Reference no: EM13180750

1. 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

2. 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

3. 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

4. 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

5.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.