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Economics Study Set 8

Business

Quiz 19 :

The Logic of Individual Choice: the Foundation of Supply and Demand

Quiz 19 :

The Logic of Individual Choice: the Foundation of Supply and Demand

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Total utility refers to the:
Free
Multiple Choice
Answer:

Answer:

A

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

D

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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.
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True False
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Answer:

True

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The total satisfaction one gets from one's consumption of a product is called:
Multiple Choice
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The principle of diminishing marginal utility states that people don't enjoy consuming more of a good.
True False
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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
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The consumption of an additional unit of a good provides additional satisfaction, which is called:
Multiple Choice
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Focal point equilibria definitely violate the principle of rational choice.
True False
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If MUA/PA> MUB /PB, an individual should choose to consume more of good A.
True False
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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
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If you sign up for a class and then drop it mid-semester, you must not have been making a rational choice when you were enrolling in classes.
True False
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When the ratios of the marginal utility to the price of goods are equal, you're maximizing utility.
True False
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Suppose there is diminishing, but not negative, marginal utility and no inflation. If the price of labor goes up, a worker will supply more labor. (Hint: The worker measures his marginal costs in terms of hours worked. )
True False
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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? img
Multiple Choice
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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
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If marginal utility is declining but still positive, total utility is increasing.
True False
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To calculate the marginal utility of consuming the Nth product:
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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
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To calculate the total utility of consuming N quantity of a product:
Multiple Choice
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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? img
Multiple Choice
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