6 Econ Practice Test.

6 Econ Practice Test. In economics, the term "utility" is defined as the A) system of basing the price of a good on its usefulness to society. B) usefulness of a good. C) total consumer satisfaction received from consumption of a good. D) usefulness of a theory to explain price determination. E) a service such as sewer and water or electricity. - CORRECT ANSWER C) total consumer satisfaction received from consumption of a good. Economists usually assume that consumers A) are motivated to maximize their profit. B) are poor judges of what is best for them. C) spend all of their current income. D) usually save as much as possible of their income. E) are motivated to maximize their utility. - CORRECT ANSWER E) are motivated to maximize their utility. Economists use the term "marginal utility" to describe the A) change in total satisfaction caused by consumption of an additional unit of a good. B) average utility of each unit of a good consumed. C) inverse of the measure of total utility. D) total satisfaction received from consumption of a good. E) price paid for every unit consumed. - CORRECT ANSWER change in total satisfaction caused by consumption of an additional unit of a good. The idea that the utility a consumer derives from successive units of a good diminishes as total consumption of the good increases is known as A) the paradox of value. B) the utility theory of demand. C) utility maximization. D) diminishing marginal utility. E) diminishing total utility. - CORRECT ANSWER diminishing marginal utility. The "law" of diminishing marginal utility implies that the A) first unit of a good consumed will contribute most to the consumer's satisfaction. B) last unit of a good consumed will contribute most to the consumer's satisfaction. C) total utility is negative. D) total utility is constant as more units are consumed. E) marginal utility of a good diminishes over time. - CORRECT ANSWER A) first unit of a good consumed will contribute most to the consumer's satisfaction. If consumption of an extra unit of some good generates a marginal utility of zero, then consumption of that additional unit would mean that total utility would A) also be zero. B) not change. C) be increasing. D) be decreasing. E) be negative. - CORRECT ANSWER B) not change. ) If total utility from the consumption of some product is increasing as more units are consumed, then marginal utility must be A) decreasing at an increasing rate. B) negative. C) increasing. D) increasing at an increasing rate. E) positive. - CORRECT ANSWER E) positive. If total utility from the consumption of some product is decreasing as more units are consumed, then marginal utility must be A) positive. B) negative. C) decreasing. D) decreasing at an increasing rate. E) increasing at a decreasing rate. - CORRECT ANSWER negative Refer to Figure 6-1. The marginal utility of the second unit of the good consumed is 80-60 A) 10. B) 20. C) 30. D) 40. E) 50. - CORRECT ANSWER B) 20. Refer to Figure 6-1. The total utility from consuming two units of the good is A) 20. B) 40. C) 60. D) 80. E) 100. - CORRECT ANSWER 80 Refer to Figure 6-1. The consumer's total utility is A) increasing at an increasing rate. B) increasing at a decreasing rate. C) decreasing at an increasing rate D) decreasing at a decreasing rate. E) constant. - CORRECT ANSWER B) increasing at a decreasing rate.