Question

MwSt Saleso... Download Loc 1. The change in total satisfaction that experiences from consuming one more unit of a good is called Open with a. total utility. C. elasticity. b. marginal utility d. diminishing utility. is called 2. As more Big Macs are consumed each day, the marginal utility that a person gets from each additional Big Mac tends to a. rise at a steady rate. b. decrease. c. remain constant. d. accelerate. 3. Suppose a consumer wants to obtain the highest possible satisfaction from goods purchased on fixed budget. Which of the following must be equal for all goods? a. Total utility. b. Marginal utility. C. Average utility d. Marginal utility per dollar. 4. Which of the following must happen in order to have consumer equilibrium? a. The consumer's total utility must be at a maximum. b. The consumer's marginal utility must be at a maximum c. There must be no surplus or shortage of the goods. d. The marginal utility of all goods must be equal. 5. The price of diamonds is higher than the price of water because a. diamonds give greater total utility than water. b. the marginal utility for diamonds is greater than the marginal utility for water. c. diamonds are more durable than water. d. diamonds are less essential to life than water. Consider a consumer who spends all income on only two goods: bread and wine. An extra loaf of bread would give the consumer 10 extra utils, while an extra bottle of wine would give the consumer 60 extra utils. Bread costs 50€ per loaf, and wine costs $6 per bottle. In this situation, the consumer a. could increase utility by buying more bread and less wine. b. could increase utility by purchasing more wine and less bread. c. has maximized utility and attained consumer equilibrium. d. is violating the law of diminishing marginal utility. Page 1 / 2 - a +

Answer 1

1..........b (marginal utility)

explanation:- marginal utility is additional utility (change in TU),when an additional unit of a good is consumed.suppose a consumer consumes 10 unit of a good and gets total utility 100 utils ,now if he consumes 11 unit and receives 105 utils of satisfaction. His mu=5

2.........b (decrease)

explanation:- The law of diminishing marginal utility ooperates with successive consumption of a good.

3.........d (marginal utility per dollar)

Explanation- highest possible satisfaction (consumer's equilibrium)is only possible only when marginal utility per dollar is equal for all goods.

4.......b (MU for dimond> MU for water)

Explanation:- no doubt total utility of water is tremendous, but TU doesn't decide market price, but it is decided by the MU. The MU of water falls very quickly.

5...... a (increase buying more bread and less wine. )

Explanation:- At consumer's equilibrium;

MU_b/P_b =MU_w/P_w or 20/0.5 =60/6 or 20=10

Thus the consumer is not in equilibrium, he receives more satisfaction from bread and less from wine. So the consumer needs to increase consumption of bread and decrease consumption of wine.