Exam 8: Consumer Choice and Behavioral Economics

Marginal utility is the

Consumers maximize total utility within their budget constraint by

Which of the following is used to explain why a consumer's willingness to use Blackberry Messenger (BBM)increases as the number of other people who use Blackberry Messenger increases?

Jamal, Lawson and Kyle have been standing in line for almost an hour waiting to be served at Kirala, a popular new Japanese restaurant.It is possible that some of the people in line won't be served at all before the restaurant closes.Which of the following could explain why the restaurant does not simply raise prices high enough to eliminate the lines? a)In situations where consumption takes place publicly, demand for the product is also influenced by how many other people are buying the product.Consequently, a popular restaurant that increased its prices enough to eliminate lines might find that it had also eliminated its popularity. b)Firms may sometimes not raise their prices for fear that it violates people's sense of fairness and might alienate customers. c)The demand for restaurant meals is relatively elastic and if the firm raise prices it will lower its profits.

The income effect of a price increase for a Giffen good outweighs the substitution effect.

Which of the following does not explain why consumers buy products that many other consumers are already buying?

Figure 8.4 -Refer to Figure 8.4.Suppose the price of pizza increases while the price of hamburger remains constant.Then, the consumer's

A consumer's utility-maximizing combination of goods is given by the bundle that corresponds to the point on

Many economists do not believe that network externalities lock consumers into the use of products that have technology inferior to other, similar products.These economists believe that

Economists have used ________ and ________ in experiments designed to determine whether consumers care about fairness when they make decisions.

A common mistake made by consumers is the failure to take into account the sunk costs of their actions.

Figure 8.4 -Refer to Figure 8.4.The consumer can afford consumption bundles

An item has utility for a consumer if it

Firms pay famous individuals to endorse their products because

If a consumer always buys goods rationally, then

If Ewan is consuming his utility maximizing bundle and the price of one good falls, what happens to the marginal utility per dollar spent on this good (MU/P), and what should Ewan do?

In order to derive an individual's demand curve for salmon, we would observe what happens to the utility-maximizing bundle when we change

If a consumer receives 20 units of utility from consuming two donuts, and 25 units of utility from consuming three donuts, the marginal utility of the second donut is

If the price of muffins, a normal good you enjoy, rises,

What is the common feature displayed by the following items? a)eating in a newly opened "fusion" cuisine restaurant b)attending a Toronto Maple Leafs game at Air Canada Centre c)wearing Lucky Brand designer jeans