Practice Questions
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What does the concept of consumer utility maximization primarily involve?
This idea is about picking things that make you the happiest with the money you have. Other options are incorrect because Some might think this is abo...
If a consumer experiences diminishing marginal utility, how might the price elasticity of demand for a good be affected if the price increases?
When the price goes up, people feel less satisfied with each extra unit they buy. Other options are incorrect because Some might think that higher pri...
How does the substitution effect relate to consumer utility maximization when a price change occurs for a good?
When the price of a good goes down, it becomes cheaper. Other options are incorrect because Some might think people stick to their old habits even whe...
How does the income effect influence a consumer's choice when considering diminishing marginal utility under a budget constraint?
The income effect helps people change what they buy to get the most satisfaction. Other options are incorrect because Some might think that the income...
In the context of consumer utility maximization, which of the following scenarios best illustrates the concept of an optimal consumption bundle on an indifference curve?
This choice shows that a consumer is balancing what they want with what they can afford. Other options are incorrect because This option suggests chan...
What does the concept of consumer utility maximization primarily involve?
This idea is about picking things that make you the happiest with your money. Other options are incorrect because Some might think it's about cutting ...
What is the primary goal of a consumer in the context of utility maximization?
Consumers want to get the most satisfaction from their choices. Other options are incorrect because Some might think minimizing total utility is the g...
What is the principle of marginal utility in the context of consumer utility maximization?
Marginal utility means the extra satisfaction you get from using one more unit of something. Other options are incorrect because This option confuses ...
Order the steps a consumer should take to maximize utility when allocating their budget among different goods.
To get the most satisfaction, compare how much happiness each dollar gives you. Other options are incorrect because Just looking at how much happiness...
In the context of consumer utility maximization, consumers will continue to allocate their resources until the ________ of the last unit consumed equals the price paid for that unit.
Marginal utility is the extra satisfaction you get from one more unit of something. Other options are incorrect because Total utility is the overall s...
Maria has a budget of $20 to spend on fruit. She can buy apples for $2 each and bananas for $1 each. After her first purchase, she finds she enjoys bananas more. How should she adjust her spending to maximize her utility given her preferences?
Maria should buy only bananas because she enjoys them more. Other options are incorrect because Buying 10 bananas means she spends all her money on ju...
Which of the following statements accurately reflect the principles of consumer utility maximization? Select all that apply.
All the statements misunderstand how consumers make choices. Other options are incorrect because This suggests people ignore prices; This implies cons...
If a consumer is maximizing utility, what should they do if the marginal utility per dollar spent on good A is greater than that of good B?
When good A gives you more satisfaction for each dollar, you should buy more of it. Other options are incorrect because Buying equal amounts ignores t...
A consumer is deciding between purchasing a smartwatch for $300 that provides 30 units of utility and a pair of headphones for $150 that provides 15 units of utility. Which category does this scenario best illustrate in terms of consumer utility maximization?
The consumer is looking for the best value. Other options are incorrect because Some might think that cheaper items are always better; Ignoring opport...
A consumer is deciding between two goods, A and B. If the marginal utility per dollar spent on good A is higher than that of good B, what should the consumer do to maximize utility?
When good A gives more satisfaction per dollar, it makes sense to buy more of it. Other options are incorrect because Buying equal amounts means you i...
Utility Maximization: Money spent on goods is to utility as time spent on activities is to what?
When you spend time on activities, you want to feel satisfied. Other options are incorrect because Opportunity cost is what you give up when you choos...
If a consumer is consistently choosing to buy less of a good despite its price decreasing, what could be a likely underlying cause of this behavior?
When the price goes down, people might buy less if they enjoy it less. Other options are incorrect because Some might think the consumer wants to spen...
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