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Chp 7 reference

# Chp 7 reference - QUIZ FOR CHAPTER 7 Started 1:57 PM...

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QUIZ FOR CHAPTER 7 Started: June 13, 2011 1:57 PM Submitted: June 13, 2011 2:01 PM Time spent: 00:04:03 Total score: 3/10 = 30% 1. The utility of a particular good: Student Response Value Correct Answer Feedback A. is the same for everyone, even if its usefulness differs from person to person B. is a measure of the product's usefulness 0% Utility is the subjective satisfaction one derives from a good. The law of diminishing marginal utility suggests that utility increases at a decreasing rate. C. increases at a constant rate D. increases at a decreasing rate Score: 0/1 2. Answer the next question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer derives from successive quantities of products J and K.

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Refer to the table. If this consumer has an income of \$26 and the prices of J and K are \$2 and \$4 respectively, the consumer will maximize her utility by purchasing: Student Response Value Correct Answer Feedback 0% Divide each of the entries in the MU J column by \$2 and each of the entries in the MU K column by \$4 to obtain the marginal utilities in terms of per dollar spent on each good. The first dollar will be spent on K because it provides 12 units of utility, whereas J would provide only 10 units of utility. Continue in this manner, purchasing the next unit of the good with the highest marginal utility per dollar until income is exhausted. At this point, the marginal utility per dollar of each good will be the same???6 units of utility per dollar in this example. Score: 0/1 3. Jim enjoys having either a peanut butter sandwich or a bologna sandwich for his lunch. A drop in the price of peanut butter increases the marginal utility per dollar of peanut butter and causes Jim to buy more peanut butter and less bologna to restore maximum utility. This best illustrates the: Student Response Value Correct Answer Feedback
0% The substitution effect of a price decrease refers to the impact on quantity demanded because this good is now relatively less expensive compared to its substitutes. Score: 0/1 4. Suppose the prices of products X and Y are \$5 and \$10, respectively. For a specific consumer who is currently exhausting her total income, the total utility from X is 100,

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Chp 7 reference - QUIZ FOR CHAPTER 7 Started 1:57 PM...

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