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

What is the marginal utility of the fourth can of soda? Cans of Soda Total utility Marginal utility 1 14 2 12 3 36 4 44 5 6

The underlying psychological foundation of individual choice and economic reasoning is:

How does the principle of diminishing marginal utility underlie the law of demand?

Consider the following table,which gives utility numbers for "Good X." Marginal in this table represents values between levels of total utility. Units of Good X Total Utility Marginal Utility 0 0 1 10 2 12 3 36 4 52 5 18 6 20 (a)Fill in the blanks of the table. (b)Draw a picture illustrating the relationship between Units of Good X (horizontal axis)and Marginal Utility (vertical axis). (c)What does the picture you drew for part (b)say about a consumer's satisfaction when increasing consumption of Good X? (d)How is this example different than what we typically expect to find?

Joseph Gallo poured two glasses of wine from the same bottle but put a more expensive price tag on one glass than on the other. He let people test both and asked which they wanted; most wanted the more expensive glass, not knowing that both had come from the same bottle. This kind of experiment tells us that:

A Jackson Pollock painting can cost $1.2 million, whereas a poster reproduction of the same painting costs only about $15. The reason is that:

Given a fixed level of spending, you will maximize utility when the:

The price of a McDonald's dinner is $5; the price of a Burger King dinner is $5. The marginal utility you would get from the next McDonald's dinner is 15; the marginal utility you would get from the next Burger King dinner is 20. You should:

When companies supersized luxury consumer products to cater to the superwealthy who wanted to rise above the pack, this made use of the concept of:

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:

Refer to the following table. Fill in the table and answer the following question: What is the marginal utility of the ninth can of soda? Cans of Sadn Tatal utility Marginal utility 6 54 7 6 8 0 9 54

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:

To choose, based on the principle of rational choice, among combinations of goods with a cost in money, one must compare:

Assume the utility Janet obtains from consuming apples is given in the table below. (a)Draw the graphs for Jane's total utility curve and marginal utility curve for apples. (b)At what point does diminishing marginal utility set in? (c)What is the maximum satisfaction (total utility)she can obtain from consuming apples? (d)If Janet is at her level of maximum utility from apple consumption,what will happen to her level of utility if she consumes an additional apple? (e)If apples were freely given away at zero cost,how many apples would she choose to consume? Number of apples Total Utility Marginal Utility 1 7 7 2 13 6 3 18 5 4 22 4 5 25 3 6 27 2 7 28 1 8 28 0 9 27 -1 10 25 -2 Note: Marginal utility should be interpreted as between levels of total utility,so that the marginal utility between 0 and 1 apple is 7,and the marginal utility between 1 and 2 apples is 6.

Refer to the graph shown. A consumer would be expected to change consumption from point A to point B in response to a(n):

Economists have been interested in the following interaction: A person is allowed to split a sum of money between himself and another person. The other person can then accept the split or reject it, in which case neither person gets anything. Economists call this interaction the:

Refer to the graph shown. Which price combination is consistent with the budget line shown?

The message of the ultimatum game is that:

In choosing between two products, a rational consumer will choose the product that gives her the:

The opportunity cost of consuming good A is lower than the opportunity cost of consuming good B. This means that good: