Exam 20: Consumer Choice

Suppose that an individual consumes only two goods. What will happen to the individual if her last dollar spent on one good yields more marginal utility than that from another good?

Initially, a consumer is at an optimum. Then the price of Y increases. Consequently

Other things being equal, when the money price of a good increases, its relative price

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

Why can't an indifference curve be a straight line?

Basket of goods A is on an indifference curve that lies further from the origin than basket B. From this we know that

What is utility and what are its characteristics?

Carol is very hungry. She has just sat down to eat. Her first bite gives her a certain level of utility. Her second bite increases her utility by more than the first bite. Her third bite increases her utility by more than the second bite. Carol has 40 bites left before she finishes. Which of the following statements is TRUE about Carol?

-Refer to the above figures. Which panel best represents marginal utility?

-Using the above table, what is the total utility of consuming 3 bottles of soda?

Maria buys a cup of coffee every day after her economics class. The first cup of coffee always tastes wonderful. The second does not taste quite as good as the first. The third does not taste quite as good as the second. Maria is experiencing

Given the price of a good or service, what determines how much a person is willing to pay for that good or service?

If the price of tea rises relative to all other prices, consumers are likely to

On a hot summer day, a construction worker enters a McDonald's fast-food restaurant. He orders the first Big Mac. He consumes it within 3 minutes. He then orders a second Big Mac and consumes it in 10 minutes. He eats only half of the third one in 18 minutes and throws away the rest. The store manager offers him the fourth for free. The construction worker says: "No thanks." Why?

The tendency of people to substitute cheaper commodities for more expensive commodities is the

When marginal utility is negative, total utility

-Use the above figure. What does point N represent?

Suppose that a consumer is at an optimum consuming A and B. If the price of A falls, then to get to a new equilibrium the consumer must

An increase in income will

With a given level of money income, when the price of a product that a consumer buys declines, the purchasing power of your money income