ECO: CHAPTER 6 QUIZ - CONSUMER CHOICES
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
Substitution and income effects of a change in price of a good may be used to explain the
direct relationship between price and quantity purchased.
The ability of a good or service to satisfy wants is called
utility
In micro-economic terms, the ability of a good or service to satisfy wants is called:
utility.
The marginal utility of two goods changes
with the quantities consumed.
In the US, the amount in savings contributed to IRA's rose from $239 billion in 1992 to $3,667 billion by 2005, while overall savings actually dropped from low to lower. Evidence suggests that, in the economy as a whole, increased savings in these retirement accounts:
are being offset by negative savings or less savings in other accounts.
The most common pattern for marginal utility is
diminishing marginal utility
In terms of micro-economic analysis, what is the function on "utils"?
A measurement of utility.
Economic theory offers _____________ about the full range of possible events and responses, which can prevent _____________ about how households will respond to changes in prices or incomes.
A systematic way of thinking, misguided conclusions.
Which of the following is most likely to cause variations in American household spending patterns?
Each of the above will cause spending variations.
Even with wage increases, the supply curve of labor is most often inelastic for which of the following?
Full-time workers
The key assumption that accompanies the use of numbers for measuring utility is that
individuals choose based on their preferences.
The ________ budget constraint shows the trade-off between present and future consumption.
intertemporal
Saving money is a(n) _____________, because it involves less consumption in the present, but the ability to consume more in the future.
intertemporal budget constraint
The theoretical model of the intertemporal budget constraint for the US economy as a whole suggests that the most common pattern seems to be that:
it doesn't change much.
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.
When Marietta chooses to only purchase a combination of goods that lie within her budget lines, she:
maximizing 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 points for Ted's family will be
on the budget line, directly above the the old consumption point.
Approximately what portion of annual consumption is typically spent by American households on shelter?
one-third
During the 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 families 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
Which of the following occurs simultaneously with an income effect?
substitution effect.
Economists are able to determine total utility by
summing up the marginal utilities of each unit comsumed
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 (or all goods purchased). Consumer equilibrium.
