Question 1

What is the main concept explained by the Law of Equi Marginal Utility?

Accepted Answer

Diminishing satisfaction from consuming more of a good

Answer

Fluctuating satisfaction from consuming more of a good

Answer

Constant satisfaction from consuming more of a good

Answer

Increasing satisfaction from consuming more of a good

Question 2

Which of the following means that as more of a good is consumed, the satisfaction gained from each additional unit of the good decreases?

Accepted Answer

Law of Equi Marginal Utility

Answer

Law of Supply

Answer

Law of Increasing Returns

Answer

Law of Demand

Question 3

What does the Law of Equi Marginal Utility say about the satisfaction when consuming more of a good?

Accepted Answer

It decreases

Answer

It stays the same

Answer

It increases

Answer

It fluctuates

Question 4

How does the law of equi-marginal utility relate to consumer decision-making?

Accepted Answer

It guides consumers to allocate their limited income in a way that maximizes total utility.

Answer

It suggests consumers should always choose cheaper goods over more expensive ones.

Answer

It advises consumers to purchase goods impulsively without considering utility.

Answer

It encourages consumers to buy only luxury goods.

Question 5

What is the main principle behind the law of equi-marginal utility?

Accepted Answer

To maximize total utility by allocating income among goods in a way that balances marginal utility and price.

Answer

To minimize total utility by purchasing goods with the highest price.

Answer

To maximize total utility by consuming goods without considering their marginal utility.

Answer

To maximize total utility by allocating income only to the cheapest goods available.

Question 6

In the context of the law of equi-marginal utility, what does the term 'marginal utility' refer to?

Accepted Answer

The additional satisfaction or benefit gained from consuming one more unit of a good.

Answer

The price of a good in relation to its utility.

Answer

The quantity of goods purchased by a consumer.

Answer

The total satisfaction obtained from consuming a particular good.

Question 7

According to the law of equi marginal utility, what must be equal for a consumer to maximize utility?

Accepted Answer

Marginal utility per dollar spent on each good

Answer

Price of each good

Answer

Total utility obtained from each good

Answer

Quantity of each good purchased

Question 8

What happens if a consumer violates the law of equi marginal utility in their spending decisions?

Accepted Answer

They may fail to maximize their overall utility and satisfaction.

Answer

They will experience diminishing marginal utility for all goods purchased.

Answer

They will always achieve perfect equilibrium in their consumption choices.

Answer

They will end up spending all their income on a single product.

Question 9

How does the law of equi-marginal utility help in decision-making for investors in financial markets?

Accepted Answer

By allocating funds among different investment opportunities to maximize overall returns

Answer

By investing all funds in a single opportunity for higher risk

Answer

By randomly choosing investment opportunities without considering returns

Answer

By disregarding the concept of marginal utility in investment decisions

Question 10

How does the law of equi-marginal utility help in optimizing consumer satisfaction?

Accepted Answer

By ensuring that the marginal utility per unit of money spent is equal across all goods

Answer

By prioritizing the purchase of the most expensive goods

Answer

By ignoring the concept of marginal utility

Answer

By randomly allocating money to different goods

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