Questions and Answers
Which of the following statements is true of the law of diminishing marginal utility?
John's total utility from the consumption of two ice creams is 10, and his total utility from the consumption of three ice creams is 9. What is John's marginal utility from the third ice cream?
Which of the following situations is clearly inconsistent with the law of diminishing marginal utility?
According to the law of diminishing marginal utility, the more of a product a person consumes per time period, other things constant, what happens?
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Which of the following is true of marginal utility?
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Marginal utility is defined as:
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Which of the following statements is true of the law of diminishing marginal utility?
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Economists assume that the tastes and preferences of individuals are:
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The individual experiences disutility from the consumption of which hamburger according to Table 6.1?
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The marginal utilities derived from which hamburgers are the same according to Table 6.1?
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The marginal utility from the third hamburger equals what according to Table 6.1?
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Study Notes
Law of Diminishing Marginal Utility
- As more units of a good are consumed, the marginal utility from the consumption of the next unit decreases.
- Total utility initially rises but can decline when too much of a good is consumed.
Marginal Utility Calculation
- Marginal utility is the change in total utility from consuming one additional unit of a good.
- Example: If total utility from 2 ice creams is 10 and from 3 ice creams is 9.7, the marginal utility from the third ice cream is -0.3.
Inconsistencies with Diminishing Utility
- An elite class consuming diamond jewelry without disutility contradicts the law of diminishing marginal utility as it suggests infinite utility.
Effects of Increased Consumption
- More consumption leads to smaller additions to total utility, reflecting the diminishing returns of utility as consumption increases.
Characteristics of Marginal Utility
- Marginal utility is defined as the change in total utility from a one-unit change in consumption, not the total satisfaction from all units consumed.
- It does not always increase with increased consumption.
Total Utility and Consumer Equilibrium
- Total utility continues to rise until consumer equilibrium is achieved, after which it either stabilizes or begins to fall.
Individual Preferences
- Individual tastes and preferences are generally stable and not significantly affected by external factors like product prices or market demand.
Disutility in Consumption
- In a specific example of hamburgers, the disutility arises from the fourth hamburger.
- Similarly, the marginal utilities from the third and fourth hamburgers are the same.
Marginal Utility Examples with Hamburgers
- The marginal utility from the third hamburger equals 5, calculated from the difference in total utility from the second and third hamburgers.
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Description
Test your understanding of the law of diminishing marginal utility with these flashcards. This quiz presents multiple-choice questions to reinforce your learning and ensure you grasp the necessary concepts from Chapter 6 of your economics course.
