Exam 10: Consumer Choice and Behavioral Economics

What is the common feature displayed by the following items? A.eating at a newly opened "fusion" cuisine restaurant B.attending a Red Sox game in Fenway Park C.wearing Lucky Brand designer jeans

The income effect of a decrease in the price of legal services, a normal good, results in

In 2016, the face value of tickets to the Broadway musical Hamilton was

Assuming consumers have transitive preferences, a consumer's indifference curves can never cross.

You participate in a taste test for a new protein supplement called "Kapow." You are given five consecutive one ounce vials of the supplement and after consuming each vial you are asked to note your reaction.You consume the first vial and your response is: "Hmmm, quite good!" After the second, you say, "Not bad at all." After the third, you note, "It's alright." and after the fourth you wince, "No more, the after-taste is getting to me.I need water." What economic principle does this scenario illustrate? Define the principle.

If Dawson prefers pizza to hamburgers and hamburgers to hot dogs, then if preferences are transitive

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

Marv Pilson has $50 worth of groceries in a shopping cart at his local Shop 'n Save.Assume that the marginal utility per dollar of the liter bottles of soft drink in Marv's cart equals 50.The marginal utility per dollar of the boxes of cereal in Marv's cart equals 20.Marv has only $50 to spend, but has not yet paid for his groceries.How can Marv increase his total utility without spending more than $50?

Table 10-1 Keegan has $30 to spend on Pita Wraps and Bubble Tea. The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3. Table 10-1 shows his total utility from different quantities of the two items. -Refer to Table 10-1.What is Keegan's optimal consumption bundle?

The demand curve for corn is downward sloping.If the price of corn, an inferior good, falls, then

A significant downside to network externalities is that

A sunk cost is

A new area of economics studies situations in which people appear to be making choices that do not appear to be economically rational.This area is called

Gowri has $6 per day to purchase lunch.She spends all of her lunch money on pizza and iced tea.The price of pizza is $2.00 per slice and iced tea costs $1 per bottle. a.Draw Gowri's budget constraint and label it BC₀.Put pizza on the horizontal axis and iced tea on the vertical axis.Be sure to identify the intercept values. b.If the price of iced tea rises to $1.20 per bottle, show what will happen to her budget constraint in your diagram.Be sure to indicate any new intercept values.

The order of the letters along the rows of computer keyboards could be changed to allow users to type faster, but this would inconvenience the vast majority of people who learned to type with the current keyboard layout.The costs of switching to a new layout make this change unlikely.This is an example of

After getting an A on your economics exam, you decide to go to your favorite Mexican restaurant to celebrate.You are having trouble deciding whether to order the chipotle chicken chimichanga or the cilantro seafood enchiladas.Use the rule of equal marginal utility per dollar to determine which one to purchase: (a)the chimichanga for $8 which gives you 120 units of utility, or (b)the enchiladas for $15 which gives you 195 units of utility? Assume your budget is large enough to purchase either item.

Which of the following is not a common mistake made by consumers?

The French Bakery ran a special which decreased the price of its croissants from $1.50 to $1.00.Although her money income had not changed, Toni decided to buy 2 croissants instead of her usual 1 bagel and 1 croissant.Toni's actions are explained by which of the following?

In an experiment that employed the dictator game, economists at Cornell University gave student "allocators" the option of dividing $20 in only two ways (a)$18 for themselves and $2 to another student, or (b)$10 for themselves and $10 to another student.What was one result from this experiment?

Costs that have already been incurred, and which cannot be recovered, are known as