Exam 6: Consumer Behaviour

FIGURE 6-2 -Refer to Figure 6-2.Suppose that the price of X is $2,the price of Y is $1,the consumer's income is $10,and the consumer is buying 3 units of good X and 4 units of good Y.What is the total utility the consumer obtains from this combination of X and Y?

The "law" of diminishing marginal utility implies that the

Consider the substitution and income effects of a 15% increase in the price of a good.Of the goods listed below,which is most likely to have the smallest income effect?

John is allocating his household expenditure between groceries and housing in order to maximize total utility.For the quantities of groceries and housing he has chosen,an increase in the price of housing will,ceteris paribus,

In which of the following situations will an individual's purchasing power be unaffected?

FIGURE 6-2 -Refer to Figure 6-2.Suppose the price of Y is $1 and the consumer's income is $10.Initially,the price of X is $2 and the consumer is buying 3 units of good X and 4 units of good Y.If the price of X then falls to $1,what quantities of X and Y will he/she now purchase in order to maximize total utility?

Dave's Consumer Surplus on Movie Rentals per Week (yes,we know no one rents movies anymore,but it makes a good example!) TABLE 6-2 -Refer to Table 6-2.Assuming Dave maximizes his utility when the price is $5,his consumer surplus (in dollars)on each movie rental in order from 1 through 7 is as follows:

If consumption of an extra unit of some good generates a marginal utility of zero,then consumption of that additional unit would mean that total utility would

Suppose a consumer can purchase only two goods,soap and apples.If the price of soap falls and the consumption of apples increases,we can conclude that the increased consumption of apples is due to

A parallel shift in the consumer's budget line must indicate a change in

If John consumes only two goods,A and B,and he is maximizing his utility subject to his budget constraint,

The figures below show Chris's consumption of specialty coffee per week. FIGURE 6-10 -Refer to Figure 6-10.Suppose Chris's income is such that he is able to buy no more than 10 specialty coffees per week.If Chris is maximizing his utility at this level of income,how many specialty coffees is he consuming per week?

Diagrams A,B,and C show 3 individual consumers' demand curves for cement.Consumers A,B,and C constitute the entire monthly cement market in this region. FIGURE 6-3 -Refer to Figure 6-3.On the regional market demand curve for cement (not shown),at which price level(s)is there a "kink" in the demand curve?

Sophie consumes two goods - paperback novels and visits to the movies. FIGURE 6-12 -Refer to Figure 6-12.Sophie's movement from point A to point B is the

The substitution effect of a price change leads consumers to ________ their demand for goods whose prices have risen.The income effect leads consumers to buy less of all ________ goods whose prices have risen.

Economists use the term "marginal utility" to describe the

A consumer maximizes his or her utility when expenditures are allocated such that

An individual's consumer surplus from some product can be eliminated entirely by: 1.raising the price until very few units are bought. 2.charging a price for each unit that is equal to the individual's marginal value for each unit. 3.raising the price until zero units are purchased.

The table below shows the quantities of toffee bars and bags of cashews that a consumer could consume over a 1-week period. Toffee (bars) Cashews (bags) TABLE 6-1 -Refer to Table 6-1.If this consumer purchases 3 toffee bars and 4 bags of cashews per week,his/her total utility will be

Suppose Arun consumes only 2 goods - books and CDs - and has a set of downward sloping indifference curves.As Arun moves from one point to another on a particular indifference curve,