Exam 7: Consumer Choice: Utility Theory and Insights From Neuroscience

Paul is consuming X and Y so that MUₓ/Pₓ = 18 and MUᵧ/Pᵧ = 14.Using the equimarginal rule,Paul should

The equimarginal rule

At George's current level of consumption,MUskᵢ tᵣᵢps/Pskᵢ tᵣᵢps = 7 and MUᵣₑstₐᵤᵣₐnt mₑₐls/Pᵣₑstₐᵤᵣₐnt mₑₐls = 9.George can increase his utility by decreasing his consumption of ski trips and increasing his consumption of restaurant meals.

Juan is consuming 3 sandwiches and 6 sodas.If a sandwich costs twice as much as a soda,then

Table 7.5 -Table 7.5 shows how the total utility that Alan derives from watching basketball games changes as he watches more and more games each week.Fill in the table.Do the numbers in the table support the law of diminishing marginal utility? Explain.

Ceteris paribus,if the prices of the goods a consumer purchases decrease,then the consumer's real income

Table 7.1 -Refer to Table 7.1.The total utility of the five cups of coffee per day is

Recall the Application about consumer choice between Coke and Pepsi to answer the following question(s). -Neuroscientist Read Montague conducted a taste test with Coke and Pepsi.When the taste test was ________,most subjects preferred Pepsi,and when the test was ________,most preferred Coke.

Utility can be thought of as the same as

Recall the Application about how a simultaneous increase in the gasoline tax and decrease in the income tax affect gasoline consumption to answer the following question(s). This Application discusses a gasoline tax increase which is combined with a cut in income taxes to ensure that total tax revenue does not change. -Recall the Application.How would a simultaneous increase in the gasoline tax a decrease in the income tax effect gasoline consumption?

Suppose that Erin spends all of her income on two goods,pizza and fiction novels.If the price of pizza rises,then

A point on a demand curve shows the utility maximizing quantity at that price.

What is a budget line?

-Refer to Figure 7.3.The marginal utility from the fourth slice of pie is

A consumer's budget set does not include all combinations of goods that a consumer can afford given the consumer's income and the prices of the goods.

Consumers should allocate their scarce income so that

The calibration of the regions of the brain involved in benefit valuation comes from the brain's NAcc system.

Mike is a college student who works part time and earns $100 per week.He spends his entire income on two goods: pepperoni pizzas and bottles of soda.The price of a pepperoni pizza is $10 and the price of a bottle of soda is $2.Draw Mike's budget line.

Table 7.1 -Refer to Table 7.1.Diminishing marginal utility sets in after the ________ cup of coffee per day.

The decoy effect has important implications for consumer decision making.A savvy consumer can use cognition to avoid being affected by the decoy effect.