201-tutorial-6 - Econ 201 Tutorial #6 Date: Week of Mar. 1...

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Unformatted text preview: Econ 201 Tutorial #6 Date: Week of Mar. 1 7, 2010 Coverage: Chapter 6.1-6.5 Consumer Choice and Demand Decisions Part I: Multiple choice questions 1. What does the law of diminishing marginal utility state? A) That the amount of additional utility increases as successive units of a product are consumed. B) That the amount of total utility decreases at an increasing rate. C) That the amount of total utility decreases at a decreasing rate. D) That the amount of additional utility decreases as successive units of a product are consumed. 2. When is total utility at a maximum? A) When marginal utility is at a maximum. B) When marginal utility is zero. C) When marginal utility is equal to total utility. D) When marginal utility is greater than total utility. 3. Assume that George is allocating his budget optimally between two products. If the MU of product X is 40 and its price is $8, what must be the price of product Y if its MU is 60? A) $7.50. B) $12. C) $16. D) $40. Use the following to answer questions 4-6: 1 4. Referring to the figure above, which price combination is consistent with the income constraint shown?4....
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201-tutorial-6 - Econ 201 Tutorial #6 Date: Week of Mar. 1...

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