Chapter 10- The Logic of Individual Choice: The Foundation Of Supply And Demand Flashcards
If eating the first jelly bean gives you 15 units if utility ad the second gives you 10 additional units…
Total utility of both is 25 units
Marginal utility is:
The additional utility gained from consuming one more unit of a product.
Which of the following is the best example of the law if diminishing marginal utility?
a) I could eat M&Ms forever
b) M&Ms are like potato chips; you can’t eat just one
c) the more M&Ms I eat, the less I enjoy eating them
d) the more M&Ms I eat, the more I enjoy eating them
c) the more M&Ms I eat, the less I enjoy eating them
The principle of rational choice assumes that people:
Maximize total utility
Economists assume that consumers will choose to purchase and consume goods that:
Gives them the greatest additional satisfaction per dollar spent.
A consumer is following the utility-maximizing rule if:
Her marginal utility per dollar for all goods is the same
Assuming DMU, if the marginal utility per dollar of cheeseburgers is less than the marginal utility per dollar of chili dogs, you can increase utility without spending more money by:
Consuming more chilli dogs ad fewer cheese burgers.
The law if demand can be explained by the law of:
Diminishing marginal utility
As one moves down along a demand curve:
Marginal utility falls
Fads, such as wearing extremely skinny jeans, come and go. Which assumption of economists theory of choice do fads violate?
Preferences are given.
In consumer theory, when economists talk about utility, they are referring to:
Satisfaction
“The third piece if chocolate cake I had for breakfast this morning was good, but not as good as the first” ?
Diminishing marginal utility
Jen is deciding between coffee ($1, 10 units utility) or orange juice ($2, 16 units utility)?
Choose coffee since it gives her the most marginal utility per dollar.
Suppose Bill was consuming his utility-maximizing combination of pizza and bagels when the Brice if bagels increased by 10%. In response to the INCOME EFFECT, Bill will:
Decrease his consumption of Bagels because the price increase has made Bill poorer
Assume Jo lives in a world where there’s only good X and Y. If for Jo, MUx/Px > MUy/Py, how can she increase total utility?
She could buy less Y and use the money she saves to buy more X