Consumer Equilibrium and Marginal Utility Quiz

A normal good is a good for which demand increases as income increases, while an inferior good is a good for which demand decreases as income increases.

Margarine is a substitute for butter.

Consumers are likely to switch to the other good, leading to an increase in demand for that good.

<p>Coffee and sugar are complementary goods.</p> Signup and view all the answers

<p>The demand for the other good is likely to decrease since consumers will be consuming less of the complementary good.</p> Signup and view all the answers

<p>Age, gender, and education level</p> Signup and view all the answers

<p>Consumer equilibrium refers to a situation where a consumer gets maximum satisfaction out of his given income and has no tendency to make any change in his existing expenditure.</p> Signup and view all the answers

<p>Marginal Utility (MU) in terms of price of the commodity is equal to its Marginal utility of Money (MUM).</p> Signup and view all the answers

<p>It results in a Consumer Surplus.</p> Signup and view all the answers

<p>It results in a Consumer Deficit.</p> Signup and view all the answers

<p>The additional benefit a person derives from a given increase in their stock of a good diminishes with every increase in the stock that they already have.</p> Signup and view all the answers

<p>Consumer equilibrium is achieved when the ratio of marginal utilities of two goods is equal to the ratio of their prices.</p> Signup and view all the answers

<p>The concept is also known as Gossen’s Second Law of Maximum Satisfaction.</p> Signup and view all the answers

<p>The consumer will adjust their consumption to reach equilibrium.</p> Signup and view all the answers

<p>The consumer will continue to adjust their consumption until the marginal utility of each good is equal to its price.</p> Signup and view all the answers

<p>The adjustment mechanism is based on the Law of Diminishing Marginal Utility.</p> Signup and view all the answers