Exam 19: Consumer Choice Appendix: Indifference Curves

Explain how a rational consumer decides which goods to buy.

If a successful advertising campaign increases brand loyalty,the

Use the law of diminishing utility to explain why a demand curve is typically downward-sloping.

An indifference curve represents combinations of two goods that provide an individual the same total utility.

Any point on the budget constraint

Price discrimination occurs with products that consumers buy regularly.

-Refer to Figure 19.2.With no budget constraint,a rational consumer will consume _________ apple(s).

A consumer can purchase a product that is outside her or his budget constraint if it is on a higher indifference curve.

Price discrimination is illegal in the United States.

The total consumer surplus is shown on a graph as

The law of diminishing marginal utility states that

According to consumer choice theory,rational behavior requires that consumers compare the marginal utility of each purchase with its price.

As more satisfaction is achieved from consuming a good with diminishing marginal utility,then total utility

Rosa is willing to pay $200 for the iPhone,but the actual price is $400.This means

Consumer surplus does not exist because some consumers cannot afford to purchase the product at all.

Price discrimination

If the marginal utility per dollar spent for candy bars is higher than the marginal utility per dollar spent for popcorn,you should buy more popcorn and fewer candy bars in order to maximize utility.

A successful advertising campaign will

The farther an indifference curve is from the origin,the more total utility it yields.

Consumer surplus measures