microeconomics chapter 6 quiz

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.

B. a systematic way of thinking; misguided conclusions

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

Marginal utility

Which of the following is most likely to cause variation in American household spending patterns?

all of them

Marginal utility can:

be positive ,negative or zero

The most common pattern for marginal utility is ____________________.

disminishing marginal utility

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.

disminishing marginal utility

An inferior good is a product:

for which demand decreases as income increases.

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.

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

is maximaxing utility

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

measurement of utility

Approximately what portion of annual consumption is typically spent by American households on shelter?

one third

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 consumed.

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 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 marginal utility of two goods changes ______________.

with quantities consumed