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Questions and Answers
Which of the following is the impact of a change in the price of a product on a consumer’s real income and quantity demanded of that good?
Which of the following is the impact of a change in the price of a product on a consumer’s real income and quantity demanded of that good?
- Utility
- Substitution effect
- Total utility
- Income effect (correct)
What does the term 'utility' refer to?
What does the term 'utility' refer to?
- The consumer's ability to assign a number to a good representing its degree of utility
- The amount of satisfaction derived from consumption of a good (correct)
- A fictional unit for utility or satisfaction
- The added or extra satisfaction that a consumer realizes from consuming an additional unit of a commodity
What is the difference between cardinal utility and ordinal utility?
What is the difference between cardinal utility and ordinal utility?
- Cardinal utility allows the consumer to assign a number representing the degree of utility associated with a good, while ordinal utility only requires ranking the bundles of goods (correct)
- Cardinal utility is the added or extra satisfaction that a consumer realizes from consuming an additional unit of a commodity, while ordinal utility is the impact of a change in a product's price on its relative 'value'
- Cardinal utility is the amount of satisfaction derived from a bundle of goods, while ordinal utility is the consumer's ability to assign a number to a good representing its degree of utility
- Cardinal utility is the impact of a change in a product's price on its relative 'value', while ordinal utility is the amount of satisfaction derived from consumption of a good
What is total utility?
What is total utility?
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What is marginal utility?
What is marginal utility?
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Study Notes
Impact of Price Change on Consumer's Real Income and Quantity Demanded
- A change in the price of a product affects a consumer's real income, leading to a change in the quantity demanded of that good.
Utility
- Utility refers to the satisfaction or pleasure a consumer derives from consuming a good or service.
Types of Utility
- Cardinal Utility: Measures the satisfaction or pleasure a consumer derives from consuming a good or service in quantitative terms, e.g., in units of happiness.
- Ordinal Utility: Ranks the satisfaction or pleasure a consumer derives from consuming a good or service in a relative order, e.g., first, second, third, but does not measure the exact quantity.
Total and Marginal Utility
- Total Utility: The total satisfaction or pleasure a consumer derives from consuming a certain quantity of a good or service.
- Marginal Utility: The additional satisfaction or pleasure a consumer derives from consuming one more unit of a good or service.
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Description
Test your knowledge on demand and consumer behavior with this quiz! Learn about the income effect, substitution effect, and utility, and how they impact a consumer's quantity demanded of a product. Don't miss out on this opportunity to improve your understanding of consumer economics.
