Exam 6: Consumer Choices

Briefly discuss how a higher rate or return or a higher interest rate affects the choices typical to households with respect to intertemporal budget constraint.

Terry attends college and works part-time job in a drug store. She can work up to 40 hours each week, and is paid $9 per hour. The table below shows her utility from different levels of leisure and income. If Terry decides to work 20 hours per week, her total utility from both leisure and income would be:

A decrease in consumer preference for a product, other things being equal, will cause:

Economic theory offers ____________________ about the full range of possible events and responses, which can prevent __________________ about how households will respond to changes in prices or incomes.

Bruce works for a large bank. His wage increased from $30 per hour to $40 per hour. He can work up to 50 hours each week. The table below shows her utility from different levels of leisure and income. If Bruce decides to increase his weekly hours of work from 10 to 20 hours after his raise, the marginal utility loss from having less leisure is:

Briefly describe how the utility-maximizing choice on a consumption budget constraint can be found.

How does the U.S. Bureau of Labor Statistics gather information with regard to the typical consumption choices of Americans?

The term _____________ describes a situation where a ________________ causes a reduction in the buying power of income, even though actual income has not changed.

Garth inherited $25,000. He needs to decide now much to spend now and how much to save for later. If he saves the money, then he can earn 15% interest on the total before he spends it. Using the information about his marginal utility in the table below, Garth should:

Briefly explain why a graph is used in a budget constraint model between two goods and include a description of how the graph would appear. Explain the significance of the budget constraint line and how the marginal utility of the two goods changes. How would a sensible economizer choose based on marginal comparison between one good and another that costs twice as much?

-Refer to the diagram above. What is the significance of the point at the top of the backward bending of the supply curve marked L3?

The theoretical model of the intertemporal budget constraint for the U.S. economy as a whole suggests that the most common pattern seems to be that:

Marginal utility can:

Kim has $24 per week in her entertainment budget. She splits her time between going to the movies and yoga classes. Each movie costs $8 while each yoga class costs $3. The total utility from each of these activities is set out in the table below. What is Kim's total utility maximizing point?

The government distributes food stamps that can only be used to acquire food to low-income families. The budget line graph will show food on the horizontal axis and everything else on the vertical axis. After receiving food stamps, Ted's family is able to consume the same amount of food. The new consumption point for Ted's family will be:

In May and June, Tammy spent all her clothing budget on bathing suits and beach bags. Each bathing suit cost $75. At Tammy's optimal choice, her marginal utility from the last bathing suit purchased is 300 and her marginal utility from the last beach bag purchased is 200. This means that each handbag must cost:

For lunch, Wendy eats only salads or fruit & yogurt smoothies. Her weekly food budget is $48. Each salad costs $6 and each smoothie costs $3. When deciding how much of each good to buy, Wendy knows that 2 salads and 4 smoothies will give her a utility of 8. What is Wendy's utility-maximizing point?

When economists attempt to predict the spending patterns of U.S. households, they will typically view the _____________________ as a primary determining factor that influences the individual consumption choices that each will make.

During a severe recession, the government issued food stamps that could only be used to acquire food to a greater number of families. The budget line graph shows food on the horizontal axis and everything else on the vertical axis. The government expects that issuing the food stamps will cause each family's budget constraint line to:

The _________________ budget constraint shows the tradeoff between present and future consumption.