Practice Questions
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How does the concept of marginal utility influence a consumer's budgeting decisions in consumer choice theory?
Consumers want to get the most happiness from their money. Other options are incorrect because Some might think that happiness from each purchase does...
If a consumer has a limited budget and is deciding between two products, how does the concept of marginal utility guide their purchasing decision when prices vary?
To get the most satisfaction, a buyer looks at how much happiness each product gives per dollar spent. Other options are incorrect because Some might ...
If a consumer's budget is constrained and they experience an increase in the price of one good, which of the following outcomes is most likely to occur according to the substitution effect?
When the price of a good goes up, people often look for cheaper options. Other options are incorrect because Some might think that people will keep bu...
How do shifts in a consumer's budget constraint affect their choice of goods as reflected in the concepts of total utility and indifference curves?
When a consumer's budget changes, it can change where the budget line meets the indifference curves. Other options are incorrect because This idea sug...
How does the concept of opportunity cost relate to consumer choices when considering the income effect and price sensitivity in budgeting decisions?
Opportunity cost helps people think about what they give up when they buy something. Other options are incorrect because Some might think opportunity ...
What does the principle of marginal utility suggest about consumer behavior when allocating their budget?
Consumers want to get the most happiness from their money. Other options are incorrect because This idea suggests people ignore prices and only buy wh...
If a consumer receives 10 units of total utility from consuming 2 apples, what is the marginal utility of the third apple if it increases total utility to 13 units?
The marginal utility is the extra satisfaction from one more apple. Other options are incorrect because This answer suggests the extra satisfaction is...
In the context of utility maximization, if a consumer is allocating their budget between two goods, how should they adjust their consumption if the marginal utility per dollar spent on one good is greater than that of another?
When one good gives you more satisfaction per dollar, you should buy more of it. Other options are incorrect because This choice suggests you should b...
If a consumer evaluates the marginal utility per dollar spent on two goods and finds that good X provides more satisfaction per dollar than good Y, what should they do?
Good X gives you more happiness for each dollar you spend. Other options are incorrect because Buying equal amounts ignores the fact that good X is a ...
Which of the following statements accurately describe the relationship between marginal utility and budgeting? Select all that apply.
All the statements misunderstand how marginal utility works with budgeting. Other options are incorrect because Many think that more of a good always ...
If a consumer finds that the marginal utility per dollar spent on good A is higher than that of good B, what is the most likely underlying reason for this observation?
Good A gives more happiness for each dollar spent than good B. Other options are incorrect because Just because something costs more doesn't mean it's...
If a consumer has a budget of $30 and is evaluating two goods, A and B, with marginal utilities of 15 and 10 respectively, and prices of $5 and $2, which good should the consumer prioritize to maximize satisfaction per dollar spent?
Good B gives more satisfaction for each dollar spent. Other options are incorrect because Some might think that higher total satisfaction means it's b...
Arrange the following steps in the correct order for maximizing utility within a budget constraint: A) Calculate the marginal utility per dollar for each good; B) Compare the marginal utility per dollar across goods; C) Allocate budget to goods based on the highest marginal utility per dollar; D) Assess total utility gained from the chosen consumption bundle.
First, you calculate how much satisfaction each good gives you for each dollar spent. Other options are incorrect because This option suggests compari...
Marginal Utility:Total Satisfaction :: Budget Constraint: ?
A budget constraint shows how much money you can spend. Other options are incorrect because Some might think a budget tells you how many items you can...
When determining the optimal consumption of goods within a budget, it is essential to compare the marginal utility per dollar spent on each good to maximize __________.
Total utility is the overall satisfaction you get from all the goods you buy. Other options are incorrect because Some might think average cost is imp...
If a consumer has a budget of $30 and finds that good A provides 5 utils per dollar while good B provides 3 utils per dollar, which should they prioritize to maximize satisfaction?
Good A gives more satisfaction per dollar spent. Other options are incorrect because Some might think good B is a good choice, but it gives less satis...
Maria has a budget of $30 and is considering purchasing two goods: water and good X. Water costs $3 per unit, and good X costs $6 per unit. If Maria derives a marginal utility of 9 from the last unit of water and 12 from the last unit of good X, how should she allocate her budget to maximize her total utility?
Maria should buy 5 units of water and 2 units of good X. Other options are incorrect because Buying only water may seem good, but it doesn't use her b...
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