Define the following terms. Give a complete and precise definition in one sentence.
a.
total utility
b.
marginal utility
c.
consumer’s surplus
d.
“law” of demand
What will be an ideal response?
| a. | Total utilityof a good is the satisfaction the consumer receives from consuming a given quantity of the commodity. Measured in money terms, it is the maximum amount a consumer is willing to give in exchange for the good. |
| b. | Marginal utilityof a good is the satisfaction the consumer receives from the marginal unit consumed. Measured in money terms, it is the maximum amount of money the consumer is willing to pay for one more unit of the commodity. |
| c. | Consumer’s surplusis the difference between the amount that the quantity of commodity X purchased is worth to the consumer and the amount that the market requires the consumer to pay for that quantity of X. |
You might also like to view...
We know that a firm is paying way below the market wage rate if
A. the number of applications for a job posting is low and the quit rate is high. B. the number of applications for a job posting and the quit rate are low. C. the number of applications for a job posting and the quit rate are high. D. the number of applications for a job posting is high and the quit rate is low.
The relationship between the average price of aggregate output and the quantity of aggregate output demanded is:
a. aggregate price. b. aggregate demand. c. aggregate investment. d. aggregate consumption.
The theory of monopolistic competition predicts that in long-run equilibrium a monopolistically competitive firm will:
A. produce the output level at which price equals long-run marginal cost. B. operate at minimum long-run average cost. C. overutilize its insufficient capacity. D. produce the output level at which price equals long-run average cost.
A production possibilities frontier (PPF) is bowed outward when
a) the more resources the economy uses to produce one good, the fewer resources it has available to produce the other good. b) an economy is self-sufficient instead of interdependent and engaged in trade c) the rate of tradeoff between the two goods being produced is constant d) the rate of tradeoff between the two goods being produced depends on how much of each good is being produced