Question

please provide detailed step by step solution

Microeconomics

Question in Microeconomics

19) The term Utility in economics refers to A) government provided goods like electricity B) ease of use C he want satisfying power experienced from a good, service or human he change in benefit from producing one additional unit of information limiting a person's ability to purchase a good or service is determined by: 20) 20) The objective information limi A) their preferences the prices they pay for the goods and services they purchase and their incomes their income only the prices for the goods or services only When an economists refers to utility as subjective they mean 1 The want satisfying power received from the action is personal One person may value a good, service or human action differently from another person C) All of the above. D) Comparing utility among different people is difficult 22) Marginal utility is A) objectively measurable B) the satisfaction experienced from consuming a good C) the change in total utility from one additional unit of a good, service or action D) the preference a person has for one good over another good. 23) The table below shows Al's total utility and marginal utility from going to yoga class each week Number of yoga classes Total Utility Marginal Utility 1,200 1,200 2.700 1.100 4.600 5.200 _and from the fourth yogas class is Al's marginal utility from the second yoga class is respectively. A) 600 amd 550, respectively C) 1,100 and 600, respectively B) 2,700 and 4,600, respectively D) 1.500 and 800, respectively 24) Diminishing marginal utility sets in with the A) 4th B) 3rd - yoga class Al attends C) 1st D) 2nd 25) The equimarginal principle tells us that a consumer maximizes their utility when A) the marginal utility per dollar spent on necessities is greater than the marginal utility per dollar spent on luxuries. B) total utility is at its lowest value. C) the marginal utility per dollar spent on all goods is the same. D) the marginal utility per dollar spent on expensive goods is larger than the marginal utility per dollar spent on inexpensive goods.

Answer 1

Question No.	Answer	Reason
19	C	As per definition of utility. Utility is want satisfying power of a commodity.
20	B	Both income as well as price of the goods and services limit persons ability to purchase. As even if when income of the person is low but price of the goods/services is low he will be able to buy it.
21	C	Utility is purely a subjective creteria hence it differs from person to person. For some person 1 glass of water may be enough but for a child even half a glass of water may be enough.
22	C	Marginal utility is additional utility derived from consumption of one additional unit.
23	D	As per Calculation Annexed in Annexure-1
24	B	Marginal utility for the 2nd class was 1500, However, for the 3rd class it was 1100 hence it decreased in 3rd class
25	C	The equimarginal principle states that consumers will choose a combination of goods to maximise their total utility. Hence when Marginal utility per dollar spend on all goods and services are same at that time consumer maximizes their utility.
Annexure-1
Total utility	Marginal utility	Calculation
1200	1200
2700	1500	(2700-1200)
3800	1100	(3800-2700)
4600	800	(4600-3800)
5200	600	(5200-4600)