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Economic Theory

Multiple-Choice Questions

1. Utility as defined in this chapter refers to the:
a) satisfaction or pleasure from consuming a good;
b) usefulness of a purchased product;

c) value of the money a consumer spends on a good;
d) extra income a consumer gets from buying a good at a lower
price.

2. The level of utility a consumer can achieve is limited by:

a) prices and income;
b) income only;
c) prices only;
d) the consumer’s preferences.

3. Which the best expresses the law of diminishing marginal utility?

a) the more a person consumes of a product, the smaller becomes
the additional utility that he receives as a result of consuming an
additional unit of the product;

b) the more a person consumes of a product, the smaller becomes
the utility that he receives from its consumption;
c) the less a person consumes of a product, the smaller becomes the
utility that he receives from its consumption;

d) the less a person consumes of a product, the smaller becomes the
additional utility that he receives as a result of consuming an
additional unit of the product.

4. An indifference curve is a curve that shows the different
combinations of two products that:
a) give a consumer equal total utilities;
b) give a consumer equal marginal utilities;

c) cost a consumer equal amount;
d) have the same price.

5. The budget line:
a) identifies affordable bundles;

b) identifies preferred bundles;
c) identifies the maximum utility which can be achieved from
consumption;
d) identifies the satisfaction received from consumption.

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