Filling blanks from utility theory

Reference no: EM1315696

1. The overall satisfaction a consumer gets from consuming a good or service is________ utility, but the extra or additional satisfaction that a consumer gets from a good or service is ________ utility.

2. A graph of total utility and marginal utility shows that when total utility when total utility is increasing, marginal utility is (positive, negative)__________________, and when total utility is at its maximum, marginal utility is at (a maximum, zero, a minimum)___________________.

3. When the consumer is maximizing the utility the consumer's income will obtain, the ratio of the marginal utility of the (first, last)______________unit purchased of a product to its price is (the same, greater than)_________________for all the products bought.

4. If the marginal utility of the last dollar spent on one product is greater than the marginal utility of the last dollar spent on another product, the consumer should (increase, decrease)______________purchases of the first and _______________purchases of the second product.

5. Water is low in price because its (total, marginal) ____________________utility is low, while diamonds are high in price because their __________________is high.

Reference no: EM1315696

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