econ review problems

econ review problems - Chapter 8 Thought and Review 1....

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Chapter 8 Thought and Review 1. Explain how marginal utility differs from total utility a. Total utility refers to the total satisfaction one gets from consuming a product. Marginal utility refers to the satisfaction one get from consuming a product above and beyond what has been consumed. 2. According to the principle of diminishing marginal utility, how does marginal utility change as more of a good is consumed? As less of a good is consumed? a. As you consume more of a good, at some point, marginal utility decreases with each additional output. As less of a good are consumed marginal utility increases. 3. How would the world be different than it is if the principle of marginal utility seldom held true? 4. It is sometimes said that an economist is a person who knows the price of everything but the value of nothing. Is this statement true or false? 5. L 6. What key psychological assumptions do economists make in their theory of individual choice? a.
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This note was uploaded on 11/23/2008 for the course ECON 201 taught by Professor Williams during the Fall '08 term at UVA.

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econ review problems - Chapter 8 Thought and Review 1....

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