MicroEconomics, Theory and Applications 1 MCQs and Notes

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📊 MicroEconomics, Theory and Applications 1
Q. A consumer with a fixed income will maximize utility when each good is purchased in amounts such that the:
  • (A) total utility is the same for each good.
  • (B) marginal utility of each good is maximized.
  • (C) marginal utility per dollar spent is the same for all goods.
  • (D) marginal utility per dollar spent is maximized for each good.
💬 Discuss
✅ Correct Answer: (C) marginal utility per dollar spent is the same for all goods.
📊 MicroEconomics, Theory and Applications 1
Q. Which situation is consistent with the law of diminishing marginal utility?
  • (A) the more cake henry eats, the more he enjoys another slice.
  • (B) the more cake henry eats, the less he enjoys another slice.
  • (C) henry’s marginal utility from eating cake becomes positive after eating threeslices.
  • (D) henry’s marginal utility from eating cake reaches a maximum when total utilityis zero.
💬 Discuss
✅ Correct Answer: (B) the more cake henry eats, the less he enjoys another slice.
📊 MicroEconomics, Theory and Applications 1
Q. Which best expresses the law of diminishing marginal utility?
  • (A) the more consumption of a product, the smaller is the total and marginal utilityfrom the consumption.
  • (B) the less consumption of a product, the greater is the total and marginal utilityof the consumption.
  • (C) the more consumption of a product, the smaller is the marginal utility fromconsuming an additional unit.
  • (D) the more consumption of a product, the smaller is the total and marginal utilityfrom the consumption.
💬 Discuss
✅ Correct Answer: (C) the more consumption of a product, the smaller is the marginal utility fromconsuming an additional unit.
📊 MicroEconomics, Theory and Applications 1
Q. Which of the following defines marginal utility?
  • (A) the change in total utility divided by the price of a product
  • (B) the maximum amount of satisfaction from consuming a product
  • (C) the total satisfaction received from consuming as much of the product that isavailable for consumption
  • (D) the additional satisfaction received from consuming one more unit of a product
💬 Discuss
✅ Correct Answer: (D) the additional satisfaction received from consuming one more unit of a product
📊 MicroEconomics, Theory and Applications 1
Q. Which of the following would decrease the supply of wheat?
  • (A) a decrease in the price of pesticides
  • (B) an increase in the demand for wheat
  • (C) a rise in the price of wheat
  • (D) an increase in the price of corn
💬 Discuss
✅ Correct Answer: (D) an increase in the price of corn
📊 MicroEconomics, Theory and Applications 1
Q. If there is excess capacity in a production facility, it is likely that the firm’s supply curve is:
  • (A) price inelastic
  • (B) none of these answers
  • (C) unit price elastic
  • (D) price elastic
💬 Discuss
✅ Correct Answer: (D) price elastic
📊 MicroEconomics, Theory and Applications 1
Q. Which of the following would cause a demand curve for a good to be price inelastic?
  • (A) the good is a luxury
  • (B) there are a great number of substitutes for the good
  • (C) the good is a necessity
  • (D) the good is an inferior good
💬 Discuss
✅ Correct Answer: (C) the good is a necessity

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