Exam 7: Consumer Behavior

The idea that limited information and limited cognitive abilities lead people to make suboptimal choices is called bounded _____, and the idea that there are limitations on our determination is called bounded:

Explain the difference between total utility and marginal utility.

Use the table Utility from Roller Coaster Rides I. What is the total utility from two roller coaster rides? ​

A consumer buys two goods, X and Y. When the price of good X decreases, this encourages a buyer to buy more of good X and less of good Y, which is called the:

What happens to a consumer's budget constraint if the amount of money he or she has to spend increases?

Use the table Jackson's Total Utility for Cupcakes. What is the marginal utility of Jackson's third cupcake? ​

A consumer's objective is to maximize _____ utility.

A _____ is the set of points on a graph that exhaust a consumer's budget.

The idea that there are limits to optimal decision making because there are limits to people's limited cognitive abilities, skills, information, or time is called:

If a good is an inferior good and its price decreases, the income effect:

If Alice's marginal utility per dollar spent is higher on magazines than on baseball tickets and she has spent all of her income, then which of the following is true?

If a good is a normal good and its price decreases, the income effect:

What is the difference between bounded rationality and bounded willpower?

When the price of apples is $2 and the price of oranges is $2, Sue buys 10 apples and eight oranges. When the price of apples decreases to $1, apples become more appealing than oranges because the opportunity cost of buying apples decreases while the opportunity cost of buying oranges increases. What does this description describe?

A TV streaming service offers three different packages of channels to customers, even though some customers would prefer more. What concept from behavioral economics explains why the streaming service believes that it will sell more subscriptions with three services than if it offers customers the ability to choose the channels they want from its 150 channel line-up?

All else equal, when the price of soda rises, Brian purchases less soda and more candy. For Brian, we can definitely say that candy:

Use the table Number of Roller Coaster Rides II. What is the marginal utility of the third roller coaster ride? ​

When there is an increase in your budget, the budget constraint shifts out because you can afford:

Use the table Jackson's Total Utility for Cupcakes. For what cupcake is Jackson's marginal utility the highest? ​

When marginal utility is _____, then total utility is: