Lesson 6 Quiz

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 (correct)

Assume that you are consuming brownies (cookies) with the following utility function.

5 (correct)

In the Indifference Diagram above, Points H, I and J represent combinations of consumption for A and B that will yield the same amount of additional pleasure.

FALSE (correct)

Many individuals receive a higher value of utility from spending rather than saving and therefore choose to save a large amount of money.

FALSE (correct)

The utility obtained per unit of consumption will not vary based upon "need at the moment" such as with police or doctor services.

FALSE (correct)

As we spend more money our total pleasure increases to a maximum point, but with additional increases in spending our marginal utility (additional pleasure) declines.

TRUE (correct)

Consider the example of an individual in a grocery store examining two cans of peaches, Alpha Peaches and Beta Peaches. If Alpha is thought to provide 10 units of pleasure per dollar and Beta is thought to provide 8 units per dollar, then Alpha should be chosen.

TRUE (correct)

Economists recognize the difficulty in actually measuring pleasure, but most believe that an improved understanding of consumer behavior is served by using the concept of marginal utility.

TRUE (correct)

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 (correct)

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 (correct)

An interesting addition to economic behavior theory was a social commentary published by an American economist __________ in the late 1920's.

Thorstein Veblen (correct)

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 (correct)

The $ $ $ benefit received by a person paying a lower price than the person would have been willing to pay is called ___________ .

consumer surplus (correct)

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 (correct)

The Law of Diminishing Returns states that as more units are consumed past some point, _________ additional pleasure will be received.

less (correct)