1. Rational consumers seeking to maximize their satisfaction as they choose among various goods will allocate their...
Question:
1. Rational consumers seeking to maximize their satisfaction as they choose among various goods will allocate their expenditures so that:
a. Marginal utility equals zero
b. Total utility is equal for all goods
c. Total utility/price is equal for all goods
d. Marginal utility/price is equal for all goods
e. None of the above
2. Let MUA be the marginal utility that the consumer gets from good A, MUB be the marginal utility that the consumer gets from good B, PA the price of good A, and PB the price of B. We know that consumers will increase their overall utility level (that they obtain from an expenditure of a given size), by spending less on B and more on A if:
a. MUA > MUB
b. MUA < MUB
c. MUA/ PA < MUB/ PB
d. MUA/PA > MUB/PB
e. MUA x PA > MUB x PB
3. Assume that the price of hamburger is raised from $3.50 per pound to $5.00 per pound, while ht price of chicken remains constant at $3.00 per pound. No other substitutes are available. How would revenue from sales of meat and chicken be altered by this increase?
a. It would increase for both
b. It would decrease for both
c. It would increase for chicken, increase or decrease for hamburger
d. It would decrease for chicken, but would increase for hamburger
e. There would be no change for either chicken or hamburger
4. The fact that diamonds are generally costlier than coal could be explained by:
a. Diminishing returns
b. Economies of scale
c. Marginal utility
d. Profit maximization
e. None of the above
5. The demand for bicycle parts is an example of:
a. Derived demand
b. Snob demand
c. Artificial demand
d. Purely competitive demand
e. None of the demand
Expert Answer:
