Multiple Choice Questions
A. is synonymous with usefulness.
B. is want-satisfying power.
C. is easy to quantify.
D. rarely varies from person to person.
2. Marginal utility can be:
A. positive, but not negative.
B. positive or negative, but not zero.
C. positive, negative, or zero.
D. decreasing, but not negative.
4. The ability of a good or service to satisfy wants is called: A. utility maximization.
B. opportunity cost.
C. revenue potential.
9. The above data illustrate the:
A. law of comparative advantage.
B. utility-maximizing rule.
C. law of diminishing marginal utility.
D. law of increasing opportunity costs.
10. Refer to above data. Marginal utility becomes negative beginning with the: A. first unit.
B. second unit.
C. third unit.
D. fourth unit.
11. A product has utility if it:
A. takes more and more resources to produce successive units of it. B. violates the law of demand.
C. satisfies consumer wants.
D. is useful.
12. The law of diminishing marginal utility states that:
A. total utility is maximized when consumers obtain the same amount of utility per unit of each product consumed. B. beyond some point additional units of a product will yield less and less extra satisfaction to a consumer. C. price must be lowered to induce firms to supply more of a product. D. it will take larger and larger amounts of resources beyond some point to produce successive units of a product.
13. The first Pepsi yields Craig 18 units of utility and the second yields him an additional 12 units of utility. His total utility from three Pepsis is 38 units of utility. The marginal utility of the third Pepsi is: A. 26 units of utility.
B. 6 units of utility.
C. 8 units of utility.
D. 38 units of utility.
14. If the price of product X rises, then the resulting decline in the amount purchased will: A. necessarily increase the consumer's total utility from his total purchases. B. increase the marginal utility of this good.
C. increase the total utility from purchases of this good.
D. reduce the marginal utility of this good.
15. Marginal utility is the:
A. sensitivity of consumer purchases of a good to changes in the price of that good. B. change in total utility obtained by consuming one more unit of a good. C. change in total utility obtained by consuming another unit of a good divided by the change in the price of that good. D. total utility associated with the consumption of a certain number of units of a good divided by the number of units consumed.
16. Utility refers to the:
A. satisfaction that a consumer derives from a good or service. B. rate of decline in a product demand curve.
C. relative scarcity of a product.
D. usefulness of a product.
17. Total utility may be determined by:
A. multiplying the marginal utility of the last unit consumed by the number of units consumed. B. summing the marginal utilities of each unit consumed.
C. multiplying the marginal utility of the last unit consumed by product price. D. multiplying the marginal utility of the first unit consumed by the number of units consumed.
18. Refer to the above diagram. The marginal utility of the third unit of X is: A. 5.
19. Refer to the above diagram. The total utility yielded by 4 units of X is: A. 4.
20. Refer to the above diagram. Total utility is at a maximum at _____ units of X. A. 2
21. Refer to the above diagram. Total utility:
A. increases so long as additional units of Y are purchased. B. becomes negative at 4 units.
C. increases at a diminishing rate, reaches a maximum, and then declines. D. is maximized at 2 units.
22. Refer to the above diagram. Marginal utility:
A. increases at an increasing rate.
B. becomes negative after consuming 4 units of output.