Exam 6: Concumer Choice and Behavioural Economics

If you received negative marginal utility from consuming the 4th slice of pizza, then your total utility from 4 slices of pizza must be less than your total utility from 3 slices of pizza.

The endowment effect is the tendency of people to be unwilling to sell a good they already own even if they are offered a price greater than they would be willing to pay to buy the good if they did not already own it.

Each price-quantity combination on a consumer's demand curve shows the utility-maximising quantity at the given price.

What is an indifference curve?

If Marlowe obtains 9 units of utility per dollar spent on apples and 6 units of utility per dollar spent on oranges, then Marlowe

Goods with upward-sloping demand curves are referred to as

Terence has $50 per week to spend on Subway sandwiches and milkshakes. The price of a Subway sandwich is $5 and the price of a milkshake is $4. He buys 6 sandwiches and 5 milkshakes. The marginal utility of the 6th sandwich = 25 and the marginal utility of the 5th milkshake = 24. Which of the following is true?

Why do many film processing companies have a policy of printing every picture on a roll of film or a memory card, even if the picture is very fuzzy and customers are allowed to ask for refunds on any pictures they do not like?

Sunk costs

Total utility

Which of the following is a common mistake made by consumers?

The income effect of a decrease in the price of legal services, a normal good, results in

A standard which came to the market first, such as the QWERTY letter layout in typewriters, can become entrenched (this layout is still used in computer keyboards today). What is this phenomenon called?

-Refer to Table 6-1. If Keegan can drink all the bubble tea he wants for free, how many glasses will he consume?

A consumer's indifference curves can never cross.

Many economists do not believe that network externalities lock consumers into the use of products that have technology inferior to other, similar products. These economists believe that

-Refer to Table 6-1. What is Keegan's optimal consumption bundle?

Suppose Barry is maximising his utility from consuming used paperback novels and audio books. The price of a used novel = $4 and the price of an audio book = $8. If the marginal utility of the last novel was 32 units of utility (utils) what was the marginal utility of the last audio book purchased?

Standard economic theory asserts that sunk costs are irrelevant in making economic decisions, yet studies conducted by behavioural economists reveal that sunk costs often affect economic decisions. Which of the following could explain this observation?

The income effect of an increase in the price of salmon