Practice Questions
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How does the income effect influence consumer choice when the price of a good decreases?
When the price of a good goes down, people feel like they have more money to spend. Other options are incorrect because Some might think that feeling ...
How does the principle of diminishing marginal utility influence a consumer's decision when purchasing multiple units of a product?
As you eat more slices of pizza, each slice gives you less happiness than the one before. Other options are incorrect because Some people think buyers...
A consumer has a fixed income and is deciding between two goods: apples and oranges. If the price of apples decreases, how does the substitution effect influence the consumer's choice between the two goods?
When apples cost less, they become a better deal. Other options are incorrect because This answer suggests the consumer will ignore apples completely;...
How does the concept of diminishing marginal utility influence a consumer's demand curve within the constraints of their budget?
As people buy more of a product, each extra unit gives them less happiness. Other options are incorrect because This answer suggests that more satisfa...
How does the concept of utility maximization influence consumer choice in relation to economic welfare?
Consumers want to get the most satisfaction from their money. Other options are incorrect because Some might think that higher prices mean better prod...
What does the principle of marginal utility suggest about consumer choice?
This principle says that people buy more of something if it gives them more satisfaction than it costs. Other options are incorrect because Some might...
If a consumer derives a total utility of 60 from consuming 3 units of a good, and the total utility from consuming 4 units is 70, what is the marginal utility of the fourth unit?
The marginal utility is the extra satisfaction from one more unit. Other options are incorrect because This answer suggests that the extra satisfactio...
What does the principle of diminishing marginal utility imply about a consumer's consumption choices?
As you eat more slices of pizza, each slice gives you less happiness than the one before. Other options are incorrect because Some people think that m...
A consumer has a budget of $10 to spend on apples and oranges. If the marginal utility of the last apple consumed is 20 utils and the price of an apple is $2, while the marginal utility of the last orange consumed is 15 utils and the price of an orange is $1, which of the following statements correctly classifies the consumer's spending behavior?
The consumer gets more satisfaction per dollar from apples. Other options are incorrect because This suggests that oranges are better overall; This im...
Maria has a budget of $10 to spend on apples and oranges. Apples cost $2 each and oranges cost $1 each. If Maria decides to buy 3 apples, how should she allocate her remaining budget to maximize her total utility, considering the marginal utility she receives from each fruit? Assume she derives more satisfaction from each additional orange than from an additional apple after the third apple.
Maria spends $6 on 3 apples. Other options are incorrect because This choice suggests saving money is better than getting more fruit; Buying 3 oranges...
If a consumer increases their consumption of apples and experiences a decrease in their marginal utility from apples, what is the most likely underlying cause of this effect?
When a person eats more apples, each additional apple gives them less satisfaction. Other options are incorrect because This answer suggests that spen...
If a consumer is maximizing total utility with a budget constraint, which of the following scenarios best illustrates the principle of marginal utility per dollar spent?
This choice shows that the consumer buys more apples until the satisfaction from apples per dollar spent matches that of oranges. Other options are in...
When considering the consumption of apples and oranges, a consumer seeks to maximize their total utility by ensuring that the __________ gained from the last dollar spent on each good is equal.
Marginal utility is the extra satisfaction you get from spending one more dollar on a good. Other options are incorrect because Average utility looks ...
Marginal utility is to consumer satisfaction as budget constraint is to which of the following?
A budget constraint limits how much you can spend. Other options are incorrect because Total expenditure is how much money you spend overall; Market p...
If a consumer is maximizing utility, how should they allocate their budget between apples and oranges?
To get the most satisfaction, spend more on the fruit that gives you the most value for your money. Other options are incorrect because Spending the s...
Order the steps a consumer should take to maximize their total utility when choosing between apples and oranges, given a budget constraint.
To get the most satisfaction, you need to see how much happiness each fruit gives you for every dollar spent. Other options are incorrect because Just...
Which of the following statements accurately describe the relationship between marginal utility and consumer choice? Select all that apply.
All the statements misunderstand how marginal utility affects choices. Other options are incorrect because This suggests people will keep buying if sa...
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