Exam 10: Consumer Choice and Behavioral Economics

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.

The substitution effect of an increase in the price of peaches is

Once a product becomes established,network externalities may create ________ costs that make consumers reluctant to buy a new product with better technology.

When diminishing marginal utility sets in,total utility must be negative.

Describe the demand curve for a Giffen good.

If the price of muffins,a normal good you enjoy,rises,then

After getting an A on your economics exam,you decide to go to your favorite Mexican restaurant to celebrate.You are having trouble deciding whether to order the chipotle chicken chimichanga or the cilantro seafood enchiladas.Use the rule of equal marginal utility per dollar to determine which one to purchase: (a)the chimichanga for $8 which gives you 120 units of utility,or (b)the enchiladas for $15 which gives you 195 units of utility?

The demand curve for a Giffen good slopes upward.

Quantity of Beer (glasses) Total Utility Quantity of Pizza (slices) Total Utility 1 25 1 20 2 45 2 35 3 60 3 45 4 65 4 50 5 69 5 52 6 70 6 52 Table 10-7 shows Antonio's utility from beer and pizza. -Refer to Table 10-7.What is Antonio's marginal utility from consuming the fifth beer?

Figure 10-9 -Refer to Figure 10-9.Consider the budget constraint BC1.If the price of DVDs is $20 and the price of CDs is $10,what is the consumer's income?

Marge buys 5 CDs and 7 DVDs.The marginal utility of the 5th CD and the marginal utility of the 7th DVD are both equal to 30 utils.Can we say that this is the optimal combination of CDs and DVDs for Marge?

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

What happens to the absolute value of the marginal rate of substitution as you move down a convex (bowed toward the origin)indifference curve?

In making decisions about what to consume,a person's goal is to

Figure 10-6 The above panels show various combinations of indifference curves and budget constraints for two products: Popcorn and Candy. -Refer to Figure 10-6.Which diagram demonstrates a decrease in total utility following an increase in the price of candy?

What is the endowment effect?

The demand curve for canned peas is downward sloping.If the price of canned peas,an inferior good,rises,then

A consumer's budget constraint is

Consider the following hypothetical scenarios: Scenario A: You are about to purchase a pair of 7 for All Mankind jeans for $175 and a t-shirt for $45.The sales attendant at the store tells you that the pair of jeans you wish to buy is on sale for $160 at another store,located about a 20-minute drive away. Scenario B: You are about to purchase a pair of 7 for All Mankind jeans for $175 and a t-shirt for $45.The sales attendant at the store tells you that the t-shirt you wish to buy is on sale for $30 at another store,located about a 20-minute drive away. Based on standard economic theory,under which scenario would you make the 20-minute trip to the other store?

Which of the following is not a common mistake made by consumers?