Exam 8: Utility and Demand

If the price of a good increases, a consumer will substitute away from the relatively more expensive good, which will increase the marginal utility for that good and bring the consumer back to equilibrium.

Neuroeconomics is

Chips Sodas -The table above shows Mary's utility from chips and soda. Mary buys only chips and soda. Chips cost $2 per bag and soda costs $4 per six-pack. She has $20 to spend per week. To maximize her utility, Mary will buy

Marginal utility theory predicts that when income increases a

-The above table shows Homer's total utility from boxes of doughnuts. As Homer's consumption of doughnuts increases

If Jack is a utility maximizer, shouldn't a fall in the price of popcorn cause an increase in his marginal utility of popcorn?

Total utility describes

Marginal utility theory predicts that if a consumer's income decreases, the consumer

-In the figure above, the marginal utility of the third crate of tomatoes for the person with total utility curve C is

Suppose Jill's consumption bundle is made up of 2 goods, apples and bottles of juice. If the price of an apple increases, then Jill's budget line would

Sarah consumes pizzas and hamburgers. The price of a hamburger is $1 and the marginal utility from her last hamburger is 5. Let P_p be the price of a pizza and MU_p be the marginal utility of pizzas. In consumer equilibrium, the ratio MU_p/P_p for Sarah's last pizza must equal

Suppose Hanna spends her entire budget buying bagels and cups of coffee each day. Also, suppose the marginal utility of her last bagel is 100 and the marginal utility of her last cup of coffee is 200. If the price of a bagel is $4 and the price of a cup of coffee is $2, then

Robinson spends all his income on mangos and bananas. Mangos cost $3 per pound and bananas cost $1 per pound. The marginal utility is 30 for the last pound of mangos purchased and 10 for the last pound of bananas. To maximize his utility, Robinson should buy

Chips Sodas -The table above shows Mary's utility from chips and soda. Mary receives ________ units of utility from the third chip.

According to marginal utility theory, a rise in income will

Suppose Hank spends his entire budget buying 2 bagels and 3 cups of coffee each day. Also, suppose the marginal utility of the second bagel is 100 and the marginal utility of the third cup of coffee is 200. Which of the following statements is TRUE?

Sam consumes only sandwiches and soda and maximizes his total utility. Suppose that the price of a sandwich falls. At the new consumer equilibrium, Sam substitutes ________ for ________. Sam's marginal utility from soda ________ and his marginal utility per dollar spent on sandwiches ________.

Marginal utility is the

According to the principle of diminishing marginal utility, as an individual consumes more and more of a good or service, the total utility increases while the marginal utility decreases.

A decrease in consumption will result in