Chapter 10

Question 1

A consumer’s switch to another similar good when the price of the preferred good increases

Answer 1

Substitution effect

Question 2

Reduction in quantity demanded of a good when its price increases because of a consumer’s decreased purchasing power

Answer 2

Income effect

Question 3

A good’s ability to provide less satisfaction with each successive unit consumed

Answer 3

Diminishing marginal utility

Question 4

A measure of the relative levels of satisfaction consumers get from consumption of goods and services

Answer 4

Utility

Question 5

One unit of satisfaction

Answer 5

Util

Question 6

Total amount of satisfaction derived from the consumption of a certain number of goods or services

Answer 6

Total utility

Question 7

Extra satisfaction generated by consumption of an additional good or service during a specific time period

Answer 7

Marginal utility

Question 8

The concept that states as an individual consumes more and more of a good, each successive unit generates less and less satisfaction (utility)

Answer 8

Diminishing marginal utility

Question 9

Allocation of consumer income that balances the ratio of marginal utility to the price of goods purchased

Answer 9

Consumer equilibrium

Question 10

A field of economics that incorporates insights from human psychology into the models of economic behavior

Answer 10

Behavioral economics