Question

Indicate whether the following statements are True or False

e)If Tom's total utility from watching one more minute of television increases but the increase for each additional minute is smaller tha the previous minute,he has diminishing marginal utility

f)As a person consumes more and more slices of pizza, the marginal utility of each extra slice diminishes

g)A consumer will maximize utility when all income is spent and the marginal utility is equal for all goods

h)When Kathryn spends her entire budget and equates marginal utility per dollar across all goods'Kathryn's total utility is maximized

i)If Dana spends all her income on ice cream and Mountain Dew and her marginal utility per dollar from ice cream is greater than her marginal utility per dollar from Mountain Dew,she should buy more ice cream and less Moutain Dew

J)If the price of a good increases,a consumer will substitude away from the relatively more expensive good,which will increase the marginal utility for that good and bring the consumer back to equilibrium

Answer 1

e) True.

The law of diminishing marginal utility states that as consumption increases the marginal utility from each additional unit declines

f)True.

The law of diminishing marginal utility states that as consumption increases the marginal utility from each additional unit declines

g)False.

A consumer maximises utility when he spends his income on goods which yields the greatest marginal utility per dollar of expenditure

h)False.

A consumer maximises total utility ,for every dollar they spend,they should spend it on item which yields the greatest marginal utility per dollar of expenditure

I)True.

A consumer maximises total utility ,for every dollar they spend,they should spend it on item which yields the greatest marginal utility per dollar of expenditure

j) False.

Substitution effect