Econ Hw 5

Given the table below, when Sean consumes 3 popsicles per hour, his total utility is ___ utils per hour.

175

Consider a market for snowboards in which there are 4 potential buyers. The first has a reservation price of $200; the second has a reservation price of $300; the third has a reservation price of $400; and the fourth has a reservation price of $500. If snowboards sell for $250 and if each potential buyer only wants one snowboard, then total consumer surplus in this market will be ___ dollars

450

The law of demand states that people do _____ of what they want to do as the cost of doing it rises.

less

Economists refer to the total satisfaction that people derive from all of their consumption activities as _____.

total utility

True or false: Economists believe that our preferences for different goods and services can be influenced by our culture.

true

If your marginal utility from eating French fries is positive but decreasing, then this implies that if you eat another French fry, your total utility

will increase.

The affordable combination of goods that yields the highest total utility for a consumer is known as the ___ combination of goods.

optimal

The tendency for the additional utility gained from consuming an additional unit of a good to diminish as consumption increases beyond some point is known as

the law of diminishing marginal utility.

Provided people have achieved bare subsistence levels of consumption, economists speak mainly in terms of people's ______.

wants

Consider a market for skateboards in which there are 3 potential buyers. The first has a reservation price of $100, the second has a reservation price of $200, and the third has a reservation price of $300. If skateboards sell for $150 and if each potential buyer only wants one skateboard, then what will be total consumer surplus in this market?

$200

Consider a market for surfboards in which there are 5 potential buyers. The first has a reservation price of $100; the second has a reservation price of $200; the third has a reservation price of $300; the fourth has a reservation price of $400 and the 5th has a reservation price of $500. If surfboards sell for $350 and if each potential buyer only wants one surfboard, what will be total consumer surplus in this market?

$200

When Kyle eats 1 donut for breakfast, his total utility is 20, when he eats 2 donuts his total utility is 35, and when he eats 3 donuts his total utility is 40. Thus, his marginal utility of going from 1 to 2 donuts is ___ utils

15

Suppose that when the price of a sandwich from Dagwood's Deli is $5, there are 200 people who buy 1 sandwich per week and 100 people who buy 2 sandwiches per week. Thus, at a price of $5, the market demand each week for sandwiches from Dagwood's Deli is

400

True or false: If your marginal utility from watching a second hour of television is less than your marginal utility from the first hour, then watching a second hour of television will decrease your total utility.

False

Grace's current marginal utility from t-shirts is 10 utils per t-shirt and her marginal utility from shorts is 20 utils per pair of shorts. If a t-shirt costs $20 and a pair of shorts costs $40, then

Grace should not change her consumption of t-shirts and shorts.

Irina's current marginal utility from consuming tofu is 200 utils per pound, and her marginal utility from consuming chicken is 300 utils per pound. If tofu costs $2 per pound and chicken costs $2.50 per pound, then

Irina should buy more chicken and less tofu.

Which of the following best illustrates the substitution effect of a decrease in the price of pasta?

The increase in the quantity of pasta demanded that results because people switch from eating rice to pasta.

Which of the following states that spending should be allocated across goods so that the marginal utility per dollar is the same for each good?

The rational spending rule

True or false: Once people have acquired the food, shelter, and clothing required to maintain their health, economists refer primarily to the goods and services people "want" rather than those they "need".

True

True or false: economists believe that our preferences for different goods and services can be influenced by our peers.

True

Marginal utility is the _____ gained from consuming an additional unit of a good.

additional utility

The law of diminishing marginal utility captures the tendency for the _____ gained from consuming an additional unit of a good to diminish as consumption increases beyond some point.

additional utility

Economists assume that people ______.

allocate their income between different goods and services to make themselves as happy as possible

The law of demand states that people do less of what they want to do

as the cost of doing it rises.

The difference between a buyer's reservation price for a product and the price a buyer actually paid is _____.

consumer surplus

The law of ___ marginal utility captures the tendency for the additional utility gained from consuming an additional unit of a good to diminish as consumption increases beyond some point.

diminishing

If total consumer surplus in a market is $2,000 per day, then the total amount, in aggregate, that consumers would be willing to pay to participate in that market is ______.

equal to $2,000 per day.

Suppose that when you eat chocolate cake, you enjoy every bite, but each bite is never quite as good as the one before it. Thus, with each bite of chocolate cake, your total utility _____ while your marginal utility _____.

increases; decreases

The additional utility gained from consuming an additional unit of a good is _____.

marginal utility

Utility maximization refers to the process whereby

people allocate their income between different goods and services in order to maximize their total satisfaction.

According to the ___ spending rule, spending should be allocated across goods so that the marginal utility per dollar is the same for each good.

rational

When the price of a good goes up, part of the reason consumers purchase less of the good is that they

switch to less expensive substitutes.

A consumer's optimal combination of goods is

the affordable combination that yields the highest total utility.

Consumer surplus is

the difference between a buyer's reservation price for a product and the price a buyer actually paid.

According to the rational spending rule, spending should be allocated across goods so that

the marginal utility per dollar is the same for each good.

Suppose that in response to an increase in the price of sugar, people switch from using sugar to corn syrup. This is an example of ____ of a price change.

the substitution effect

Total consumer surplus in a market is

the total amount that consumers would be willing to pay, in aggregate, for the right to participate in that market.

The total amount that consumers would be willing pay, in the aggregate, for the right to participate in a market is ______.

total consumer surplus in that market

Total utility refers to the

total satisfaction that people derive from all of their consumption activities.

The process whereby people allocate their income between different goods and services in order to maximize their total satisfaction is known as

utility maximization.

Once people have achieved bare subsistence levels of consumption, economists emphasize that we can talk mainly in terms of people's ______.

wants

The difference between a buyer's reservation price for a product and the price the buyer actually paid is known as consumer

surplus