Exam 6: Consumer Choice and Behavioural Economics

You wish to buy only one CD.Use the rule of equal marginal utility per dollar to determine which one to purchase: (a)Usher's latest CD for $15 which gives you 75 units of utility,or (b)Tom Petty and the Heartbreakers' Greatest Hits for $10 that gives you 100 units of utility?

An economist observes two consumers in a supermarket.One of the consumers buys a case of Coca-Cola and the other buys a case of Pepsi-Cola.Both colas sell for the same price and the ages and incomes of the consumers are also the same.Based on this information,how would the economist explain the consumers' choices?

Figure 6-2 Figure 6-2 represents the demand for ice cream cones. -Refer to Figure 6-2.Which of the following statements is true?

Which of the following correctly describes the result of a price increase for an inferior good?

Table 6-2 Table 6-2 above shows Keira's utility from soup and sandwiches.The price of soup is $2 per cup and the price of a sandwich is $3.Keira has $18 to spend on these two goods. -Refer to Table 6-2.What is Keira's marginal utility per dollar spent on the third cup of soup?

Which of the following statements about utility and preferences is false?

One reason that consumers and businesses might not act rationally is

Which of the following refers to the increase in the usefulness of a product as the number of consumers who use it increases?

A consumer's utility-maximising combination of goods is given by the bundle that corresponds to the point on

The demand curve for a luxury good is upward sloping.

The demand curve for a Giffen good is

Suppose Renee can increase her total utility from consuming video rentals and books by buying one more book and renting one fewer video.Which of the following is true?

The word 'util' has been used by economists in the past as an objective measure of utility.Today economists believe that

Which of the following statements describes economists' attitudes regarding the influence of social factors on the choices consumers make?

Explain the concept of network externalities.

Figure 6-1 -Refer to Figure 6-1.When the price of meat pies increases from $5.00 to $5.75,quantity demanded decreases from Q₁ to Q₀.This change in quantity demanded is due to

What is the marginal rate of substitution?

Describe the demand curve for a Giffen good.

What is behavioural economics?

Total utility is constant along a given indifference curve.