Question 1

38.Which of the following statements is true?
A) Because total utility is constant along an indifference curve,the marginal rate of substitution is also constant.
B) If an indifference curve is convex,the marginal rate of substitution varies along the curve.
C) The slope of an indifference curve measures the consumer's marginal rate of substitution.
D) Both b) and c) are true.

Accepted Answer

An indifference curve is convex, indicating that the marginal rate of substitution (MRS) varies along the curve. The slope of the indifference curve represents the MRS, which is the rate at which a consumer is willing to substitute one good for another while maintaining the same level of utility.

Question 2

When total utility,U(x) is maximized,marginal utility,MU_x is A) constant. B) rising. C) maximized. D) zero.

Accepted Answer

When total utility is maximized, it means that the consumer has achieved the highest level of satisfaction possible with the given resources and preferences. At this point, the marginal utility of consuming an additional unit of the good (MU_x) is zero as any further consumption would not provide any additional satisfaction. Therefore, the correct answer is D.

Question 3

Identify the truthfulness of the following statements. I.Diminishing marginal utility and increasing total utility are incompatible with each other.
II.When marginal utility is negative,total utility is decreasing.
A) Both I and II are true.
B) Both I and II are false.
C) I is true; II is false.
D) I is false; II is true.

Accepted Answer

The answer of Identify the truthfulness of the following statements....

Question 4

Suppose that MRSS1U1B1x,y S1U1B0= 10.
A) The consumer is willing to substitute 10 units of  for 1 unit of  to leave utility unchanged.
B) The consumer is willing to substitute 10 units of  for 1 unit of  to leave utility unchanged.
C) Regardless of prices, the consumer will consume only  .
D) Regardless of prices, the consumer will consume only  .

Accepted Answer

MRSS1U1B1x,y measures the marginal rate of substitution between goods x and y. It indicates the amount of y that the consumer is willing to give up for one unit of x while maintaining the same level of utility. In this case, the value of MRSS1U1B1x,y is 10, which means that the consumer is willing to give up 10 units of y for one unit of x. Thus, option B is correct as it states that the consumer is willing to substitute 10 units of good 11ea71e2_6308_576d_89cd_45ab51fcab11_TB1644_11 for 1 unit of 11ea71e2_6308_576e_89cd_ebd5ec6bdaf3_TB1644_11 to maintain the same level of utility. Options A, C, and D do not provide any relevant information about the consumer's preferences and therefore are incorrect.

Question 5

An illustration of an indifference curve has:
A) prices of the goods on the axes.
B) quantities of the goods on the axes.
C) price on the vertical axis, quantity on the horizontal axis.
D) Price on the horizontal axis, quantity on the vertical axis.

Accepted Answer

An indifference curve shows different combinations of two goods that give the same level of satisfaction to the consumer. The curve itself does not involve prices, only the quantity of each good that the consumer is willing to consume. Therefore, the best choice is B, with quantities of the goods on the axes.

Question 6

Indifference curves have a negative slope when
A) the consumer likes good  but dislikes good  .
B) the consumer likes good  but dislikes good  .
C) the consumer likes both good  and good  .
D) the consumer dislikes both goods.

Accepted Answer

The answer of Indifference curves have a negative slope when
A)...

Question 7

Suppose that a consumer has utility function U= Ax²y²with MU_x = Ay²x and MU_y = Ax²y.Which of the following statements is false? A) The marginal utilities are positive. B) The marginal rate of substitution is diminishing. C) The indifference curves are bowed away from the origin. D) The indifference curves are downwards sloping.

Accepted Answer

The indifference curves for this utility function are actually bowed towards the origin, not away from it, due to the diminishing marginal rate of substitution.

Question 8

Which of the following statements is false?
A) Marginal utility may be negative.
B) Marginal utility is the slope of total utility.
C) If the more is better assumption is satisfied, total utility will increase as consumption increases.
D) If the more is better assumption is satisfied, the marginal utility from consuming the second unit must be greater than the marginal utility from consuming the first unit.

Accepted Answer

If the more is better assumption is satisfied, the marginal utility from consuming the second unit may be equal to or less than the marginal utility from consuming the first unit. This is because marginal utility can decrease as consumption increases due to the principle of diminishing marginal utility.

Question 9

An indifference curve represents
A) a two-dimensional "slice" of a three-dimensional total utility function.
B) varying levels of a total utility function.
C) constant marginal utility.
D) the slope of marginal utility.

Accepted Answer

The answer of An indifference curve represents
A) a two-dimensional "slice"...

