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Diminishing marginal utility implies

1) Diminishing marginal utility implies that the
A) first unit of a good consumed will contribute most to the consumer's satisfaction.
B) last unit of a good consumed will contribute most to the consumer's satisfaction.
C) total utility is negative.
D) total utility is increasing.
E) marginal utility of a good diminishes over time.

2) If a good has a marginal utility of zero, then consumption of an additional unit would mean that total utility would
A) also be zero.
B) not change.
C) be increasing.
D) be decreasing.
E) be negative.

3) The total utility a consumer receives from 6 units of a good is 255. The marginal utility of the 6th unit is 45 and of the 5th unit is 60. The total utility of consuming 4 units of the good thus is
A) 300.
B) 150.
C) 210.
D) 195.

4) If all consumers in an economy have maximized their utility, and they face a given set of market prices, then each consumer will have identical
A) total utilities for each good.
B) marginal utilities for each good.
C) marginal utilities per unit of each good.
D)ratios of marginal utility to price for each good.
E) consumption of each good.

9) Josie is allocating her expenditure between steaks and asparagus in order to maximize her total utility. For the quantities of steak and asparagus she has chosen, an increase in the price of steaks will, ceteris paribus,
A) increase the marginal utility of a unit of steak.
B) reduce the marginal utility per dollar spent on steak.
C) reduce the marginal utility of a unit of steak.
D) increase the marginal utility per dollar spent on steak.
E) have no effect on the utility per dollar spent on steak.

10) The market demand curve is the
A) horizontal sum of the individual consumer demand curves.
B) vertical sum of the individual demand curves.
C) vertical sum of the quantities demanded at a certain price.
D) vertical sum of the prices at a given quantity demanded.
E) horizontal sum of quantities demanded at a certain price.

11) At a garage sale, Ken purchases a used bicycle for $8 when he was willing to pay $25. If the bicycle costs $75 new, Ken's consumer surplus is ________.
A) $0
B) $17
C) $33
D) $50
E) $67

12) Average product is maximized when
A) total product is maximized.
B) marginal product is maximized.
C) the maximum quantity of the variable input is employed.
D) diminishing returns cease to operate.
E) average product equals marginal product and marginal product is falling. lineline

13) In the short run, the firm's product curves show
A) AP is at its minimum when MP = AP.
B) TP is at its maximum when MP = O.
C) TP begins to decrease when AP begins to decrease.
D) when MP > AP, AP is decreasing.
E) when the MP curve cuts the AP curve from below, the AP curve begins to fall.

14) If we know that capital is fixed and a basket-producing firm can produce 36 baskets per day with 3 workers and 44 baskets per day with 4 workers, then we know all of the following EXCEPT:
A) The marginal product of the fourth worker is 8.
B) The average product of the fourth worker is 12.
C) The firm has passed the point of diminishing average productivity.
D) The marginal product is below the average product.
E) The firm has passed the point of diminishing marginal productivity.

Solution Preview

1) Diminishing marginal utility implies that the
A) first unit of a good consumed will contribute most to the consumer's satisfaction.
B) last unit of a good consumed will contribute most to the consumer's satisfaction.
C) total utility is negative.
D) total utility is increasing.
E) marginal utility of a good diminishes over time.

Answer: A

2) If a good has a marginal utility of zero, then consumption of an additional unit would mean that total utility would
A) also be zero.
B) not change.
C) be increasing.
D) be decreasing.
E) be negative.

Answer: B

3) The total utility a consumer receives from 6 units of a good is 255. The marginal utility of the 6th unit is 45 and of the 5th unit is 60. The total utility of consuming 4 units of the good thus is
A) 300.
B) 150.
C) 210.
D) 195.

Answer: B

255 - 45 - 60 = 150

4) If all consumers in an economy have maximized ...

Solution Summary

This solution is comprised of answer to the economic multiple choice questions.

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