Exam 4: Consumer Decision Making and Consumer Reaction to Price Changes  

If goods were characterized by increasing marginal utility, we would observe consumers spending all of their income on one good.

If you are buying CD's in the range of quantities for which marginal utility is diminishing, then each CD provides you with _________ marginal utility than did the previous one.

Does a change in the quality of a good affect the amount of utility you would derive from consuming it?

Would you ever spend money to purchase a good that provided zero marginal utility?

The law of diminishing marginal utility asserts that you become worse off as you consume more of a good.

If demand is unit-elastic within a price range, a change in price will result in _________ _________ in total consumer spending on the good.

Which one of the following would make the demand for airline travel relatively more elastic?

As the price of a good _________, it allows the consumer to buy a quantity at which the marginal utility of the last unit consumed is lower.

The more you are willing to pay for an item, the more marginal utility you derive from it.

If the price elasticity of demand is -0.6, how will quantity demanded change when the price decreases by 20 percent?

If a tax is imposed on cigarettes in an attempt to discourage smoking, what would determine how effective the tax is in achieving this goal?

The price elasticity of demand measures

Table 4.3 -In Table 4.3, at how many sodas is the total utility from sodas maximized?

Lucy gets a bad haircut and afterwards is heard to say, "This haircut was a waste of money." Which of the following is an accurate restatement of Lucy's comment?

The observed responsiveness to a given price change is relatively greater when more _________ is allowed for consumers to respond.

A rational consumer will never purchase a product when its

Consumers purchase goods because the goods provide _________.

Table 4.4 -According to Table 4.4, what is the total utility when six CDs are purchased?

If demand for a good is elastic, then an increase in price reduces demand for the good.

Why does the price elasticity of demand play a role in determining how much revenue the government collects from a per-unit tax imposed on a consumption good?