Exam 5: The Demand Curve and the Behavior of Consumers

Suppose the price of a pair of jeans is $20 and the price of a T-shirt is $10. Suppose further that a consumer can spend a maximum of $100 on T-shirts and jeans. Which of the following is the most affordable bundle for maximizing the consumer's utility?

Only demand curves from individuals with similar preferences can be summed to obtain a market demand curve.

Exhibit 5-4 The numbers inside the box below give the utility from consuming the amount of apples and the number of cans of cola shown outside the box. -Refer to Exhibit 5-4. Which of the following is the combination that gives the first preference?

Utility maximization implies that a change in income results in a movement along a demand curve.

Consider the table below showing Anne's willingness to pay for magazines.

If a consumer is already consuming a good and is willing to pay a maximum of $100 for one more unit of it, then the total benefit from consuming the good is $100.

Total utility is the

The slope of the budget constraint is affected by the

The market demand curve is the sum of all the individual demand curves.

A consumer will consume such that price equals marginal benefit for every good consumed because

Marginal utility is

Economists refer to utility as the

Utility is easily measured by economists using a unit of measure called a util.

For a given budget, a consumer is assumed to

Exhibit 5-9 -Refer to Exhibit 5-9. When price falls from P₂ to P₁, the size of consumer surplus

Explain how it is possible for marginal utility to decrease as total utility increases.

Marginal utility is used to compare behavior among different consumers.

Consumer surplus increases as price decreases.

Suppose an individual's budget is $1,000, and all of it is spent on food and clothing. If the price of food is $10 and the price of clothing is $25, calculate the maximum amount of food that can be consumed. Do the same for clothing. Finally, calculate how much food and clothing can be consumed if half of the budget is spent on each.

Suppose Austin is willing to pay $5 for one more burger but he actually pays $2 for it. The consumer surplus for Austin to consume that additional burger is