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

Refer to the following table. At this level of consumption of goods A and B, the consumer: Gand A Gand B Marpinal utility 100 500 Price \ 50

Experiments based on the "ultimatum game" indicate that people are generally:

If the marginal utilities are constant for travel and food and the marginal utility per dollar of travel is 50 and the marginal utility per dollar of food is 30:

Crackerjacks cost twice as much as Doritos. Fred maximizes utility by buying eight boxes of Crackerjacks and some number of bags of Doritos. If the last box of Crackerjacks gives Fred 100 units of utility, you can conclude that:

If the total utility curve is a straight line, the marginal utility curve would be a:

Jack Sprat could eat no fat, his wife could eat no lean. And so betwixt them both, they licked the platter clean. Which of the following is true about Jack and his wife?

Steve is currently maximizing utility by consuming three fried eggs and four strips of bacon. From this you can conclude that the:

The slope of a budget constraint with combinations of cookies that cost $1 a cookie and milk that costs $0.50 a carton (with cookies on the y-axis and milk on the x-axis)is:

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

As a consumer moves along an indifference curve:

What is the marginal rate of substitution? (Appendix)

Popeye cannot eat enough free spinach. With this information, we know that Popeye's:

The faster marginal utility declines the:

Suppose that every time you go to the library to study economics you buy yourself soda (S)and candy bars (C)as an incentive to study.Having mastered the material on rational choice you always allocate your study snack budget so that MU_S/P_S = MU_C/P_C.What should you do if one night you discover that the price of a can of soda has increased?

The following table lists the utility that Steve receives from consuming oranges at $0.50 apiece. What is the marginal utility of increasing consumption from two to three oranges? Number of oranges Total utility 0 0 1 4 2 9 3 15 4 20 5 24

What is an indifference curve? (Appendix)

Mary is maximizing utility by eating three pancakes and two eggs. The principle of rational choice says that if there is diminishing marginal utility and the price of eggs rises, Mary will choose to eat more pancakes and fewer eggs.

The principle of diminishing marginal utility says that as you consume more of an item, beyond some point the:

The three major assumptions underlying the economist's theory of choice are (1)decisions can be made costlessly, (2)our preferences are given and not shaped by society,and (3)that individuals maximize utility.Explain why each of those assumptions may not reflect reality.Why may the assumption of "bounded rationality" be more realistic?

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: