Question

Quantity (slices of pizza) Total utility 12) The table above gives Matt's utility from consuming slices of pizza. As Matt consumes m m consuming slices of pizza. As Matt consumes more slices of pizza, he A) obtains greater amounts of marginal utility. B) has diminishing total utility. C) has diminishing marginal utility. D) obtains less total utility. 13) When total utility is at a maximum A) marginal utility is zero. B) marginal utility is equal to total utility. C) marginal utility is negative. D) marginal utility is at a minimum. 14) "Spreading overhead" refers to A) A decrease in the average fixed cost as output rises B) An increase in the average fixed cost as output rises C) An increase in total fixed costs D) An increase in the amount of total cost 15) A consumer reaches the optimal level of consumption A) Total Utility begins to fall B) Marginal Utility is negative C) Total Utility is zero D) Total Utility is maximized 16) For the perfectly competitive firm marginal revenue is equal to: A) the market price of the good being sold B) the number of units sold times the price of the good C) the change in total revenue from selling one more unit of a good D) Both A and C are correct.

Answer 1

12.

Quantity (Slices of Pizza)	Total Utility	Marginal Utility
0	0	-----
1	15	15
2	22	7
3	27	5
4	30	3
5	31	1

Marginal utility = (Change in total utility / Change in quantity)

As Matt consumes more slices of pizza, he has diminishing marginal utility.

Answer: Option (C)

13. When total utility is at maximum marginal utility is zero.

Answer: Option (A)

14. Spreading overheads refers to a decrease in the average fixed cost as output rises.

Answer: Option (A)

15. A consumer reaches the optimal level of consumption when total utility is maximized.

Answer: Option (D)

16. For a perfectly competitive firm marginal revenue is equal to the market price.

P =MR (in perfectly competitive market because price is remains same)

MR = change in total revenue from selling one more unit of good .

Answer: Option (D) i.e., both A and C are correct.