Exam 10: Consumer Choice and Behavioral Economics

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 liter 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?

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

If Paul decides to buy a $60 ticket to a Cirque du Soleil show rather than a $45 ticket for a Blue Man Group performance,we can conclude that

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

________ is an experiment that tests the significance of fairness in consumer decision making.

One possible reason as to why consumers respond to sales is that by displaying a "high" regular price and a "low" sale price,sales provide consumers with a reference point to interpret the prices being offered.

What must be true in terms of the income effect,the substitution effect,and the type of good for the good's demand curve to be upward sloping?

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

If a consumer receives 22 units of marginal utility for consuming the first can of soda,20 units from consuming the second,and 15 from the third,the total utility of consuming the three units is

The income effect of a price increase causes a decrease in the quantity demanded of a normal good.

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 maximizing her utility?

Which of the following is not a characteristic of indifference curves?

Some economists have argued that path dependence and switching costs can lead to market failure.Which of the following is an example of this argument?

Figure 10-4 -Refer to Figure 10-4.What is the marginal rate of substitution between g and h?

Some economists have suggested that network externalities result in consumers being locked into the use of products with inferior technologies.Economists Stan Leibowitz and Stephen Margolis have studied cases that have been cited as examples of this and found

The iPod is a product without any significant network externalities.

If,as a person consumes more and more of a good,each additional unit adds less satisfaction than the previous unit consumed,we are seeing the workings of

Figure 10-8 -Refer to Figure 10-8.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?

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

Figure 10-7 Manuri has $300 to spend on Pilates classes and Yoga classes. The price of a group Pilates class is $20 and the price of a group Yoga class is $10. Manuri's optimal bundle is given by "A" in Figure 10-7. -Refer to Figure 10-7.Suppose the price of Pilates sessions rises to $30 while income and the price of Yoga sessions remain unchanged.What is her new optimal bundle?