B. summing the marginal utities of each ni.ansumos maltplying the marginal uiliy
ID: 1123810 • Letter: B
Question
B. summing the marginal utities of each ni.ansumos maltplying the marginal uiliy f he asun D mutbplying the marginal utlity of the frst unit consumed by the number ct urio nsumed rodurt aire 7. Where total utility s at a maximum, marginal utiity s. A. negative. B. positive and increasing. C. zero D. positive but decreasing. 8. Marginal udlity A. is equal to total ulity divideod by tre rumber af urnits consamed. B. is equal to botal utility if the demand curve is linear C. increases as more of a product is consumed. D. diminishes as more of a product is consumed. 9. To maximize utility a consumer should allccate money income so that the: A. elasticity of demand on al products purchased is the same B. marginal utility obtained from the last dollar spent an each product is the same. C. total utility derived from each product consumed is the same D. marginal utility of the last unit of each product consumed is the same 10. Suppose that MUxPx exceeds MUylPy. To maximize uslty the consumer who is spending al her money income should buy: A. less of X only d its price rises. B. more of Y only if its prioe rises. C. more of Y and less of X D. more of X and lass of Y 11. Iin purchasing products A and 8, a consumeris in equibrium when: 12. The diamond-water paradox arises because: A. essential goods may be cheap while nonessential goods may be expensive. B. the marginal utlity of certain products increases, rather than diminishes C essential goods are always higher priced than nonessential goods. D. we sometimes fail to use money as a standard of value.Explanation / Answer
7. Since the total utility is the sum of the Marginal utilities, therefore the total utility is maximum when MU is zero.
Hence option C is the correct answer.
8.
Marginal utility decreases as the more goods are consumed because an individual gets less utility by consuming a successive unit of goods.
Hence option d is the correct answer.
9.
For maximizing utility a consumer should allocate money income so that the marginal utility obtained from the last dollar spent on each product is the same.
Hence option B is the correct answer.
10. If MUx / Px is greater than the MUy/Py, then the individual should consume less of good Y, so the marginal Utility of good Y will increase while the if the individual uses more of good X, then the MU of good X decreases.
Hence the individual should, buy more of good X and less of good Y.
Hence option D is the correct answer.
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