MICRO Chpt 6

When Marietta chooses to only purchase a combination of goods that lie within her budget line, she:

. is maximizing utility

For lunch, Maria eats only salads or vegetarian burgers. Her weekly food budget is $36. Each salad costs $6 and each vegetarian burger costs $3. When deciding how much of each good to buy, Maria knows that 2 salads and 4 vegetarian burgers will give her a utility of 8. Maria's utility-maximizing point is:

3 salads, 6 vegetarian burgers

Troy has a part-time job in a book store to help pay for his college. He can work up to 30 hours each week at his job, which pays $9 per hour. The table below shows his utility from different levels of leisure and income. Troy currently works 20 hours per week. If he decides to work 30 hours instead, his marginal utility gain from the additional income is ____.

9

In terms of microeconomic analysis, what is the function of "utils"?

a measurement of utility

Marginal utility can:

be positive, negative, or zero

Substitution and income effects of a change in price of a good may be used to explain the:

direct relationship between income and demand.

An inferior good is a product

for which demand decreases as income increases.

The key assumption that accompanies the use of numbers for measuring utility is that:

individuals choose based on their preferences

Saving money is a(n) ____________________, because it involves less consumption in the present, but the ability to consume more in the future.

intertemporal choice

The _________________ budget constraint shows the tradeoff between present and future consumption.

intertemporal choice

The term _________________ refers to the additional utility provided by one additional unit of consumption.

marginal utility

A decrease in consumer preference for a product, other things being equal, will cause:

market demand to shift to the left.

The typical pattern revealed in a budget constraint model shows that as the quantity consumed rises,

total utility rises, but marginal utility falls.

In microeconomic terms, the ability of a good or a service to satisfy wants is called:

utility.

The government distributes food stamps that can only be used to acquire food to low-income families. The budget line graph will show food on the horizontal axis and everything else on the vertical axis. After receiving food stamps, Ted's family is able to consume the same amount of food. The new consumption point for Ted's family will be:

on the new budget line, directly above the old consumption point.

Which of the following is considered to be a tell-tale signal that the point with the highest total utility has been found?

the marginal utility per dollar is the same for both goods

. The term ___________________ is used to describe the common pattern whereby each marginal unit of a consumed good provides less of an addition to utility than the previous unit.

diminishing marginal utility

Terry attends college and works part-time job in a drug store. She can work up to 40 hours each week, and is paid $9 per hour. The table below shows her utility from different levels of leisure and income. If Terry decides to work 20 hours per week, her total utility from both leisure and income would be:

142

During a severe recession, the government issued food stamps that could only be used to acquire food to a greater number of families. The budget line graph shows food on the horizontal axis and everything else on the vertical axis. The government expects that issuing the food stamps will cause each family's budget constraint line to:

shift to the right.

The ________________ arises when a price changes because consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price.

substitution effect