Exam 6: Consumer Choice and Behavioural Economics

Adhira buys chocolates and almonds.She has 3 bars of chocolates and 4 bags of almonds.The marginal utility of the third chocolate bar is 18 units of utility and the marginal utility from the fourth bag of almonds is also 18.Is Adhira maximising her utility?

Table 6.6 Table 6.6 lists Jay's marginal utilities for burgers and Pepsi.Jay has $7 to spend on these two goods.The price of a burger is $2 and the price of a can of Pepsi is $1. -Refer to Table 6.6.Jay's optimal consumption bundle is

Which of the following statements is false?

What happens to the absolute value of marginal rate of substitution as you move down a convex (bowed toward the origin)indifference curve?

What is an indifference curve? Why can indifference curves never cross? __________________________________________________________________________________________________________________________________________________________________________________________

Most people would prefer to drive a luxury car that has all the options, but more people buy less expensive cars even though they could afford the luxury car because

Which of the following refers to the increase in the usefulness of a product as the number of consumers who use it increases?

Figure 6.4 -Refer to Figure 6.4.Which of the following statements is true?

In their surveys of consumers, Daniel Kahneman, Jack Knetsch and Richard Thaler found that

The slope of the indifference curve is referred to as

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 will not 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.

What did economists Robert Jensen and Nolan Miller determine must be true for a good to be a Giffen good, where the income effect is larger than its substitution effect? __________________________________________________________________________________________________________________________________________________________________________________________

If your total satisfaction increases when you consume another unit, your marginal utility must be

Social influence is likely to have the greatest impact for which of the following products?

The demand curve for corn is downward sloping.What happens if the price of corn, an inferior good, falls?

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 litre 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?

If, when you consume another piece of chocolate, your marginal utility is zero, then

The demand curve for a luxury good is upward sloping.

Suppose the marginal utilities for the first three cans of coke are 100, 80 and 60, respectively.What is the total utility received from consuming 2 cans?

Figure 6.6 -Refer to Figure 6.6.If the price of biscotti is $1.50 and the price of a cappuccino is $3.00, what is the slope of the budget constraint?