5 - Demand

The tendency for consumers to purchase more of a good or service as its price falls is captured by the:

law of demand

Cory gets 18, 23, and 25 units worth of total utility from consuming 10, 11, and 12 raw oysters, respectively, and the price per oyster is 25 cents. Thus, one can infer that Cory: A. is not maximizing his utility. B. is experiencing diminishing marginal utility. C. should not consume any more oysters. D. has consumed too many oysters.

B

During Thanksgiving you participated in a pumpkin-pie eating contest. You really enjoyed the first two pies, the third one was okay, but as soon as you ate the fourth one you became ill and lost the contest. Your total utility ______ with the first three pies you ate. a. increased b. decreased c. stayed the same d. first increased than decreased

a

Growing rice requires extensive irrigation in California. Economists consider water to be a ______ for rice farmers in California. a. want b. need c. luxury d. inferior good

a

f a consumer reallocates his or her spending away from good A and towards good B, then the consumer's total utility will increase if: A MUA/PA < MUB/PB B MUA/PA > MUB/PB C MUA/PA > 0 and MUB/PB > 0 D MUA/PA < 0 and MUB/PB < 0

a

Suppose a cup of tea costs $0.60 and a scone costs $1.20. If Edith spends all of her income on these two goods, and at her current level of consumption, she receives a marginal utility of 6 utils from the last cup of tea she buys and a marginal utility of 24 utils from the last scone she buys, then Edith should: Select one: a. buy more tea and fewer scones. b. buy less tea and more scones. c. not change her consumption of tea and scones. d. buy more tea and more scones.

b

In some countries, medical care is provided free-of-charge to citizens and is paid for by the government. In those countries, medical care: a. is not a scarce resource. b. is available at zero opportunity cost. c. is rationed by some non-monetary method. d. does not exhibit diminishing marginal returns.

c

It is impossible for total utility to be _________ when marginal utility is ___________

decreasing; positive.

Cory gets 18, 23, and 25 units worth of total utility from consuming 10, 11, and 12 raw oysters, respectively, and the price per oyster is 25 cents. Thus, one can infer that Cory:

is experiencing diminishing marginal utility.

Let MUc denote the marginal utility that Pablo receives from a cup of coffee, and let Pc denote the price of a cup of coffee. We typically expect that as Pablo buys more coffee:

m/p will fall

n most markets, scarce goods or services are rationed among competing users, and ______ perform that task.

monetary prices