Exam 5: Consumer Choice: Individual and Market Demand

In Poland's free market, Felix Siemienas is making a fortune in cold cuts.Prices are much higher than formerly.Siemienas says, "Yes, my prices are high.If nobody buys, I bring my prices down.That is the market rule." This "rule" best describes

If I use 1,000 gallons of water a month at a price of $.01 a gallon, is my consumer surplus likely to be large or small? Explain.

Lana spent $5 to see a movie.We know

When the price of a commodity rises, we can expect

An inferior good is one

A change in the price of one good, such as staples, may affect the quantity demanded of another good, such as rubber bands.

The market demand curve

A change in the price of one good results in a rotation of the budget line, so that it is steeper or flatter.

Figure 5-4 -In Figure 5-4, the rightward shift in budget lines from the one containing point A to the one containing point B

The marginal utility of a unit of good Y to Jane is

What is the relationship between marginal utility and an individual demand curve?

The number of Compact Discs purchased by a consumer depends on the price of the discs as well as the prices of all other goods purchased.

Elaine values the utility of her first cup of coffee at $1; a second cup, $.75; and a third cup, $.50.If Elaine drinks three cups of coffee for breakfast, her total utility is equal to

What is a budget line? What does its slope indicate?

Even if all individual demand curves are downwardly sloped, the market demand curve may slope upward.

Figure 5-2 -In Figure 5-2, consumer surplus is measured by the area

Figure 5-13 -According to Figure 5-13, if the price of good X falls, a consumer making her optimal decision will move from a point on

The law of diminishing marginal utility states that total utility will increase at a decreasing rate as additional units of a commodity are acquired.

For a ____, if incomes rise and prices do not change, quantity demanded will increase.

Marginal utility can fall even as total utility from the consumption of a good is rising.