Basic_Exercises on Utility (1)

# Basic_Exercises on Utility (1) - second and 5 for the third...

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Some exercises on Utility (Answers at the end) 1 If Ann gets 100 units of utility from reading a book and 500 units of utility from playing with her cat, we know that Ann a. does not enjoy reading books. b. does not enjoy playing with her cat. c. prefers reading a book to playing with her cat. d. prefers playing with her cat to reading a book. 2. We assume that as more of a good is consumed, total utility a. increases. b. decreases. c. remains the same. d. becomes negative and then turns positive. 3.If you get 40 units of utility from eating the first bag of pretzels, 30 from the second bag, and 20 from the third bag, the total utility of three bags of pretzels is ____ units of utility. a. 40 b. 70 c. 90 d. 50 4.If a consumer obtains 20 units of marginal utility for the first unit consumed, 10 for the

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Unformatted text preview: second, and 5 for the third, what is the total utility of consuming three units? a. 20 units b. 30 units c. 35 units d. 5 units 5.If a consumer’s total utility increases when another unit of a good is consumed, which of the following is true? Marginal utility must be a. negative. b. equal to one. c. positive. d. increasing. 6.Diminishing marginal utility means that as more of a good is consumed, a. the price of the good rises. b. the price of the good falls. c. more income is spent. d. the utility of an additional unit decreases. 1.Answer: d 2.Answer: a 3.Answer: c 4.Answer: c 5.Answer: c 6.Answer: d...
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## This note was uploaded on 10/04/2011 for the course ECONOMICS 281 taught by Professor Vg during the Spring '09 term at University of Alberta.

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Basic_Exercises on Utility (1) - second and 5 for the third...

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