What does the term 'utility' refer to in economics?

The want-satisfying power of a commodity

Fill in the Blanks Consumer surplus equals to the amount consumers are ______ minus what they pay.

Willing to pay

True or False: 

The law of diminishing marginal utility states that each additional unit of a commodity provides increasing satisfaction.

False. 

It states that each additional unit provides less satisfaction.

What is the formula for calculating Total Utility (TU)?

TU = ∑ MU

Which of the following is considered a necessary for efficiency? 

A) Luxury yacht 

B) Clean water 

C) Vintage car 

D) Designer shoes

B) Clean water

MRS shows the rate a consumer is willing to ______ goods for same satisfaction.

Trade 

True or False: 

Indifference curves can intersect each other.

False. 

No two indifference curves can intersect each other.

Riddle: I show how much of one good a consumer gives up for another on an indifference curve. What am I?

Marginal Rate of Substitution (MRS)

What does the budget line represent in consumer theory?

All combinations of two goods that a consumer can purchase with their given income at specified prices.

Fill in the blank: 

The condition for consumer equilibrium is when the budget line is ______ to the indifference curve.

Tangent

True or False: 

A higher indifference curve represents a lower level of satisfaction.

False. 

A higher indifference curve represents a higher level of satisfaction.

What does the law of diminishing marginal utility imply about consumer behavior?

As a consumer consumes more of a good, the additional satisfaction gained from each unit decreases.

Fill in the blank: 

The slope of the budget line measures the rate at which the consumer can ______ one good for another.

Trade

How are Total Utility (TU) and Marginal Utility (MU) related when TU is at its highest value?

When Total Utility (TU) is at its maximum, Marginal Utility (MU) is zero.

Which type of goods are consumed only in fixed proportions, resulting in L-shaped indifference curves?

Perfect complements

What shape does an indifference curve typically have?

Convex to the origin.

What does a downward-sloping indifference curve indicate?

A consumer must give up some of one good to gain more of another, maintaining satisfaction.

What causes a parallel shift of the budget line?

A change in income with constant prices.

What happens when MRS = price ratio (Px/Py)?

The consumer achieves equilibrium.

Riddle: I’m extra satisfaction when you pay less than you're willing, shaped like a triangle. What am I?

Consumer Surplus