Exam 19: Consumer Choice Appendix: Indifference Curves

-Complete Table 19.3.Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. Refer to Table 19.3.If Michael has $48 to spend on cola and pretzels,what combination should he purchase in order to maximize his utility?

The slope of the budget constraint,when a consumer has reached optimal consumption of two goods,is equal to the

Market demand is identical to individual demand.

The point where the budget constraint and an indifference curve are tangent

If there is no budget constraint,utility maximization is achieved when marginal utility is zero.

Advertisers currently spend about $1 million per year to change the demand for products.

Sellers can increase total revenues by charging different individuals the maximum they are willing to pay.

If marginal utility is negative,then

Price discrimination occurs when consumers have only partial information about a product's price and availability.

Using the concept of the budget constraint and indifference curves,explain how a consumer maximizes total utility.

Assume that Anna buys peanut butter and bread.If the price of peanut butter falls,then

Consumer theory predicts that a consumer will purchase the product with the highest marginal utility per dollar.

A consumer maximizes total utility from a given amount of income when the

Two indifference curves can cross one another.

Economists focus on the effect of changes in income and prices in influencing actual consumer purchases.

In the article "Men vs.Women: How They Spend,"

If marginal utility is rising,then total utility must be falling.

Utility maximization is always achieved where total revenue is maximized.

Which of these examples is an example of price discrimination?

The rational consumer chooses a combination of two goods that is on the budget constraint and is tangent to the highest indifference curve possible.