Exam 7: Consumer Choice: Utility Theory and Insights From Neuroscience

Comment on the following statement: "Diminishing marginal utility implies that total utility will fall when an additional unit of a good is consumed."

Mike is a college student who works part time and earns $100 per week.He spends his entire income on two goods: pepperoni pizzas and bottles of soda.The price of a pepperoni pizza is $10 and the price of a bottle of soda is $2.Draw Mike's budget line.

Table 7.6 -Refer to Table 7.6.Pete has $10 to spend.He buys two cookies and four candies.Using the equimarginal rule which of the following is true?

According to the law of diminishing marginal utility:

As more of any one good is consumed in a given period,its:

When a decrease in the price for wine increases Adam's real income,Adam will buy more of all normal goods.If wine is a normal good,then Adam will buy more wine due to:

An individual demand curve shows the relationship between the price of a product and the quantity demanded by a rational consumer.

A budget line connects the combinations of two goods that exhaust a consumer's budget.

What is the equimarginal rule?

-Refer to Figure 7.2.The ________ movie rental has a marginal utility of zero.

Susie receives an allowance from her parents of $10 per week.She spends her entire allowance on two goods: cans of hairspray and bubble gum.The price of a can of hairspray is $2 and the price of a pack of bubble gum is $1.Draw Susie's budget line.

If marginal utility is decreasing consuming an additional unit of a product will cause total utility to decline.

Recent experiments by neuroscientists have shown that the more a person thinks about the health consequences of an unhealthy food like a donut,the higher the perceived benefit of the unhealthy food.

Which of the following economically explains why consumers are willing to pay less for a consultation than for a surgery?

Table 7.3 -Refer to Table 7.3.The effect of the law of diminishing marginal utility is seen after:

The decoy effect has important implications for consumer decision making,A savvy consumer can use cognition to avoid being affected by the decoy effect.