Microeconomics Chapter 6

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

a measurement of utility

The most common pattern for marginal utility is ____________________.

diminishing marginal utility

The term _____________ describes a situation where a ________________ causes a reduction in the buying power of income, even though actual income has not changed.

income effect; higher price

When economists attempt to predict the spending patterns of U.S. households, they will typically view the ___ as a primary determining factor that influences the individual consumption choices that each will make.

income level of each household

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

individuals choose based on their preferences.

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

inverse relationship between price and quantity demanded.

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

marginal utility

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

Jay and Jen are married with two children. They are preparing a household budget for the coming year. Based on statistical information for American households from the 2020 Consumer Expenditures Survey, approximately what portion of this family's annual consumption will most likely be budgeted for food and vehicle expenses?

one-fifth

As a general rule, utility-maximizing choices between two consumption goods occur where the:

price ratio and marginal utilities ratio of two goods is equal.

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

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 consumed.

During the COVID recession, the government issued checks to a large number of families. The budget line graph shows food on the horizontal axis and everything else on the vertical axis. The government expects that disbursing these checks will cause each family's budget constraint line to:

shift to the right.