Question

[16] Opportunity costs:

A) are incurred in every activity an individual carries out.

B) apply only to individuals' spending and earning decisions.

C) are associated only with decisions involving money outlays.

D) cannot be evaluated since they are costs of alternatives that have been forgone, and therefore, no costs have actually been incurred.

[17] The change in total satisfaction from consuming each additional unit of a good, service, or activity is:

A) total utility.

B) average utility.

C) adjusted utility.

D) marginal utility.

[18] The satisfaction received from consuming a specified number of units of a good, service, or activity is:

A) net utility.

B) end utility.

C) total utility.

D) marginal utility.

Answer 1

16. Answer- A) are incurred in every activity an individual carries out.

Opportunity cost is defined as the cost of an alternative that has been foregone in choosing to do a certain activity. It need not be activities involving spending or earning decisions, it could be as simple as a choice to study versus to sleep. It may be hard to evaluate the costs of alternatives a lot of the times but that does not imply that no cost has been incurred. Option A is correct because each activity you do can only be done by foregoing some other activity which is our opportunity cost. For example if we choose to sleep we are foregoing the benefit we would have received from studying instead.

17. Answer- D) marginal utility

Total utility is defined as the total utility received from consuming a specified number of units of a good, service or activity.

Marginal utility is defined as the utility received from consumption of an additional unit of good which gives us the option D as the answer.

18. Answer- C) total utility

Marginal utility is defined as the utility received from consumption of an additional unit of good.

Total utility is defined as the total utility received from consuming a specified number of units of a good, service or activity, this gives us option C) as the answer.