Exam 6: Concumer Choice and Behavioural Economics

-Refer to Figure 6-5. Suppose the price of Pilates sessions rises to $30 while income and the price of Yoga sessions remain unchanged. The substitution effect of this price change is represented by the movement from

(Multiple Choice)

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Question 121

A curve that shows combinations of consumption bundles that give a consumer the same utility is called

(Multiple Choice)

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Question 122

Grant has $200 to spend each month on restaurant meals and jazz performances at his neighbourhood jazz club. The price of a typical restaurant meal is $20 and the price of a jazz performance ticket is $10. Grant is maximising his utility by consuming 6 restaurant meals and attending 8 jazz performances. Suppose Grant still has $200 to spend, but the price of restaurant meal rises to $25, while the price of jazz performance ticket drops to $8. Is Grant better off or worse off than he was before the price change? Use a budget constraint/indifference curve graph to illustrate your answer.

(Essay)

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Question 123

Total utility is maximised in the consumption of two goods by

(Multiple Choice)

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Question 124

All of the following products are most likely to have significant network externalities except

(Multiple Choice)

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Question 125

The substitution effect of a price increase causes a decrease in the quantity demanded of an inferior good.

(True/False)

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Question 126

Consider a good whose consumption takes place publicly. Your decision to buy that good depends

(Multiple Choice)

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Question 127

Economists Robert Jensen and Nolan Miller reasoned that to be a Giffen good, with an income effect larger than its substitution effect, a good must be and make up a portion of a consumer's budget.

(Multiple Choice)

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Question 128

There are two conditions necessary for a consumer to maximise her utility. One is that the marginal utilities per dollar spent on each good and service consumed are equal. What is the other condition?

(Multiple Choice)

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Question 129

Many people leave their servers tips in restaurants, even when they are not likely to visit the restaurant again. This is evidence that

(Multiple Choice)

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Question 130

Farah has $100 to spend each month on bread and chicken. Suppose the price of bread is $4 a loaf and the price of chicken is $5 per pound. a. Draw her budget constraint and label it BC₀. Put bread on the horizontal axis and chicken on the vertical axis. Be sure to identify the intercept values. b. Suppose Farah is a utility maximiser and she consumes 10 loaves of bread and 12 pounds of chicken. On the same graph you drew in part (a), draw an indifference curve to identify her optimal bundle. Label this bundle 'E.' c. Is her budget exhausted? Verify your answer. d. Now suppose Farah's income falls so that she can now devote $80 to the two goods. Prices however remain unchanged. In the same diagram, graph her new budget constraint and label it BC₁. Be sure to identify any new intercept values. e. Following the change in income, can Farah consume the same bundle 'E'? Explain your answer. f. What must happen to her total utility following the decrease in her income?

(Essay)

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Question 131

-Refer to Table 6-2. Holding prices constant, when Keira's income changed from $18 to $23, what happens to her total utility and to the marginal utilities of the last cup of soup and the last sandwich purchased?

(Multiple Choice)

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Question 132

When the price of audio books, a normal good, falls, causing your purchasing power to rise, you buy more of them due to

(Multiple Choice)

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Question 133

Marginal utility can be

(Multiple Choice)

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Question 134

Arnie Ziffel has $20 per week to spend on any combination of pineapples and green tea. The price of a pineapple is $4 and the price of a bottle of green tea is $2. The table below shows Arnie's utility values. Use the table to answer the questions that follow the table. a. Complete the table by filling in the blank spaces. b. Suppose Arnold purchases 4 pineapples and 2 bottles of green tea. Is he consuming the optimal consumption bundle? If so, explain why. If not, what combination should he buy and why?

(Essay)

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Question 135

Why might network externalities result in products that contain inferior technologies?

(Essay)

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Question 136

-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?

(Multiple Choice)

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Question 137

The income effect due to a price decrease will result in an increase in the quantity demanded for

(Multiple Choice)

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Question 138

The endowment effect suggests that people

(Multiple Choice)

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Question 139

Which of the following is held constant along an indifference curve?

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Question 140

Showing 121 - 140 of 254

-Refer to Figure 6-5. Suppose the price of Pilates sessions rises to $30 while income and the price of Yoga sessions remain unchanged. The substitution effect of this price change is represented by the movement from

A curve that shows combinations of consumption bundles that give a consumer the same utility is called

Total utility is maximised in the consumption of two goods by

All of the following products are most likely to have significant network externalities except

The substitution effect of a price increase causes a decrease in the quantity demanded of an inferior good.

Consider a good whose consumption takes place publicly. Your decision to buy that good depends

Economists Robert Jensen and Nolan Miller reasoned that to be a Giffen good, with an income effect larger than its substitution effect, a good must be and make up a portion of a consumer's budget.

There are two conditions necessary for a consumer to maximise her utility. One is that the marginal utilities per dollar spent on each good and service consumed are equal. What is the other condition?

Many people leave their servers tips in restaurants, even when they are not likely to visit the restaurant again. This is evidence that

-Refer to Table 6-2. Holding prices constant, when Keira's income changed from $18 to $23, what happens to her total utility and to the marginal utilities of the last cup of soup and the last sandwich purchased?

When the price of audio books, a normal good, falls, causing your purchasing power to rise, you buy more of them due to

Marginal utility can be

Why might network externalities result in products that contain inferior technologies?

-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?

The income effect due to a price decrease will result in an increase in the quantity demanded for

The endowment effect suggests that people

Which of the following is held constant along an indifference curve?

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

Exam 6: Concumer Choice and Behavioural Economics

-Refer to Figure 6-5. Suppose the price of Pilates sessions rises to $30 while income and the price of Yoga sessions remain unchanged. The substitution effect of this price change is represented by the movement from

A curve that shows combinations of consumption bundles that give a consumer the same utility is called

Total utility is maximised in the consumption of two goods by

All of the following products are most likely to have significant network externalities except

The substitution effect of a price increase causes a decrease in the quantity demanded of an inferior good.

Consider a good whose consumption takes place publicly. Your decision to buy that good depends

Economists Robert Jensen and Nolan Miller reasoned that to be a Giffen good, with an income effect larger than its substitution effect, a good must be ________ and make up a ________ portion of a consumer's budget.

There are two conditions necessary for a consumer to maximise her utility. One is that the marginal utilities per dollar spent on each good and service consumed are equal. What is the other condition?

Many people leave their servers tips in restaurants, even when they are not likely to visit the restaurant again. This is evidence that

-Refer to Table 6-2. Holding prices constant, when Keira's income changed from $18 to $23, what happens to her total utility and to the marginal utilities of the last cup of soup and the last sandwich purchased?

When the price of audio books, a normal good, falls, causing your purchasing power to rise, you buy more of them due to

Marginal utility can be

Why might network externalities result in products that contain inferior technologies?

-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?

The income effect due to a price decrease will result in an increase in the quantity demanded for

The endowment effect suggests that people

Which of the following is held constant along an indifference curve?

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

Economists Robert Jensen and Nolan Miller reasoned that to be a Giffen good, with an income effect larger than its substitution effect, a good must be and make up a portion of a consumer's budget.