Exam 5: Happiness, Utility, and Consumer Choice

Lisa Beth loves bananas and derives 10 utils of total utility eating the first one. When she consumes a second banana, her total utility increases to 15 utils. Eating the third raises her total utility to 18 utils. Economists reading her likes and dislikes conclude that

Marti wanted to replenish her wardrobe and went to the $30 rack at K-Mart. There she saw three stylish dresses. She was delighted because she would have been willing to pay $40 for the first dress, $35 for the second dress, and $30 for the third dress. She bought all three. Which of the following is correct?

If Cliff Althoff attends an antique auction, spots a vase that he would be willing to buy at $400, and he is the winning bidder at a price of $400, then Cliff

Marginal utility is defined as the

How do you calculate the total consumer surplus in any market? It is the area

If someone experiences diminishing marginal utility when eating a restaurant meal, he or she should not eat the restaurant meal.

The MU/P of a good will decrease when there is a(n)

Consumer surplus increases as

-Natasha is heading to Myrtle Beach, SC, for spring break. She has purchased the items shown in Exhibit E-10. Explain why Natasha is not maximizing her utility, and show what she can do to increase her total utility, assuming that she has purchased the optimal number of pairs of RayBan sunglasses.

Suppose Fernando allocates his lunch money to pizza and Coke. A Coke costs $1 and a slice of pizza costs $1.50. The marginal utility of the last slice of pizza Fernando ate was 30, and the marginal utility of his last Coke was 25. Fernando spent all of his lunch money. From this information, we can conclude that

The law of diminishing marginal utility explains why the demand curve is downward sloping. The law states that as you consume more of a good, the

-Refer to Exhibit E-4, which represents Chad's demand for bicycle rentals. If the bicycle rental equilibrium price is $4 an hour, Chad's consumer surplus for his first hour of bicycle rental is

According to the law of diminishing marginal utility, the fifth pair of gloves that Mary receives for Christmas makes her

If the MU/P for video rentals is 5 and the MU/P for movie theaters is 8, this person should go to movie theaters more often and rent fewer videos.

Pam is determined to lose 10 pounds and plans to adhere to a strict diet. But at the coffee break, she sees tray of glazed donuts and can't resist. She forgoes the plain bagel and devours a donut. Both the donut and bagel are priced at $0.50. When her office mates tease her, she says matter-of-factly that

A concert-goer who had been willing to pay up to $150 for a ticket, but who pays a scalper $125 for one, experiences a consumer surplus of $25.

The relative scarcity of water in desert societies causes the marginal utility of the last unit consumed to be

If we allow interpersonal comparisons of utility, and the law of diminishing marginal utility holds, then what can we reasonably suppose about the marginal utility of Bill Gates' millionth dollar?

Thinks about your own purchases. Consumer surplus

George Carlson wears cuff links with his dress shirts and he loves the new pair his wife bought him. He adds it to his collection, which he now values at $650. Before the new purchase, he valued the collection at $575. What can we say about the marginal utility of the new cuff links to him?