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# Economics Study Set 8

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## Quiz 19 : The Logic of Individual Choice: the Foundation of Supply and Demand

Total utility refers to the:
Free
Multiple Choice

A

The underlying psychological foundation of individual choice and economic reasoning is:
Free
Multiple Choice

D

Mary is maximizing utility by eating three pancakes and two eggs. The principle of rational choice says that if there is diminishing marginal utility and the price of eggs rises, Mary will choose to eat more pancakes and fewer eggs.
Free
True False

True

The total satisfaction one gets from one's consumption of a product is called:
Multiple Choice
The principle of diminishing marginal utility states that people don't enjoy consuming more of a good.
True False
According to the principle of rational choice, a consumer should spend money on those goods which provide the most marginal utility per dollar.
True False
The consumption of an additional unit of a good provides additional satisfaction, which is called:
Multiple Choice
Focal point equilibria definitely violate the principle of rational choice.
True False
If MUA/PA> MUB /PB, an individual should choose to consume more of good A.
True False
John is maximizing utility when consuming two goods: French fries and hot dogs. If the marginal utility from the last box of fries John consumed is 60 and the marginal utility of the last hot dog John consumed is 120 and hot dogs cost $1.00 apiece, a box of fries must cost$0.50.
True False
The following table lists the utility that Gwen receives from consuming bananas at $0.25 apiece. What is the total utility of consuming three bananas? Multiple Choice Answer: John is maximizing utility by choosing to spend 90 minutes reading a chapter in The Theory of Moral Sentiments, which will give him 450 units of utility, instead of spending 20 minutes reading a chapter of Atlas Shrugged, which will give him 200 units of utility. (Assume marginal utility decreases slowly. ) True False Answer: If marginal utility is declining but still positive, total utility is increasing. True False Answer: To calculate the marginal utility of consuming the Nth product: Multiple Choice Answer: Steve has two choices for taking classes. Each is three credits and meets three hours a week, so we assume they have equal monetary costs. If Steve chooses to take a modern dance class instead of an economics class, it must be that for Steve the opportunity cost of taking a modern dance class exceeds the opportunity cost of taking an economics class. True False Answer: To calculate the total utility of consuming N quantity of a product: Multiple Choice Answer: The following table lists the utility that Sarah receives from consuming bananas at$0.25 a banana. What is the marginal utility of consuming the fourth banana?