Exam 20: Consumer Choice

-In the above figure, the budget line will change from line DE to line DF when

A consumer is maximizing utility when

-Refer to the above table. At what quantity does diminishing marginal utility set in?

-In the above table, Carl experiences diminishing marginal utility after consuming how many hotdogs?

-Use the above figure. When the budget line rotates from "b" to "c"

Economists use what term to describe the want-satisfying power of a good?

Total satisfaction is maximized when

The fact that consumers will purchase more of a good that has become relatively cheaper

In cardinal utility analysis

The consumer optimum (for two goods, A and B) is reached when

The price of one piece of pizza is $2 and the price of movies is $4. The consumer has $14 of income. The consumer is purchasing 3 pieces of pizza and receiving 20 utils for the last piece. He is also purchasing 2 movies and receiving 40 utils for the last movie. This set of goods

A decrease in the price of a good causes

If your money income stays the same but the price of one good that you are buying goes up, your effective purchasing power

The marginal rate of substitution is

If an individual consumes only two goods and consumption of one good increases, then in order to keep the consumer on the same indifference curve, consumption of the other good must

-In the above figure, if the budget line is the line DE, the consumer will maximize utility at point

-Refer to the above table. If the price of Good A is $1, the price of Good B is $2, and the consumer has $13, the rational consumer will purchase

Which of the following statements is FALSE, with respect to what economist Adam Smith called the diamond-water paradox?

The substitution effect refers to

-Referring to the above table, suppose Carl's ratios of marginal utility of beer to the price of beer and the marginal utility of hotdogs to the price of hotdogs are equal. If the price of beer increases