Exam 21: Consumer Choice: Maximizing Utility and Behavioral Economics

Given two goods,X and Y,their prices,PX and PY,a consumer is in equilibrium when the last dollar spent on X yields

Suppose a consumer is purchasing Coke (c)and pretzels (p)in quantities such that he is achieving consumer equilibrium.Then the price of Coke increases.Which of the following will be true?

If the rate of increase of total utility declines as the quantity consumed of a good increases,it follows that marginal utility must be

Exhibit 21-2 -Refer to Exhibit 21-2.Total utility for the first two oranges is

Don receives 100 utils from consuming two oranges.The utility he derives from consuming the second orange equals 30 utils.The information provided

The MU/P ratio for good X is greater than the MU/P ratio for good Y.To achieve consumer equilibrium,the consumer reallocates dollars from the purchase of good Y to the purchase of good X.If the law of diminishing marginal utility holds,the marginal utility of good X __________ and the marginal utility of good Y __________.

The 100th game of chess gives Jones more utility than the 32nd game of chess.It follows that

An indifference curve shows all

Research conducted by Nicholas Epley and his colleagues at Harvard showed that people will spend a _________________ percentage of money given to them if it is ________________ rather than

Economists assume that the goal of consumers is to maximize total utility.

The diamond-water paradox holds that often things that have high __________ have a __________ price and things that have a low __________ have a __________ price.

To resolve the diamond-water paradox,it is important to note that under most circumstances,

Smith,who has $10,000,receives an extra dollar,as does Jones,who has $100,000.Smith receives more utility from the extra dollar than does Jones.This is an example of

Explain how the conditions for consumer equilibrium help to support the law of demand.Give an example to support your answer.

Rich has $100,000 and Poore has $1,000.Which of these statements is most strongly supported by the theory of consumer choice?

For the consumer,a point on an indifference curve that lies farther from the origin is preferable compared to those points that are closer to the origin.

Given two goods,X and Y,and their prices,PX and PY a consumer will maximize utility by allocating expenditures such that

A good can have high total utility and low marginal utility.

Suppose you are eating buffalo wings at a local happy hour.The total utils from doing so after the fourth,fifth,sixth,and seventh wings are 80,116,136,150,respectively.The marginal utility of the sixth wing is __________ utils.

Exhibit 21-4 -Refer to Exhibit 21-4. What value goes in blank (A)?