Exam 5: Consumer Choice: Individual and Market Demand

Use the law of diminishing marginal utility to explain why Domino's and Pizza Hut allow the purchase of a second pizza for only $4 when one pays full price (around $10)for the first pizza. Why not simply charge $7 a pizza instead?

When the price of a good changes but the price of the only other good bought by a consumer stays constant, his

The law of demand states that as the price

If the demand curve for an inferior good is drawn,

If marginal net utility is positive, the consumer must be buying too small a quantity to maximize total net utility. Why?

Tom is buying a quantity of wheat at which the marginal utility (in dollars)exceeds price. He should

If the marginal utility to Juan of sleeping an extra hour (from 8 a.m. to 9 a.m.)is negative,

If a household's income declines, then its budget line is

Scarcity raises both price and marginal utility but generally reduces total utility.

Table 5-1B If a graph of Robinson's marginal utility were constructed from Table 5-1B, it would

A change in the price of one good results in a rotation of the budget line around the point at which the consumer is currently consuming, so that it is steeper or flatter.

Table 5-4 Table 5-4 shows the demand schedule for concert tickets for a particular consumer. What will be this consumer's surplus if the price of tickets is $50?

What is marginal analysis?

Consumers should purchase a good up to the point where MU = P.

The law of diminishing marginal utility is consistent with the consumer behavior that produces a negatively sloped demand curve.

An optimal purchase is one that maximizes total utility.

Why is gold very expensive, even though it is not essential to life, while water, which is essential to life, is inexpensive?

Figure 5-17 Which of the following statements about Figure 5-17 must be correct?

A change in the price of a good will shift the indifference curves.

The slope of an indifference curve at all points reflects