Exam 7: Utility Maximization

Prashanth decides to buy a $75 ticket to a particular New York professional hockey game rather than a $50 ticket for a particular Broadway play.We can conclude that Prashanth

The fact that most medical care purchases are financed through insurance

With a fixed money income, an increase in the price of one good and a decrease in the price of the other will cause the new budget line to intersect the original budget line.

(Consider This) A topographical map shows successively higher equal-elevation lines, whereas an indifference map shows successively higher levels of total

If the price of a good increases, it will tend to make the MU to P ratio for the good rise and the good becomes more attractive to the buyer.

Suppose that MUx/Px exceeds MUy/Py.To maximize utility, the consumer who is spending all her money income should buy

When diminishing marginal utility starts happening as a person consumes more and more of a given good,

When a consumer has maximized total utility, he or she cannot increase total utility by reallocating expenditures among different products.

Noncash gift-giving involves value loss when the marginal utility of the gift to the receiver is less than the product price.

"Essential" water is cheaper than "nonessential" diamonds because

If the quantity of X is measured on the horizontal axis and the quantity of Y on the vertical, then the slope of the budget line is equal to the price of X divided by the price of Y.

Many people do not steal or commit fraud because to them, the resulting feelings of guilt and uneasiness make the

If a consumer is initially in equilibrium, an increase in money income will

From the viewpoint of potential criminals, the probability of being fined or imprisoned

A budget line shows the

(Last Word) Most people do not steal, because

Why do people tend to eat more at all-you-can-eat buffet restaurants than at restaurants where each item is purchased separately?

A consumer is making purchases of products Alpha and Beta such that the marginal utility of product Alpha is 30 and the marginal utility of product Beta is 40.The price of product Alpha is $5, and the price of product Beta is $10.The utility-maximizing rule suggests that, to stay within a given budget constraint, this consumer should

In 2015 the federal government started requiring restaurants to print calorie counts next to menu items.The intent was to persuade consumers to

(Consider This) When the federal government started requiring restaurants to print calorie counts next to menu items,