Exam 6: Consumer Behaviour

For your typical consumption levels of water and diamonds, the good with the higher marginal utility is ; the good with the higher total utility is ; and the good with the greatest consumer surplus is .

Suppose a consumer can purchase only two goods, pasta and cheese. Let the quantity of pasta bemeasured on the vertical axis and the quantity of cheese be measured on the horizontal axis. If theprice of pasta falls, with no change in the price of cheese or in the consumer's money income, then the budget line for the consumer will shift

Suppose a utility-maximizing person consumes only two goods, hamburgers and milkshakes.Suppose the price of milkshakes rises and all other variables remain constant. As a result, thisperson will certainly

Assume the quantity of good X is measured on the horizontal axis and the quantity of good Y on the vertical axis. Initial prices are PX = $5 and PY = $10. The consumer's income is $100. If PY increases to $20, then

The substitution effect is the change in quantity demanded that occurs

The Smith family is allocating its monthly household expenditure between only two goods, food and clothing. Suppose that the price of food is $5 per unit, and the price of clothing is $10 per unit and that the marginal utility that the family is receiving from its consumption of food is currently25. What is the family's marginal utility from its consumption of clothing if it is maximizing its utility?

A basic hypothesis of marginal utility theory is that the utility a consumer derives from successiveunits of a good diminishes as total consumption of the good increases. This hypothesis is known as

Suppose a consumer can purchase only two goods, soap and apples. If the price of soap falls andthe consumption of apples increases, we can conclude that the increased consumption of apples isdue to

An indifference curve plotted for two different goods on the axes

As a consumer moves along an indifference curve

Christine is allocating her household expenditure between cleaning services and gardening services in order to maximize the household's total utility. For the quantities of cleaning and gardening services she has chosen, an increase in the price of cleaning service will, ceteris paribus,

If all consumers in an economy have maximized their utility, and they face a given set of market prices, then each consumer will have identical

The demand curve for a good with an income elasticity of less than one

If total utility is increasing as more units are consumed, then marginal utility must be

If money income is reduced by half, and the prices of all goods consumed by the household are reduced by half, the household's budget line will

If the income effect is negative and larger in absolute terms than the substitution effect, then thedemand curve will be

If consumption of a good generates a marginal utility of zero, then consumption of an additionalunit would mean that total utility would

The real purchasing power of an individual will NOT be affected if

The table below shows the total value (in dollars) that Andrew gets from playing 9-hole rounds of golf. TABLE 6-3 -Refer to Table 6-3. If the price of a 9-hole round of golf is $9, then Andrew will playtimes per month.

The paradox in "the paradox of value" refers to the