Question 10

If one were to draw indifference curves representing preferences over two varieties of red apple,it is likely that one would draw them as:
A) almost straight lines.
B) almost "L-shaped."
C) positively sloped.
D) crossing.

Accepted Answer

Indifference curves for preferences over two varieties of the same product, in this case, red apples, are likely to be almost straight lines as the consumer will be indifferent between different units of the same kind of product. The consumer may prefer one variety to the other, but the trade-off between the two varieties will be constant. Therefore, the consumer's preferences will be represented by straight lines parallel to the x-axis.

Question 11

Which of the following statements is false?
A) Total utility and marginal utility cannot be plotted on the same graph
B) The marginal utility is the slope of the (total) utility function
C) Marginal utility is not the slope of total utility
D) The relationship between total and marginal functions holds for other measures in economics

Accepted Answer

Marginal utility is indeed the slope of the total utility function, so statement B is true. The relationship between total and marginal functions also applies to other measures in economics, so statement D is also true. However, statement A is false because total utility and marginal utility can be plotted on the same graph. Therefore, the only false statement is C.

Question 12

The principle of diminishing marginal utility implies
A) indifference curves are concave.
B) indifference curves are convex.
C) indifference curves are straight lines.
D) as your consumption level increases, the marginal utility received from consumption of an additional unit increases.

Accepted Answer

The principle of diminishing marginal utility states that the more of a good or service a person consumes, the less additional utility they receive from each additional unit consumed. This implies that indifference curves are convex, as they represent all the combinations of goods that provide the same level of satisfaction, and as consumption of one good increases, the amount of the other good needed to provide the same level of satisfaction decreases.

Question 13

Marginal utility is
A) always increasing.
B) maximized when total utility is zero.
C) the slope of the total utility function.
D) always decreasing.

Accepted Answer

Marginal utility is the additional utility gained from consuming one more unit of a good or service. It is calculated as the derivative of the total utility function with respect to the quantity of the good consumed. Therefore, marginal utility is represented by the slope of the total utility function.

Question 14

A consumer would not generally be represented as deriving utility from:
A) the brand name of a product
B) the characteristics of a product
C) the price of a product
D) the packaging of a product

Accepted Answer

While price does play a role in a consumer's purchase decision, it is not typically something that directly provides utility or satisfaction to the consumer. Rather, it is a consideration that affects the overall value or benefits that the consumer perceives from the product. The other three choices - brand name, product characteristics, and packaging - can all contribute to a consumer's utility or satisfaction with a product. A consumer may consider the price of a product, but they do not derive utility from it. Instead, they seek to maximize their utility by obtaining the most satisfaction for the lowest possible cost. Utility is derived from the characteristics of a product, such as its quality and functionality, as well as the packaging and brand name which can influence a consumer's perception and satisfaction with the product.

Question 15

Which of the following statements is false?
A) If marginal utility is diminishing, then total utility is increasing but at a decreasing rate.
B) If marginal utility is diminishing, then total utility is concave.
C) If marginal utility is negative, then total utility is downward-sloping.
D) If marginal utility is decreasing, then total utility is decreasing.

Accepted Answer

If marginal utility is decreasing, it means it is diminishing at a decreasing rate. Therefore, total utility may still be increasing but at a decreasing rate, and not necessarily decreasing.

Question 16

A _____________________ measures the level of satisfaction that a consumer receives from any basket of goods.
A) production function.
B) transformation function.
C) utility function.
D) transitivity function.

Accepted Answer

A utility function measures the level of satisfaction a consumer receives from any basket of goods. It is a mathematical function that assigns a number or score to each possible consumption bundle or combination of goods, representing how much the consumer likes or enjoys that particular basket.

Question 17

Which of the following statements best explains the concept of diminishing marginal utility?
A) As I consume additional ice cream cones, each ice cream cone adds more to my total happiness than the previous one.
B) I must consume ice cream cones until I have a stomach ache.
C) As I consume additional ice cream cones, each ice cream cone adds less to my total happiness than the previous one.
D) I must maximize my consumption of ice cream cones.

Accepted Answer

Diminishing marginal utility refers to the idea that as a consumer consumes more of a good, the additional satisfaction or happiness they receive from consuming each additional unit of the good decreases. This means that each additional unit adds less to their total happiness than the previous one, as stated in option C. Options A and D are incorrect because they suggest that the additional utility from each unit of the good is increasing, which is not the case with diminishing marginal utility. Option B is also incorrect as it doesn't relate to the concept of utility at all.

