A) easily measured in units called utils. B) subjective and difficult to measure. C) the consumption of a quasi-public good like electricity or natural gas. D) the production of a quasi-public good like electricity or natural gas. A) easily measured in units called utils. B) subjective and difficult to measure. C) the consumption of a quasi-public good like electricity or natural gas. D) the production of a quasi-public good like electricity or natural gas.

A) are theoretical and have never been discovered in the real world. B) have not existed since prior to the Industrial Revolution. C) were proven to exist in the 1890s by Sir Robert Giffen. D) were not shown to actually exist until 2006. A) are theoretical and have never been discovered in the real world. B) have not existed since prior to the Industrial Revolution. C) were proven to exist in the 1890s by Sir Robert Giffen. D) were not shown to actually exist until 2006.

Exam 6: Concumer Choice and Behavioural Economics

Some online penny auctions charge a fee, such as $1, for every bid placed. Why should these costs of $1 per bid be considered sunk costs? Would it be smart for someone who has 'already invested $5 in bidding costs' to keep bidding to 'protect his or her sunk investments'? Why or why not?

Free

(Essay)

4.9/5

(68)

Question 1

Correct Answer:

Verified

The $1 charge per bid should be considered a sunk cost because this is a cost that has already been paid and cannot be recovered. Even if a person has the winning bid for an auction, each bid he or she placed will cost an extra $1 on top of the winning bid, so whether a person wins or loses, all bids must be paid for. Since sunk costs cannot be recovered, someone who has 'invested' $5 in bidding costs would not be smart to keep bidding to protect this investment.

Assume that Anne has $300 to spend on DVDs and CDs. Her optimal consumption of DVDs and CDs is illustrated by a tangency between a budget line and an indifference curve. Now assume that the price of CDs rises but the price of DVDs falls. How can you show that Anne is made better off by these price changes?

Free

(Multiple Choice)

4.8/5

(80)

Question 2

Correct Answer:

Verified

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

Free

(Multiple Choice)

4.8/5

(75)

Question 3

Correct Answer:

Verified

The income effect of an increase in the price of peaches is

(Multiple Choice)

4.8/5

(95)

Question 4

Utility is

(Multiple Choice)

4.7/5

(80)

Question 5

-Refer to Table 6-5, which lists the values of Harry Taber's marginal utility and marginal utility per dollar for burgers and sushi rolls. Assume that the price of the burgers is $4 and the price of sushi rolls is $2. When Harry's income is $14 he buys two burgers and three sushi rolls. The last column lists the values of the marginal utility per dollar for sushi rolls when the price of sushi rolls decreases to $1. Complete this statement: As a result of the change in price,

(Multiple Choice)

4.9/5

(66)

Question 6

-Refer to Table 6-3. The table above shows Lee's marginal utility per dollar from consuming ice cream cones and cans of Lemonade. The price of an ice cream cone is $2 and the price of Lemonade is $1. Use this information to select the correct statement.

(Multiple Choice)

4.9/5

(84)

Question 7

Arnold Kim began blogging about Apple products during his fourth year of medical school. Kim's website, MacRumors.com, became so successful that he decided to give up his medical career and work full time on his website, despite the nearly $200 000 he had invested in his education. In making his decision, the $200 000 he spent on his education

(Multiple Choice)

4.8/5

(77)

Question 8

If the price of lattes, a normal good that you enjoy, falls,

(Multiple Choice)

5.0/5

(80)

Question 9

The substitution effect of a decrease in the price of movie tickets results in

(Multiple Choice)

4.9/5

(83)

Question 10

If a consumer receives 20 units of utility from consuming two chocolate bars, and 25 units of utility from consuming three chocolate bars, the marginal utility of the third chocolate bar is

(Multiple Choice)

4.9/5

(78)

Question 11

Which of the following is likely to occur as the result of the law of diminishing marginal utility?

(Multiple Choice)

4.8/5

(85)

Question 12

Economists do not think it is possible to compare the relative utility that two people get from consuming an additional unit of a particular good.

(True/False)

4.9/5

(95)

Question 13

Eliza consumes 12 cappuccinos and 8 apple turnovers per week. The price of cappuccino is $4 each and apple turnovers are $1 each. a. What is the amount of income allocated to cappuccino and apple turnover consumption? b. What is the price ratio (the price of cappuccino relative to the price of apple turnovers)? c. Explain the meaning of the price ratio you computed. d. If Eliza maximises utility, what is the ratio of the marginal utility of cappuccino to the marginal utility of apple turnovers? e. If the price of apple turnovers falls, will Eliza consume more apple turnovers, fewer apple turnovers or the same amount of apple turnovers? Explain your answer using the rule of equal marginal utility per dollar.

(Essay)

4.8/5

(79)

Question 14

A significant downside to network externalities is that

(Multiple Choice)

4.8/5

(86)

Question 15

Giffen goods

(Multiple Choice)

4.9/5

(83)

Question 16

-Refer to Figure 6-6. Given the budget constraint in the diagram, which of the following statements is false?

(Multiple Choice)

4.8/5

(77)

Question 17

The income effect of a price change refers to

(Multiple Choice)

4.8/5

(72)

Question 18

Suppose the consumer's income increases while the prices of the goods remain constant. Then the

(Multiple Choice)

4.9/5

(82)

Question 19

What is behavioural economics?

(Multiple Choice)

4.9/5

(71)

Question 20

Showing 1 - 20 of 254

Some online penny auctions charge a fee, such as $1, for every bid placed. Why should these costs of $1 per bid be considered sunk costs? Would it be smart for someone who has 'already invested $5 in bidding costs' to keep bidding to 'protect his or her sunk investments'? Why or why not?

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

The income effect of an increase in the price of peaches is

Utility is

-Refer to Table 6-3. The table above shows Lee's marginal utility per dollar from consuming ice cream cones and cans of Lemonade. The price of an ice cream cone is $2 and the price of Lemonade is $1. Use this information to select the correct statement.

If the price of lattes, a normal good that you enjoy, falls,

The substitution effect of a decrease in the price of movie tickets results in

If a consumer receives 20 units of utility from consuming two chocolate bars, and 25 units of utility from consuming three chocolate bars, the marginal utility of the third chocolate bar is

Which of the following is likely to occur as the result of the law of diminishing marginal utility?

Economists do not think it is possible to compare the relative utility that two people get from consuming an additional unit of a particular good.

A significant downside to network externalities is that

Giffen goods

-Refer to Figure 6-6. Given the budget constraint in the diagram, which of the following statements is false?

The income effect of a price change refers to

Suppose the consumer's income increases while the prices of the goods remain constant. Then the

What is behavioural economics?

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters