When deciding consumption levels of more than one good, the utility-maximizing rule states that you are maximizing utility when
the marginal utility o two goods are equal
the marginal utility of two goods are zero
the ratio of marginal utility to price of two goods is zero
the ratio of marginal utility to price for the two goods are equal
10 points
QUESTION 2
My brother says the law of diminishing marginal utility is nonsense because he is way happier after his sixth beer than after his first one. Pick the best response.
He has a point, maybe this is something behavioral economists should take a look at.
True, but marginal utility refers only to the utility gained (or lost) by drinking that last beer, not to his total utility
There are always exceptions, but in general this law will hold.
True, but the law of diminishing marginal utility is really just saying that eventually he will prefer a glass of wine to another beer.
10 points
QUESTION 3
Frank spends $75 on 10 magazines and 25 newspapers. The magazines cost $5 each and the newspapers cost $2.50 each. Suppose that his marginal utility from the final magazine is 10 utils while his marginal utility from the final newspaper is also 10 utils. According to the utility-maximizing rule, Frank should:
Reallocate spending from magazines to newspapers
Reallocate spending from newspapers to magazines
Be satisfied because he is already maximizing his total utility
None of the above
10 points
QUESTION 4
Marginal utility can be:
Positive, negative, or zero
Decreasing but not negative
Positive or negative, but not zero
Positive, but not negative
10 points
QUESTION 5
In economics, a product provides utility if it:
is useful
violates the law of demand
takes more and more resources to produce successive units of it
satisfies consumer wants
Which of the following is true of an indifference curve?
Along an indifference curve utility is fixed.
If a consumer is rational then indifference curves may cross.
Indifference curves further from the origin are associated with lower levels of utility than those that are closer to the origin.
Because they are indifference curves, microeconomics students should be indifferent towards them.
When deciding consumption levels of more than one good, the utility-maximizing rule states that you are maximizing utility when
the marginal utility o two goods are equal | ||
the marginal utility of two goods are zero | ||
the ratio of marginal utility to price of two goods is zero | ||
the ratio of marginal utility to price for the two goods are equal |
10 points
QUESTION 2
My brother says the law of diminishing marginal utility is nonsense because he is way happier after his sixth beer than after his first one. Pick the best response.
He has a point, maybe this is something behavioral economists should take a look at. | ||
True, but marginal utility refers only to the utility gained (or lost) by drinking that last beer, not to his total utility | ||
There are always exceptions, but in general this law will hold. | ||
True, but the law of diminishing marginal utility is really just saying that eventually he will prefer a glass of wine to another beer. |
10 points
QUESTION 3
Frank spends $75 on 10 magazines and 25 newspapers. The magazines cost $5 each and the newspapers cost $2.50 each. Suppose that his marginal utility from the final magazine is 10 utils while his marginal utility from the final newspaper is also 10 utils. According to the utility-maximizing rule, Frank should:
Reallocate spending from magazines to newspapers | ||
Reallocate spending from newspapers to magazines | ||
Be satisfied because he is already maximizing his total utility | ||
None of the above |
10 points
QUESTION 4
Marginal utility can be:
Positive, negative, or zero | ||
Decreasing but not negative | ||
Positive or negative, but not zero | ||
Positive, but not negative |
10 points
QUESTION 5
In economics, a product provides utility if it:
is useful | ||||||||||||||
violates the law of demand | ||||||||||||||
takes more and more resources to produce successive units of it | ||||||||||||||
satisfies consumer wants Which of the following is true of an indifference curve?
|