What is the equi-marginal principle?
Options
A As consumption of a product increases, the satisfaction from consumption of the product decreases by an equal amount.
B Consumers maximise utility where their marginal valuation for each product consumed is the same.
C The total satisfaction received by consumers from consumption of a product is constant.
D The marginal utility derived by consumers from the consumption of one more unit of a product is constant.
A consumer spends all of their income on only two goods, X and Y. The consumer is initially in equilibrium, maximising their total utility. The consumer’s tastes change and they get less utility from consuming good Y. The prices of both goods are unchanged.
What would be a rational response from the consumer?
Options
| good X | good Y | |
|---|---|---|
| A | buy less | buy more |
| B | buy more | buy less |
| C | buy more | unchanged |
| D | unchanged | buy less |
What is the equi-marginal principle?
Options
A As consumption of a product increases, the satisfaction from consumption of the product decreases by an equal amount.
B Consumers maximise utility where their marginal valuation for each product consumed is the same.
C The total satisfaction received by consumers from consumption of a product is constant.
D The marginal utility derived by consumers from the consumption of one more unit of a product is constant.
A consumer maximises his total utility by initially buying 10 units of good X and 10 units of good Y.
Assuming both goods are normal, what would cause this utility-maximising consumer to purchase more of good Y and less of good X?
Options
A an increase in the marginal utility of good Y
B an increase in the price of good Y
C an increase in the tax on the consumption of good Y
D an increase in the tax on the income of consumers
The table gives the marginal utility of two goods, X and Y. The price of good X is $2.00 and the price of good Y is $1.00.
| quantity | marginal utility of good X | marginal utility of good Y |
|---|---|---|
| 1 | 110 | 66 |
| 2 | 80 | 50 |
| 3 | 66 | 38 |
| 4 | 56 | 33 |
| 5 | 33 | 30 |
If a consumer spends all of their income on goods X and Y, which combination of goods would they choose to maximise their utility?
Options
A 1 unit of X and 1 unit of Y
B 3 units of X and 1 unit of Y
C 3 units of X and 4 units of Y
D 5 units of X and 1 unit of Y
A person buys two pairs of socks.
What does the purchase of the second pair of socks lead to?
Options
A a decrease in marginal productivity
B a decrease in marginal utility
C an increase in marginal productivity
D an increase in marginal utility
Which statement about the concept of utility is correct?
Options
A Diminishing marginal utility means that producers become less efficient the more they produce.
B If marginal utility is above average utility, average utility must be rising.
C The equi-marginal principle says that a consumer gets equal total satisfaction from each item purchased.
D Total utility continually rises as the level of consumption rises.
The table shows the total utility gained by a consumer from the consumption of water.
| quantity consumed / bottles | total utility |
|---|---|
| 0 | 0 |
| 1 | 30 |
| 2 | 40 |
| 3 | 48 |
| 4 | 54 |
| 5 | 58 |
What can be concluded from this table?
Options
A Marginal utility increases as consumption increases.
B The consumer cannot switch expenditure to another product to increase total utility.
C The marginal utility of the 3rd unit is 8.
D The marginal utility of the 5th unit is 2.
Which statement about the concept of utility is correct?
Options
A Diminishing marginal utility means that producers become less efficient the more they produce.
B If marginal utility is above average utility, average utility must be rising.
C The equi-marginal principle says that a consumer gets equal total satisfaction from each item purchased.
D Total utility continually rises as the level of consumption rises.
The diagram shows a total utility curve for a consumer.
At which point does marginal utility equal zero?
Options
A point A on Fig. 1.1
B point B on Fig. 1.1
C point C on Fig. 1.1
D point D on Fig. 1.1