Question

The ________ utility that is received when an additional unit of a good is consumed is referred to as marginal utility.

a.	total	b.	change in average
c.	average	d.	change in total

If your total utility is 100 utils after consuming one piece of pizza and 140 utils after consuming the next piece of pizza, then the marginal utility of the second slice consumed is _________.

a.	twenty	b.	forty
c.	seventy	d.	fifty

What is the substitution effect?

a.	An increase in the price of Good A causes consumers to spend more on Good A.	b.	An increase in the price of Good A causes consumers to spend less on Good A.
c.	An increase in the price of Good A causes consumers to buy less of Good A and more of substitute Good B.	d.	An increase in the price of Good A causes consumers to buy more of Good A and less of substitute Good B.

The price of Good Z decreases, and this causes the demand for another Good, B, to decrease. This is known as the ______________.

a.	income effect	b.	substitution effect
c.	law of demand	d.	complementarity effect

Answer 1

Answer 1

The ________ utility that is received when an additional unit of a good is consumed is referred to as marginal utility.

d. change in total

Reason: Marginal utility quantifies the added satisfaction a consumer garners from consuming additional units of goods or services. The concept of marginal utility is used by economists to determine how much of an item consumers are willing to purchase.

Answer 2

If your total utility is 100 utils after consuming one piece of pizza and 140 utils after consuming the next piece of pizza, then the marginal utility of the second slice consumed is _________.

b.	forty

Reason: Marginal Utility = Total utility from 2 pizzas - Total utility from first pizza = 140 -100 = 40 utils

Answer 3

What is the substitution effect?

c.	An increase in the price of Good A causes consumers to buy less of Good A and more of substitute Good B.

Reason: The substitution effect is the decrease in sales for a product that can be attributed to consumers switching to cheaper alternatives when its price rises.

Answer 4

The price of Good Z decreases, and this causes the demand for another Good, B, to decrease. This is known as the ______________.

b.	substitution effect

Reason: The substitution effect is based on the idea that as prices rise, consumers will replace more expensive items with cheaper substitutions or alternatives, assuming income remains the same. For example, when the price of your favorite shampoo goes up a dollar, you decide to try a cheaper brand.