ECN 104 Lecture 5: lecture 5 - notes

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aquamarinedinosaur931

23 Feb 2019

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5. 3 utility maximization & the demand curve. 5. 1 the law of diminishing marginal utility. Added satisfaction declines as a consumer acquires additional units of a given product. For example, a consumers" desires for an automobile, when they have none, may be very strong, but the desire is less intense for a second car, and weaker and weaker for a third or fourth. A product has utility if it can satisfy a want. Total utility: the total amount of satisfaction derived from the consumption of a single product of a combination of products. (an actual measurement, like dollars, time, etc. ) Marginal utility: the extra utility a consumer obtains from the consumption of one additional unit of a product. (utility or abstract units meaning that it could be anything). The relation between total utility and marginal utility links: https://www. khanacademy. org/economics-finance-domain/ap- microeconomics/basic-economic-concepts/16/v/marginal-utility https://www. khanacademy. org/economics-finance-domain/ap- microeconomics/basic-economic-concepts/16/v/visualizing-marginal- utility-mu-and-total-utility-tu-functions. 5. 2 theory of consumer choice marginal utility per dollar.

Related Questions

1.When Kelly Ziegenfuss buys five units of a particular good or service, __________.

a.she has no consumer surplus

b.she has a consumer surplus

c.there is no way of knowing whether she has a consumersurplus

2.Lauren Elise Ballard would be maximizing her total utility when__________.

a.she had a consumer surplus

b.her marginal utility was zero

c.her marginal utility was equal to her total utility

d.she had no consumer surplus

3.Which statement is true?

a.Most people have the same utility schedules.

b.Most people enjoy a consumer surplus for at least some of thethings they buy.

c.We will consume additional units of a product until our consumersurplus is zero.

d.The utility of a product is measured by its usefulness.

4.Which statement is false?

a.The water-diamond paradox can be resolved with the help of the law of diminishing marginal utility.

b.We will consume a service when its marginal utility is equal toits price.

c.The law of diminishing marginal utility has little validity today.

d.None is false.

5.As Keith Collins buys more and more of any good or service, his__________.

a.total utility and marginal utility both decline

b.total utility and marginal utility both rise

c.total utility rises and marginal utility declines

d.total utility declines and marginal utility rises

6.Doug Horn will buy more and more of a good or service until__________.

a.marginal utility is greater than price

b.price is greater than marginal utility

c.price is equal to marginal utility

blackox43

1. Due to the law of diminishing marginal utility, _____.

a. the marginal utility curve is upward sloping

b. when marginal utility becomes positive, total utility declines

c. when marginal utility becomes negative, total utility increases

d. marginal utility is zero when total utility is zero

e. the first unit of a product offers more satisfaction than the last unit of the same product

2. True or False. If a product has an elastic demand, it means that consumers are relatively insensitive to a change in the price of the product.

3. If one were to plot the data with utility on the vertical axis and quantity of the good on the horizontal axis:

a. the total utility curve would begin to decline after the second unit of the good.

b. the marginal utility curve would intersect the horizontal axis at the second unit of the good.

c. the total utility curve would rise from the first unit to the fifth unit.

d. the marginal utility curve would intersect the horizontal axis at the third unit of the good.

e. the marginal utility curve would begin to decline after the third unit of the good.

4. If the average variable cost of a firm is falling, then the:

a. marginal cost must be falling.

b. average fixed cost must be rising.

c. marginal cost lies below the average variable cost.

d. marginal cost must be rising.

e. marginal cost lies above the average variable cost.

5. According to economic theory, the difference between the long run and the short run is:

a. the ability for a firm to vary all resources

b. about two years

c. about two months

d. not relevant for executive decision-makers

e. strictly theoretical so that in practice there is no difference between them

jadefly405

The consumer optimum:

A. occurs when a consumer buys more of a good as a result of a relative price change.

B. the combo of goods and services that maximizes utility for the given income.

C. is the additional satisfaction derived from consuming one more unit of a good or service.

D. occurs when there is a change in purchasing power as a result of a change in the price of a good.

E. occurs when utility declines as consumption increases.

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ECN 104 Lecture 5: lecture 5 - notes

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