Econ1B03-qCh6 - 1Chapter 6 Consumer Choice: Maximizing...

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1 Chapter 6 Consumer Choice: Maximizing Utility and Behavioral Economics 1. The diamond-water paradox is the observation that a. those things that have the greatest price often have little value in exchange and those things that have the lowest price often have the greatest value in exchange. b. those things that have the greatest value in use often have little value in exchange and those things that have little value in use often have the greatest value in exchange. c. those things that have the least value in use often have little value in exchange and those things that have the greatest value in use often have the greatest value in exchange. d. those things that have the least price often have little value in exchange and those things that have the greatest price often have the greatest value in exchange. ANS: b 2. When an economist talks about utility, she is talking about a. a company that provides electricity, water, gas, etc. b. the satisfaction, in terms of price, that a producer receives from selling his product. c. the satisfaction that results from the consumption of a good. d. the amount of one good that a person is willing to give up in order to get a unit of another good. e. the satisfaction that results from the consumption of a good minus the price that must be paid to get the good. ANS: c 3. A util is an artificial construct used as a means of measuring the a. price of a good. b. satisfaction one receives from the consumption of a good. c. costs of producing a good. d. difference between the price and the value of a good. ANS: b 4. Total utility is defined as the a. change in marginal utility a person derives from the consumption of a good. b. change in total utility a person derives from the consumption of a good divided by the price of that good. c. change in total utility a person derives from the consumption of a good divided by the change in the consumption of that good. d. sum of the amounts of satisfaction a person receives from consuming a good. e. change in total utility a person derives from the consumption of a good. ANS: d 168
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169 Chapter 6 5. Marginal utility is defined as the a. change in marginal utility a person derives from the consumption of a good. b. change in total utility a person derives from the consumption of a good divided by the price of that good. c. change in total utility a person derives from the consumption of a good divided by the change in the quantity of the good consumed. d. sum of the amounts of satisfaction a person receives from consuming a good. e. change in total utility a person derives from the consumption of a good divided by the value in use of that good. ANS: c 6. Suppose Alice receives 123 utils from consuming one hamburger and 50 utils from consuming a second hamburger. What is the marginal utility of the second hamburger?
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Econ1B03-qCh6 - 1Chapter 6 Consumer Choice: Maximizing...

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