12

The table below shows the total utility associated with various units of goods X and Y. Refer to Table 7.5. Given that the price of good X is $2 per unit, the price of good Y is $5 per unit, and that the consumer spends a total of $14 on both goods, what is the total utility associated with the utility-maximizing combination?

172

The table given below reports the total utility derived by an individual from the consumption of different units of goods A, B, and C. Refer to Table 7.4. If the consumer's income increases from $10 to $20 but the prices of each of the goods doubles, the consumer would maximize utility by purchasing _____.

3 units of good A, 5 units of good B, and 6 units of good C

Suppose the prices of goods X, Y, and Z are $4, $1, and $5, respectively, and the last unit purchased of good X has a marginal utility MUx = 16 utils. At the point of equilibrium, the marginal utility of the last unit purchased of goods Y and Z will be:

MUy = 4 utils and MUz = 20 utils, respectively.

_____ is a measure of the total satisfaction derived from consuming a quantity of some good or service.

Total utility

In an indifference map, one would most likely see indifference curves that:

are bowed inward toward the origin.

The study of decision making that assumes people are rational in a broad sense, even if they do not have complete and perfect information is called _____.

behavioral economics

To decide which of the two goods is a better buy, a consumer should compare the products' _____.

marginal utilities per dollar

The additional satisfaction that a consumer receives from one more unit of a good or service is known as _____.

marginal utility

Assume that a consumer purchases a combination of products X and Y and MUx / Px = 75 utils per dollar and MUy / Py = 50 utils per dollar. To maximize utility without spending more dollars, the consumer should buy:

more of X and less of Y.

If a consumer purchases more of a product, then most likely the marginal utility of _____.

that product decreases

As long as the marginal utilities per dollar obtained from the last unit of all products consumed are the same, _____.

the consumer is in equilibrium and will not reallocate income

If one were to plot the data from Table 7.1 (with utility on the vertical axis and quantity of the good on the horizontal axis):

the marginal utility curve would intersect the horizontal axis at the third unit of the good.

Total utility is maximized when _____.

the marginal utility per dollar expenditure is the same for all goods consumed

Suppose a friend gives you two pieces of gum, and you decide to have one piece now and save the other for tomorrow. You do this because:

the marginal utility you get from the second piece will be higher tomorrow.

When the price of a good changes, the substitution effect occurs because:

the relative price of that good changes compared to other goods in the consumption bundle.

According to the law of diminishing utility, _____.

the rich people should have a higher tax rate as compared to poor people

Marginal utility diminishes more quickly:

the shorter the time period between two successive consumptions

To economists, feelings such as peace, serenity, religious devotion, and self-esteem are captured in the concept known as _____.

utility