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Chapter 6 Consumer Choice & Demand
answer
...
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Which of the following statements is true of utility?
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Utility is a subjective measure of satisfaction an individual receives from consuming a good or service.
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Marginal utility is
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The addition to total satisfaction resulting from an additional unit of consumption.
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Total utility is the
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Sum of all marginal utilities.
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The law of diminishing marginal utility states that
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Marginal utility falls as more of a good is consumed, other things constant.
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Diminishing marginal utility means that
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As one consumes more of a good, other things constant, the additional satisfaction obtained from each additional unit of good tends to fall.
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The following table shows the marginal utility of each additional unit of pretzel for a consumer. The first column shows the number of pretzels consumed in a day, and the second column shows the marginal utility of each additional unit of pretzel. The total utility derived from the consumption of three pretzels is ________ units.
Pretzels MU
1 30
2 20
3 5
4 -15
Pretzels MU
1 30
2 20
3 5
4 -15
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55
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The following table shows the total utility derived from consumption of a good. The first column shows the number of units of the good consumed in a day, and the second column shows the total utility derived from that consumption. The marginal utility of an additional unit of the good diminishes after consumption of the _____ unit of the good.
Units consumed TU
0 0
1 30
2 65
3 85
4 89
5 88
Units consumed TU
0 0
1 30
2 65
3 85
4 89
5 88
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Second
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The following table shows the total utility and marginal utility derived from the consumption of scones. The first column represents the number of scones a consumer consumes in a day. The second column presents the total utility derived from that consumption, and the third column shows the marginal utility of each additional scone. The marginal utility of the fourth scone is ______ units.
Scones TU MU
1 10 -
2 18 -
3 24 6
4 28 -
5 30 2
Scones TU MU
1 10 -
2 18 -
3 24 6
4 28 -
5 30 2
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4
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Annie reallocates her budget until the ratios of marginal utilities of goods equal the ratios of their prices. Which of the following is true of Annie's behavior?
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She maximizes her total utility derived from the consumption of goods.
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As a consumer allocates income between good A and good B, total utility is maximized when
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Marginal utility of A/price of A = marginal utility of B/price of B.
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The following table indicates Sharona's marginal utilities from the additional consumption of goods A & B. The 1st and 3rd columns show the quantities of goods A & B consumed. The 2nd and 4th columns show Sharona's marginal utilities from each additional unit of goods A & B consumed. The price of A is $2 per unit and the price of B is $4 per unit. If Sharona's budget is $12, then which of the following combinations would maximize her total utility?
Qa MUa Qb MUb
1 24 1 48
2 22 2 44
3 18 3 36
4 12 4 24
Qa MUa Qb MUb
1 24 1 48
2 22 2 44
3 18 3 36
4 12 4 24
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2 units of each good.
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The difference between the maximum amount a person is willing to pay for a given quantity of a good and the amount actually paid for that quantity is known as
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Consumer surplus
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The following diagram shows the market equilibrium for opera tickets. The demand curve for opera tickets is labeled D and the supply curve S. At market equilibrium, area ______ represents the consumer surplus of all buyers in the market.
a. A
b. B
c. C
d. A+B+C
e. A+B
a. A
b. B
c. C
d. A+B+C
e. A+B
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A
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Suppose Debbie is willing to pay $50 for a pair of shoes but has to pay $20 because the shoes are on sale. Her consumer surplus is
a. $50
b. $20
c. $70
d. $30
e. $25
a. $50
b. $20
c. $70
d. $30
e. $25
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$30
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Chapter 14 Behavioral Economics
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...
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Which of the following approaches borrow insights from psychology to help explain economic choices?
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Behavioral economics
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