Exam 6: Consumer Choice

The below table shows the average utility (in utils) obtained from the consumption of goods A and B Table 6.3 - Refer to Table 6.3.The marginal utility of the fourth unit of B is _____ utils.

Consumer equilibrium exists when the marginal utility per dollar of expenditure is the same for all goods and services.

The principle that people would rather leave things as they are is called _____.

The below indifference map shows the various combinations of hours of music and apples that yield different levels of utility. Figure 6.1 - Which of the following explains why indifference curve I₂ should not cross indifference curve I₁ as shown in Figure 6.1?

Marginal utility is total utility divided by the number of units consumed.

Jen spent her weekly allowance of $110 on clothes and cosmetics.Assume that she had allocated $100 to shoes and $10 to lipsticks and is in equilibrium.What can you conclude from her purchase decisions?

If all consumers had identical preferences,then their marginal utility schedules would be the same.

Which of the following sentences based on the findings of neuroeconomics is true?

In labor markets,a change in the wage rate has both an income and a substitution effect.An increase in wages causes an increase in real income but at the same time it increases the relative price of leisure for the worker.If the increase in the wage rate causes an individual to work less:

The law of diminishing marginal utility does not hold good when the good is free or priced at zero dollars.

When the budget line is just tangent to the highest achievable indifference curve,then _____.

As one moves downward on an indifference curve,the:

A consumer is in equilibrium when the slope of his or her indifference curve is equal to his or her budget constraint.

According to the concept of framing,when a customer calls a hotel regarding a reservation the hotel reservationists generally state room rates as the _____.

Assume that a consumer purchases a combination of products X and Y and the MU_x / P_x = 75 utils per dollar and MU_y / P_y = 50 utils per dollar.To maximize utility without spending more dollars,the consumer should buy:

If the price of videotapes decreases,then the _____.

As the price of a good increases:

Mr.Max is about to purchase 4 units of good A and 6 units of good B.The price of both A and B is $2.Mr.Max has only $20 to spend.If the marginal utility of the fourth unit of A is 12 and the marginal utility of the sixth unit of B is 12,then:

Suppose that there are five bottles of lemonade,each of which gives the consumer the same level of utility.According to the law of diminishing marginal utility,how can one receive the highest utility?

If total utility increases by smaller and smaller amounts as more units of a product are consumed,then marginal utility is: