QUESTION 1 The law of diminishing marginal utility can be stated as follows a. A

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QUESTION 1 The law of diminishing marginal utility can be stated as follows a. As the amount of a good consumed increases, the sum of satisfaction received tends to decrease O b. As the amount of a good consumed increases, the additional satisfaction gained from consuming additional units tends to decrease. O C. As the amount of a good consumed decreases, the additional satisfaction gained from consuming additional units tends to increase. d. As the amount of a good consumed increases, the sum of satisfaction received tends to increase but at a diminishing rate o e.b and d QUESTION 2 Which of the following is NOT characteristic of a good with elastic demand? O Buyers are relatively sensitive to price changes. The percentage change in quantity demanded is greater than the percentage change in price O Total revenue decreases if price is increased. O The absolute price elasticity of demand is less than 1 QUESTION 3 When an economist talks about utility, she is talking about a. the satisfaction, in terms of price, that a producer receives from selling his product. o b. a company that provides electricity, water, gas, etc. O c. the satisfaction that results from the consumption of a good minus the price that must be paid to get the good. o 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 QUESTION When the government places a tax on the producer of a good or service a. the supply curve for the good or service shifts to the right. o b. both the supply and demand curves for the good or service shifts to the left. o c. the supply curve for the good or service shifts to the left. o d. the demand curve for the good or service shifts to the left. e. the demand curve for the good or service shifts to the right. QUESTION 5 Why are binding price ceiling laws passed? a. They permit customers to obtain higher-quality products O b. They make a good less expensive for those customers who are able to purchase the good in the legal market. O c. They make goods more expensive (and profitable) for firms O d. They encourage producers to sell higher-quality products e. They encourage sellers to produce more of a good

Explanation / Answer

a) "B"

Diminishing marginal utility means as the consumer goes on increasing the consumption the additional utility is gets from the good goes on decreasing.  

b) "D"

The absolute price elasticity of demand is less than 1.

c) "E"

The satisfaction that results from consumption of goods.

d) "C"

The supply of the curve shifts to the left.

e) "B"

They make the good less expensive for those customers who can get the product legally.

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