MCQ questions T3

1. Economists use the term utility to mean:

a. the satisfaction a consumer obtains from a good or service

b. the value of a product before it has been advertised

c. the contribution a good or service makes to social welfare

d. any characteristic of a good or service which cannot be measured

2. Economists use the term marginal utility to mean

a. the process of comparing marginal units of all goods which could be purchased

b. additional satisfaction gained divided by additional cost of the last unit

c. additional satisfaction gained by the consumption of one more unit of a good

d. total satisfaction gained when consuming a given number of units

 

3. The law of diminishing marginal utility states that:

 total satisfaction will decrease as more units of the good are consumed

 the satisfaction from each additional unit of a good consumed will decrease

a. total utility will become negative

b. both the 1st and 3rd answer above

c. None of the above

 

4. By consumer surplus economists mean:

a. The difference between the maximum amount a person is willing to pay for a good and its market price

b.  the area inside the budget line

c. household saving

d. the area between the average revenue and marginal revenue curves

 

5. The price of an ice cream cone is £1.50 and you buy three ice cream cones per week. If the price of an ice cream cone falls to £1.25 and you still buy three ice cream cones per week, which of the following is TRUE?

a. Both the total and marginal utility of the fourth ice cream cone per week must be worth less than £1.25 to you

b. The marginal utility of the fourth ice cream cone per week must be worth less than £1.25 to you

c. This violates the law of demand because as price falls quantity demanded must increase

d. The total utility of the fourth ice cream cone per week must be worth less than £1.25 to you

 

6. Economists have used the idea of diminishing marginal utility to explain why:

a. demand curves are downward sloping and their curvature

b. demand curves are generally inelastic.

c. demand curves slope downwards, but it cannot explain the curvature of the demand curve

d. all downward-sloping demand curves become flatter at lower prices

 

7. A consumer will buy more units of a good if the value of the good's:

a. marginal utility is greater than price

b. marginal utility is less than price.

c. total utility is greater than price

d. total utility is less than price

8. All the combinations of two goods between which customers are indifferent is called the

 a. indifference curve

b. characteristics slope

c. budget line

d.efficiency frontier

 

9. The equation for Anna's demand curve for CDs is Q = 20 - 0.5P. If the price of a CD is £18, consumer surplus will be

a. £11

b. £242

c. £198

d. £121