Chapter 5 SmartBook

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

When Kim drinks 1 cup of coffee per day her total utility is 10, when she drinks 2 cups her total utility is 14, and when she drinks 3 cups her total utility is 16. Thus, her marginal utility of going 2 to 3 cups of coffee per day is _____ utils per cup.

2; two

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

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 utility_________ while your marginal utility _______.

Increase; decreases

Utility

The satisfaction that people derive from all of their consumption activities is called

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

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

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

as the cost of doing it rises

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

demand

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 $2000 per day, then the total amount, in aggregate, that consumers would be willing to pay to participate in that market is ________.

equal to $2000 per day.

The affordable combination of goods that yields the highest total utility for a consumer

is the optimal combination of goods for a consumer

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

less

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

marginal utility

the additional utility gained from consuming an additional unit of good is called

marginal utility

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

optimal

A consumer's optimal combination of goods is

the affordable combination that yields the highest total utility.

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.

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

total utility

The satisfaction that people derive from all of their consumption activities is called __________.

utility

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

wants

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 additional utility gained from consuming an additional unit of a good is called _________ utility.

marginal