Utility Analysis and Consumer Behaviour Quiz
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Questions and Answers

According to the law of diminishing marginal utility, what happens to the marginal utility as the consumer consumes more units of a commodity?

  • It fluctuates.
  • It decreases. (correct)
  • It increases.
  • It remains constant.

    • How is the law of diminishing marginal utility represented graphically in Figure 1.3?

  • As a horizontal line.
  • As a downward-sloping curve. (correct)
  • As an upward-sloping curve.
  • As a straight line.

    • Which of the following is NOT an assumption for the application of the law of diminishing marginal utility?

  • Change in consumer's taste and preference.
  • Continuous consumption of a commodity.
  • Consumption of exactly the same commodity.
  • Consumption of different qualities of a commodity. (correct)

    • Under what condition does the law of diminishing marginal utility operate according to the text?

    <p>No change in consumer's taste and preference.</p> Signup and view all the answers

    In Figure 1.4, what does the downward trend in marginal utility of orange juice imply?

    <p>Decreased enjoyment per unit consumed.</p> Signup and view all the answers

    Which of the following is NOT a condition for the application of the law of diminishing marginal utility?

    <p>Fluctuating consumption pattern.</p> Signup and view all the answers

    What is the primary focus of utility analysis?

    <p>Understanding consumer behavior and market purchases based on satisfaction</p> Signup and view all the answers

    Which of the following statements about utility is true?

    <p>Utility is subjective and varies with respect to time, place, and person</p> Signup and view all the answers

    What is the relationship between utility and morality?

    <p>Utility has nothing to do with morality</p> Signup and view all the answers

    Which of the following is a fundamental concept for marginal utility analysis?

    <p>Total utility and marginal utility</p> Signup and view all the answers

    What does total utility (TU) represent?

    <p>The total amount of satisfaction derived from consuming a specific quantity of a commodity</p> Signup and view all the answers

    How is marginal utility (MU) defined?

    <p>The additional utility derived from consuming one additional unit of a commodity</p> Signup and view all the answers

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