Exam 19: The Logic of Individual Choice: the Foundation of Supply and Demand

Diminishing marginal utility implies that as an individual consumes more of a good, beyond some point another unit will add:

Refer to the graph shown. The diagram demonstrates that an increase in the price of soda will:

When people play the "ultimatum game," in which one person gets to decide how to split a sum of money by offering a share to another person and neither gets anything if the second person rejects the offer, the result is often that the first person offers:

Refer to the graph shown. Total utility is at its maximum at point:

Using indifference curve analysis, you can identify the point at which a consumer maximizes utility where the slope of the:

The following table describes utility for consuming cans of soda. At what point does the law of diminishing marginal utility set in? Cans of Soda Total utility 1 14 2 30 3 47 4 57 5 56 6 50 7 42

As a consumer moves along a budget constraint:

Tom is maximizing utility by buying three packs of bubble gum and four packages of Skittles. Given diminishing marginal utility, if the price of Skittles rises, the principle of rational choice tells us that Tom will buy:

Some kids wait until the school year begins to buy their back-to-school clothes so that they are sure to fit in. Such follow-the-leader behavior is an example of what the text calls:

Using the indifference curve model, a demand for X curve is derived by allowing:

Behavioral economists have found that people are more willing to save if saving is the default option, as in the case in which they have to opt out of an automatic payroll deduction savings plan. Economists call this:

Suppose one Big Mac gives you a marginal utility of 500 and a second Big Mac gives you a marginal utility of 200. The total utility of buying (and eating) two Big Macs is:

When marginal utility is positive, total utility is:

Refer to the graph shown. Assuming a consumer has $5 to spend, if a soda costs $0.50 and a chocolate bar costs $0.50, the consumer will optimally choose to consume:

If marginal utility is declining but still positive, total utility is increasing.

Suppose that the total utility of consuming the first piece of chewing gum in a packet is 30. This means that marginal utility of consuming the first piece of gum is:

A Big Mac meal costs $3.00 and gives you an additional 5 units of utility; a meal at the Four Seasons Hotel costs $27.00 and gives you an additional 45 units of utility. Based only on the information you have, using the theory of rational choice, you most likely would:

The status quo bias implies that:

To calculate the marginal utility of consuming the Nth product:

Focal point equilibria are consistent with: