Practice Questions
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Which of the following statements best describes the utility-maximizing rule in consumer choice theory?
This rule says to spend your money where you get the most satisfaction for each dollar. Other options are incorrect because This idea suggests buying ...
In a market equilibrium, how does the opportunity cost affect a consumer's decision to maximize utility given a fixed budget?
Consumers want to get the most satisfaction from their money. Other options are incorrect because Some might think that picking the cheapest items is ...
In the context of maximizing utility within a budget constraint, which of the following scenarios best illustrates the utility-maximizing rule at market equilibrium?
This option shows that a consumer uses their whole budget wisely. Other options are incorrect because This option suggests that buying more of a cheap...
In the context of maximizing utility with a given budget, which of the following scenarios best illustrates the substitution effect, while adhering to the utility-maximizing rule and considering opportunity cost?
When the price of good X goes down, the consumer buys more of it. Other options are incorrect because This option shows a misunderstanding of utility;...
In the context of maximizing utility, how does the substitution effect influence a consumer's choice between two goods within a limited budget, considering their utility function and the utility-maximizing rule?
When prices change, people often buy more of the good that gives them more satisfaction for each dollar spent. Other options are incorrect because Som...
If a consumer has a budget of $100 and wants to maximize their utility by purchasing two goods, X and Y, where the price of X is $20 and the price of Y is $10, how many units of each good can they purchase to achieve maximum utility?
To maximize utility, you need to spend your budget wisely. Other options are incorrect because This choice spends $20 on X and $60 on Y, totaling $80;...
What is the main purpose of a budget constraint in consumer choice theory?
A budget constraint helps consumers decide how to spend their money wisely. Other options are incorrect because Some might think a budget constraint j...
In consumer choice theory, which of the following best describes the point at which a consumer maximizes their utility given a fixed budget?
To get the most happiness from spending, a consumer should compare how much satisfaction they get from each dollar spent. Other options are incorrect ...
A consumer has a budget of $100 and is choosing between two goods, A and B. If the marginal utility per dollar spent on good A is 10 and on good B is 5, which of the following classifications best describes the consumer's situation?
Good A gives more satisfaction for each dollar spent. Other options are incorrect because Thinking both goods give the same value can be misleading; C...
If a consumer spends their entire budget on two goods and finds that the marginal utility per dollar spent is higher for one good, what should they do to maximize their utility?
To get the most satisfaction, buy more of the good that gives you more value for each dollar. Other options are incorrect because Buying equal amounts...
If a consumer is maximizing their utility but decides to purchase more of a good despite its marginal utility per dollar being lower than that of another good, what is the likely underlying cause of this decision?
People often choose things they like more, even if they cost more. Other options are incorrect because Some might think they have more money than they...
In a scenario where a consumer has a fixed budget, how should they allocate their spending between two goods to maximize utility?
To get the most satisfaction, spend based on how much happiness each dollar brings. Other options are incorrect because Spending the same on both good...
To maximize utility given a budget constraint, consumers should ensure that the ratio of __________ to price is equal across all goods consumed.
Marginal utility is the extra satisfaction you get from consuming one more unit of a good. Other options are incorrect because Total utility is the ov...
Arrange the following steps in the correct order for maximizing utility within a budget: A) Calculate the marginal utility per dollar spent for each good, B) Compare the marginal utility per dollar for all goods, C) Purchase the combination of goods that equalizes the marginal utility per dollar spent, D) Identify the budget constraint and available goods.
First, you need to know your budget and what goods you can buy. Other options are incorrect because This option suggests calculating and comparing bef...
Maria has a budget of $20 to spend on fruit. She can buy apples for $2 each and bananas for $1 each. If she derives a marginal utility of 6 from each apple and 3 from each banana, how should Maria allocate her budget to maximize her utility?
Maria gets the most satisfaction by buying a mix of apples and bananas. Other options are incorrect because This choice focuses only on bananas; Here,...
Which of the following actions can help a consumer maximize their utility given a budget constraint? Select all that apply.
Choosing items that give you the most satisfaction for each dollar spent helps you get the best value. Other options are incorrect because Thinking ab...
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