Question 18

Suppose the marginal rate of substitution of for is given by MRS_x,y = 5x/7y A) The indifference curves will be bowed away from the origin. B) The indifference curves will be bowed in towards the origin. C) The indifference curves will be straight lines. D) It is not possible to tell the shape of the indifference curves with only this information.

Accepted Answer

The answer of Suppose the marginal rate of substitution of...

Question 19

If indifference curves are upward sloping,this violates the assumption that preferences
A) are complete
B) are transitive.
C) require that more to be better.
D) Upward sloping indifference curves do not violate any of the assumptions about preferences.

Accepted Answer

Indifference curves are typically downward sloping because they represent combinations of goods that provide the same level of utility. If they were upward sloping, it would imply that more of both goods is not better, violating the assumption that more is better.

Question 20

Suppose that a consumer has utility function U(x,y) with MU_x = 5y²x and MU_y = 2x²y.What is the marginal rate of substitution? A) 10y³x³ B) 2x/5y C) 5y/2x D) 5y²x²

Accepted Answer

The marginal rate of substitution (MRS) is given by the ratio of the MUS of y to that of x: MRS = MUS(y)/MUS(x). From the given utility function, we can obtain the MUS of y with respect to x as: MUS(y) = (2x²)/_y Substituting the given expression for MUS(x) = 5y²x/_x, we get: MRS = MUS(y)/MUS(x) = (2x²)/_y / (5y²x/_x) = 2x²/_x * _x/5y²y = 2x/5y Therefore, the answer is C. There is no best choice given as the question only asks for the MRS.

Quiz 3: Consumer Preferences and the Concept of Utility

38.Which of the following statements is true?

When total utility,U(x) is maximized,marginal utility,MU_x is

Identify the truthfulness of the following statements. I.Diminishing marginal utility and increasing total utility are incompatible with each other. II.When marginal utility is negative,total utility is decreasing.

Suppose that MRS_x,y= 10.

An illustration of an indifference curve has:

Indifference curves have a negative slope when

Suppose that a consumer has utility function U= Ax²y²with MU_x = Ay²x and MU_y = Ax²y.Which of the following statements is false?

Which of the following statements is false?

An indifference curve represents

If one were to draw indifference curves representing preferences over two varieties of red apple,it is likely that one would draw them as:

Which of the following statements is false?

The principle of diminishing marginal utility implies

Marginal utility is

A consumer would not generally be represented as deriving utility from:

Which of the following statements is false?

A _____________________ measures the level of satisfaction that a consumer receives from any basket of goods.

Which of the following statements best explains the concept of diminishing marginal utility?

Suppose the marginal rate of substitution of for is given by MRS_x,y = 5x/7y

If indifference curves are upward sloping,this violates the assumption that preferences

Suppose that a consumer has utility function U(x,y) with MU_x = 5y²x and MU_y = 2x²y.What is the marginal rate of substitution?

Quiz 3: Consumer Preferences and the Concept of Utility

38.Which of the following statements is true?

When total utility,U(x) is maximized,marginal utility,MUx is

Identify the truthfulness of the following statements. I.Diminishing marginal utility and increasing total utility are incompatible with each other. II.When marginal utility is negative,total utility is decreasing.

Suppose that MRSx,y = 10.

An illustration of an indifference curve has:

Indifference curves have a negative slope when

Suppose that a consumer has utility function U= Ax2y2 with MUx = Ay2x and MUy = Ax2y.Which of the following statements is false?

Which of the following statements is false?

An indifference curve represents

If one were to draw indifference curves representing preferences over two varieties of red apple,it is likely that one would draw them as:

Which of the following statements is false?

The principle of diminishing marginal utility implies

Marginal utility is

A consumer would not generally be represented as deriving utility from:

Which of the following statements is false?

A _____________________ measures the level of satisfaction that a consumer receives from any basket of goods.

Which of the following statements best explains the concept of diminishing marginal utility?

Suppose the marginal rate of substitution of for is given by MRSx,y = 5x/7y

If indifference curves are upward sloping,this violates the assumption that preferences

Suppose that a consumer has utility function U(x,y) with MUx = 5y2x and MUy = 2x2y.What is the marginal rate of substitution?

When total utility,U(x) is maximized,marginal utility,MU_x is

Suppose that MRS_x,y= 10.

Suppose that a consumer has utility function U= Ax²y²with MU_x = Ay²x and MU_y = Ax²y.Which of the following statements is false?

Suppose the marginal rate of substitution of for is given by MRS_x,y = 5x/7y

Suppose that a consumer has utility function U(x,y) with MU_x = 5y²x and MU_y = 2x²y.What is the marginal rate of substitution?