PostQuiz7 - Post-Quiz 7 Demand-Utility Maximization Name: _...

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Post-Quiz 7 Demand-Utility Maximization 1 Name: _________________________ Multiple Choice (3 points each) 1. Which of the following determinants of demand is most directly an indication of a consumer's utility for a good? A) Income. B) Tastes. C) Expectations of future prices. D) Other goods (availability and prices). 2. Marginal utility for a good is computed as: A) Total utility divided by quantity. B) Quantity divided by total utility. C) The change in quantity divided by total utility. D) The change in total utility divided by the change in quantity. 3. At some point during a meal each extra bite provides less and less additional satisfaction. This can be explained by: A) The law of demand. B) The law of diminishing marginal utility. C) The law of increasing opportunity cost. D) A shift in the demand curve. 4. Jose goes to an all-you-can-eat buffet at a Chinese restaurant and consumes three plates of food. He does not go back for a fourth plate of food because: A) The price of the fourth plate is too high. B) He has reached the point of increasing marginal utility. C) The marginal utility of the fourth plate would be zero or even negative. D) His total utility would increase with the fourth plate of food. 5. If marginal utility is negative, then: A) Total utility will increase with additional consumption. B) Total utility will decrease with additional consumption. C) The good or service being consumed is an inferior good. D) Total utility is at a minimum. 6. Total utility is maximized when: A) Price is less than marginal utility. B) Price is equal to marginal utility. C) Marginal utility is zero. D) Marginal utility is maximized. 7. If a good had a zero price (i.e. the good was free), a rational person would consume: A) An infinite amount of the good. B) The good until total utility was zero. C) The good until the marginal utility was maximized. D) The good until the marginal utility of the last unit was zero.
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Post-Quiz 7 Demand-Utility Maximization 2 8. Suppose that Jason has allocated his entire budget to the purchase of apples and bananas. The marginal utility of the last apple purchased is 10 utils and each apple costs 10 cents. The marginal utility of the last banana purchased is 10 utils and each banana costs 5 cents. Brian should:
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This note was uploaded on 12/27/2011 for the course FBAE 201 taught by Professor Eefwf during the Spring '11 term at Institute of Technology.

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PostQuiz7 - Post-Quiz 7 Demand-Utility Maximization Name: _...

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