Which of following is necessarily true regarding total utility (TU) and marginal
ID: 1180263 • Letter: W
Question
Which of following is necessarily true regarding total utility (TU) and marginal utility (MU)? A) Diminishing MU implies negative MUB) If MU is diminishing it means that TU is decreasing
C) If MU is negative it means that TU is increasing
D) Most people generally exhibit the same TU and MU functions for similar goods
E) None of the above
22. Which of following situations is most likely to cause negative marginal utility? A) studying too much for an exam
B) eating too much food at a buffet
C) owning too many pairs of shoes
D) eating inferior goods
E) owning a very old vehicle
23. In order for a consumer to choose between two different goods, he has to take into consideration the A) marginal utility of production
B) marginal utility divided by the price
C) marginal utility plus the price
D) total utility divided by price
24. Newspaper vending machines are often built so that customers can pay to lift a door and take a paper off a pile of daily newspapers. Newspaper distributors are not concerned about customers taking the whole stack of papers because A) the total utility of a daily newspaper is zero
B) the marginal utility of any one daily newspaper is zero
C) the marginal utility of a second daily newspaper is zero
D) the price of a daily newspaper is relatively low
25. Based on the material presented in the utility chapter, can we conclude that people will consume goods until the marginal utility of each good is zero? A) Yes, because at that point total utility is maximum.
B) Yes, because at that point marginal utility is minimum.
C) No, because consumption is determined by total utility.
D) No, because consumption is determined by the marginal utility/price ratio. Which of following is necessarily true regarding total utility (TU) and marginal utility (MU)? A) Diminishing MU implies negative MU
B) If MU is diminishing it means that TU is decreasing
C) If MU is negative it means that TU is increasing
D) Most people generally exhibit the same TU and MU functions for similar goods
E) None of the above
Which of following is necessarily true regarding total utility (TU) and marginal utility (MU)? A) Diminishing MU implies negative MU
B) If MU is diminishing it means that TU is decreasing
C) If MU is negative it means that TU is increasing
D) Most people generally exhibit the same TU and MU functions for similar goods
E) None of the above
Which of following is necessarily true regarding total utility (TU) and marginal utility (MU)? 22. Which of following situations is most likely to cause negative marginal utility? A) studying too much for an exam
B) eating too much food at a buffet
C) owning too many pairs of shoes
D) eating inferior goods
E) owning a very old vehicle
22. Which of following situations is most likely to cause negative marginal utility? A) studying too much for an exam
B) eating too much food at a buffet
C) owning too many pairs of shoes
D) eating inferior goods
E) owning a very old vehicle
Which of following situations is most likely to cause negative marginal utility? 23. In order for a consumer to choose between two different goods, he has to take into consideration the A) marginal utility of production
B) marginal utility divided by the price
C) marginal utility plus the price
D) total utility divided by price
23. In order for a consumer to choose between two different goods, he has to take into consideration the A) marginal utility of production
B) marginal utility divided by the price
C) marginal utility plus the price
D) total utility divided by price
In order for a consumer to choose between two different goods, he has to take into consideration the 24. Newspaper vending machines are often built so that customers can pay to lift a door and take a paper off a pile of daily newspapers. Newspaper distributors are not concerned about customers taking the whole stack of papers because A) the total utility of a daily newspaper is zero
B) the marginal utility of any one daily newspaper is zero
C) the marginal utility of a second daily newspaper is zero
D) the price of a daily newspaper is relatively low
24. Newspaper vending machines are often built so that customers can pay to lift a door and take a paper off a pile of daily newspapers. Newspaper distributors are not concerned about customers taking the whole stack of papers because A) the total utility of a daily newspaper is zero
B) the marginal utility of any one daily newspaper is zero
C) the marginal utility of a second daily newspaper is zero
D) the price of a daily newspaper is relatively low
Newspaper vending machines are often built so that customers can pay to lift a door and take a paper off a pile of daily newspapers. Newspaper distributors are not concerned about customers taking the whole stack of papers because 25. Based on the material presented in the utility chapter, can we conclude that people will consume goods until the marginal utility of each good is zero? A) Yes, because at that point total utility is maximum.
B) Yes, because at that point marginal utility is minimum.
C) No, because consumption is determined by total utility.
D) No, because consumption is determined by the marginal utility/price ratio. 25. Based on the material presented in the utility chapter, can we conclude that people will consume goods until the marginal utility of each good is zero? A) Yes, because at that point total utility is maximum.
B) Yes, because at that point marginal utility is minimum.
C) No, because consumption is determined by total utility.
D) No, because consumption is determined by the marginal utility/price ratio. Based on the material presented in the utility chapter, can we conclude that people will consume goods until the marginal utility of each good is zero?
Explanation / Answer
The first question you asked is: E.
A is false, as the marginal utility can be positive, even though it is decreasing. Diminishing total utility implies negative marginal utility, but if the marginal utility is changing, it can still be positive, even if you're getting less for each item one consumes.
22: B - Eating too much food at a buffet. When you start off during the buffet, you are happy - you have a positive marginal utility. But as you eat more and more food, you get less happiness out of each bite, and eventually you just don't want to eat anymore, because the marginal utility is negative - it would make you less happy to eat more than to stop.
23: B - Marginal Utility/Price. This is the formula for utility maximization.
24: C - The marginal utility of a second newspaper is effectively zero. Once you have a newspaper, you have absolutely no need for a second one - as a rational player, theoretically, you should get no additional utility out of that second newspaper. Since the companies assume everyone only needs and wants one, they do not worry about leaving the vending machines open.
25: A - Although I haven't seen the previous chapter, technically, the marginal utility is the derivative of total utility. When total utility is at its maximum, marginal utility is zero. Think of it this way - when marginal utility is zero, total utility cannot get any higher. As marginal utility is positive, total utility is increasing, and once it becomes negative, total utility begins to decrease. Therefore, the maximum point is when MU is zero.
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