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

A change in the price of a good purchased by a consumer would affect that consumer's

Suppose that a consumer is currently spending all of her income on 10 units of good A and 5 units of good B.The price of good A is $4 per unit,the price of good B is $10 per unit,the marginal utility of the last unit of good A consumed is 20,and the marginal utility of the last unit of good B consumed is 60.If the consumer wants to maximize her utility from consuming the two goods,she should

When the price of a good changes,the substitution effect and the income effect

Colin spends his income of $100 per week on two goods: pizzas (which cost $8 each)and milk (which costs $1 per gallon).At his current level of consumption,the marginal utility from the last pizza consumed is 32 and the marginal utility from the last gallon of milk is 4.Is Colin maximizing his utility? Why or why not? If not,what should Colin do to achieve a higher level of utility?

As more of any one good is consumed in a given period,its

Table 7.8 -Refer to Table 7.8.Jessy spends no more than $75 per month on movies and meals out.Movies cost $8 each and a meal out costs $15.If Jessy eats out three times per month,what is her marginal utility per dollar spent?

The law of diminishing marginal utility means that total utility must fall as more units of a good are consumed.

Susie receives an allowance from her parents of $10 per week.She spends her entire allowance on two goods: cans of hairspray and bubble gum.The price of a can of hairspray is $2 and the price of a pack of bubble gum is $1.Draw Susie's budget line.

The satisfaction experienced from consuming a good or service is referred to as

Table 7.2 -Refer to Table 7.2.The total utility of the five slices of pie per day is

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

The budget line shows

Cognitive processing is particularly important in making consumer decisions that involve many options.

Table 7.6 -Refer to Table 7.6.Pete has $10 to spend.He buys two cookies and four candies.Using the equimarginal rule,which of the following is true?

The law of diminishing marginal utility implies that demand curves will be upward sloping.

When a decrease in the price for wine increases Adam's real income,Adam will buy more of all normal goods.If wine is a normal good,then Adam will buy more wine due to

Comment on the following statement: "Diminishing marginal utility implies that total utility will fall when an additional unit of a good is consumed."

Kylie spends her income of $150 per week on two goods: movies (which cost $5 each)and books (which cost $10 each).At her current level of consumption,the marginal utility from the last movie consumed is 20 and the marginal utility from the last book consumed is 30.Is Kylie maximizing her utility? Why or why not? If not,what should Kylie do to achieve a higher level of utility?

-Refer to Figure 7.1.The marginal utility of the second movie rental is

Table 7.3 -Refer to Table 7.3.For the consumer whose preferences are depicted,the marginal utility of the fifth movie is