Tips And Samples Ch 7 MICRO
Study Guide and Tips for chapter 7, MICRO
Consumption of goods and services by consumers generates satisfaction, happiness, content, pride of ownership, etc. Economists have the term UTILITY to describe them all; with the assumption that consumers seek to maximize utility. Start the chapter by acquainting yourselves with the definitions of Utility, Util, Total and Marginal Utilities, and thereon the Law of Diminishing Marginal Utility. Then, closely study exhibit 1 for numerical and graphical examples of these new terms.
Read about the Diamond-Water Paradox, check the solution to the paradox, and conclude that: Prices reflect Marginal Utility, not Total Utility.
Consumer Equilibrium occurs when two conditions are met: (1) consumer has spent all of budgeted income on goods and services, and (2) the marginal utilities per price on each good or service purchased are equal , i.e., (MUx/Px) = (MUy/Py) =…………..= (MUz/Pz.)
Students should conclude, therefore; the consumer’s attempt to reach equilibrium, which is another way of saying that the consumer is seeking to maximize utility, is consistent with the law of demand.
The section of chapter that talks about Behavioral Economics is not required. Also, appendix to the chapter (Appendix C) is not required either.
Sample Questions of Chapter 7, MICRO
Multiple Choices
Identify the choice that best completes the statement or answers the question.
__C__ 1. Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 80, 116, 136, 146, respectively. The marginal utility of the seventh wing is __________ utils.
a.
14
b.
146
c.
10
d.
20.9
__A__ 2. Which of the following is true?
a.
It is possible for total utility to rise as marginal utility falls.
b.
Marginal utility is the same as total utility.
c.
As marginal utility falls, total utility always falls.
d.
a and c
__D__ 3.
Consumption of goods and services by consumers generates satisfaction, happiness, content, pride of ownership, etc. Economists have the term UTILITY to describe them all; with the assumption that consumers seek to maximize utility. Start the chapter by acquainting yourselves with the definitions of Utility, Util, Total and Marginal Utilities, and thereon the Law of Diminishing Marginal Utility. Then, closely study exhibit 1 for numerical and graphical examples of these new terms.
Read about the Diamond-Water Paradox, check the solution to the paradox, and conclude that: Prices reflect Marginal Utility, not Total Utility.
Consumer Equilibrium occurs when two conditions are met: (1) consumer has spent all of budgeted income on goods and services, and (2) the marginal utilities per price on each good or service purchased are equal , i.e., (MUx/Px) = (MUy/Py) =…………..= (MUz/Pz.)
Students should conclude, therefore; the consumer’s attempt to reach equilibrium, which is another way of saying that the consumer is seeking to maximize utility, is consistent with the law of demand.
The section of chapter that talks about Behavioral Economics is not required. Also, appendix to the chapter (Appendix C) is not required either.
Sample Questions of Chapter 7, MICRO
Multiple Choices
Identify the choice that best completes the statement or answers the question.
__C__ 1. Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 80, 116, 136, 146, respectively. The marginal utility of the seventh wing is __________ utils.
a.
14
b.
146
c.
10
d.
20.9
__A__ 2. Which of the following is true?
a.
It is possible for total utility to rise as marginal utility falls.
b.
Marginal utility is the same as total utility.
c.
As marginal utility falls, total utility always falls.
d.
a and c
__D__ 3.