Exam 6: Consumer Choice and Behavioural Economics

The marginal utility per dollar that Harold Stratton receives from oranges is greater than the marginal utility per dollar Harold receives from pears.To maximise his utility,what should Harold do?

Figure 6-7 -Refer to Figure 6-7.If the consumer has $240 to spend on DVDs and CDs,what is the price of a DVD if the budget constraint is BC₁?

One possible reason as to why consumers respond to sales is that by displaying a 'high' regular price and a 'low' sale price,sales provide consumers with a reference point to interpret the prices being offered.

Suppose you pre-ordered a non-refundable movie ticket to X-Men: Days of Future Past.On the day of the movie you decide that you would rather not go to the movie.According to economists,what is the rational thing to do?

Figure 6-5 Manuri has $300 to spend on Pilates classes and Yoga classes.The price of a group Pilates class is $20 and the price of a group Yoga class is $10.Manuri's optimal bundle is given by 'A' in Figure 6-5. -Refer to Figure 6-5.Suppose the price of Pilates sessions rises to $30 while income and the price of Yoga sessions remain unchanged.The substitution effect of this price change is represented by the movement from

Marginal utility is

Economists have shown that when the ultimatum game experiment is carried out,both allocators and recipients act as if fairness is important.

What happens to the absolute value of marginal rate of substitution as you move down a convex (bowed toward the origin)indifference curve?

Consider a downward-sloping demand curve.When the price of a normal good increases,the income and substitution effects

When the price of summer tank tops falls and you buy more of them because they are relatively less expensive,this is called

Grace Makutsi finally bought a pair of blue shoes that she had been coveting for a long time.In less than a week she discovered that the shoes were uncomfortable.Grace went back to wearing her old pair and stashed away the new pair.When asked by her boss,Mme.Ramotswe,why does she not simply give away the new pair,she said: 'But I paid so much for them.' Grace's behaviour

What did economists Robert Jensen and Nolan Miller determine must be true for a good to be a Giffen good,where the income effect is larger than its substitution effect?

If Lisa spends her income on veggie burgers and pints of soy milk and the price of veggie burgers is three times the price of a pint of soy milk,then when Lisa maximises her utility she will buy

The satisfaction a person receives from consuming goods and services is called

Figure 6-3 -Refer to Figure 6-3.Best friends Laurel and Hardy both enjoy watching romantic comedies and science fiction movies.Based on the diagrams above,what can you conclude about their movie preferences?

If Marlowe obtains 9 units of utility per dollar spent on apples and 6 units of utility per dollar spent on oranges,then Marlowe

Terence has $50 per week to spend on Subway sandwiches and milkshakes.The price of a Subway sandwich is $5 and the price of a milkshake is $4.He buys 6 sandwiches and 5 milkshakes.The marginal utility of the 6th sandwich = 25 and the marginal utility of the 5th milkshake = 24.Which of the following is true?

Table 6-1 Keegan has $30 to spend on Pita Wraps and Bubble Tea.The price of a Pita Wrap is $6 and the price of a glass of Bubble Tea is $3.Table 6-1 shows his total utility from different quantities of the two items. -Refer to Table 6-1.If Keegan can drink all the bubble tea he wants for free,how many glasses will he consume?

Economists Gary Becker and Kevin Murphy are associated with which of the following?

The additional utility that George receives from consuming one more slice of pizza is called