Practice Questions
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A consumer has a budget of $100 and is considering two products: Product X, which provides 20 units of utility for $20, and Product Y, which provides 30 units of utility for $30. If the consumer wants to maximize their utility while accounting for opportunity cost, which product should they choose to purchase if they can only choose one?
Both products give the same utility per dollar, but Product Y gives more total utility. Other options are incorrect because Choosing X because it is c...
If a consumer has a fixed income and is choosing between three different meals that provide varying levels of satisfaction for their cost, which scenario illustrates the principle of utility maximization?
The correct choice is the one that gives the most extra happiness for each dollar spent. Other options are incorrect because Choosing the most expensi...
If a consumer is evaluating whether to purchase a third slice of pizza after enjoying two, which economic principle suggests that the satisfaction from the third slice will likely be less than from the first two?
When you eat more of the same food, each new slice gives you a little less happiness. Other options are incorrect because People sometimes think buyin...
If a student decides to buy a textbook for $50 instead of going to a concert that costs $40, what is the opportunity cost of purchasing the textbook?
The student gives up the chance to enjoy the concert. Other options are incorrect because People sometimes think the money spent on the textbook is th...
A consumer evaluates two items: Item A offers 50 units of satisfaction for $10, while Item B provides 80 units for $20. If the consumer has a budget of $30 and considers the opportunity cost, which item will yield the highest marginal utility per dollar spent?
Buying Item A gives 5 units of satisfaction for each dollar spent, while Item B gives only 4 units per dollar. Other options are incorrect because The...
If the relationship between budget allocation and consumer satisfaction can be represented as Apples:Utility :: Oranges: ? What is the missing term that best completes the analogy based on the concept of Marginal Utility Per Dollar?
For oranges, the key idea is how much satisfaction you get for every dollar spent. Other options are incorrect because Thinking about the money you pa...
To maximize utility given a budget constraint, a consumer should allocate spending such that the marginal utility per dollar spent on each good is equal to the marginal utility per dollar spent on other goods. This principle is known as the __________.
When a shopper spends money, the best way to feel happiest is to keep the extra enjoyment from each dollar the same for every item. Other options are ...
Maria has a budget of $7 to spend on apples and oranges. The marginal utility from the last apple she consumes is 5 utils, and the price of an apple is $1. The marginal utility from the last orange she consumes is 6 utils, and the price of an orange is $2. How should Maria allocate her budget to maximize her utility?
To decide what to buy, compare the utility gained per dollar for each fruit. Other options are incorrect because The idea that buying only apples is b...
If a consumer has a budget of $7, how should they allocate their spending between apples and oranges to maximize their satisfaction?
When you compare how many extra happiness points you get for each dollar spent on apples versus oranges, you choose the one with the higher value. Oth...
If a consumer finds that the marginal utility per dollar spent on apples is greater than that of oranges, what is the most likely cause of this effect?
A higher preference for apples means the consumer gets more satisfaction from each dollar spent on apples. Other options are incorrect because It is e...
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