Consumer Choice - SmartBook

The total satisfaction or happiness received from the consumption of a good service or combination of goods and services refers to the _ utility; whereas the additional satisfaction or happiness received from the consumption of an additional unit of a good or service refers to the _ utility.

Total; marginal

_ maximization assumes that consumers attempt to get the maximum total utility possible out of their limited incomes.

Utility

The difference between total utility and marginal utility is that marginal utility is the:

added satisfaction of consuming another unit of the good whereas total utility is the cumulative marginal utilities of all units consumed.

A curve that shows the combinations of two products that generate the same amount of total utility or satisfaction is called

an indifference curve.

(PA x QA + PB x QB ) describes the _ constraint.

budget

A _ line shows the different combinations of two goods that can be purchased with a given budget and at a known set of prices.

budget

A line that shows the different combinations of two goods that can be purchased with a given budget and at a known set of prices is called a(n)

budget line

Utility maximization assumes that consumers attempt to get the most total utility possible out of their limited _.

income, budget, incomes, resources, wealth, or money

A curve that shows the combinations of two products that generate the same amount of total utility or satisfaction is called an _ curve.

indifference

The law of diminishing marginal utility states that the:

marginal utility associated with the consumption of a good or service becomes smaller with each extra unit that is consumed in a given time period.

Utility maximization is the process of obtaining the greatest level of:

overall satisfaction or happiness from consuming goods and services, subject to consumers' preferences, incomes, and prices.

budget line shows

the different combinations of two goods that can be purchased with a given budget and at a known set of prices.

Examining the budget constraint for a household with clothing on the vertical axis and food on the horizontal axis, the vertical intercept of the budget line represents:

the quantity of clothing purchased if all income is spent on clothing.

Economists measure utility with a unit called the _, which is subjective in nature.

util

In economics, the satisfaction or happiness received from the consumption of goods and services is known as

utility

The process of obtaining the greatest level of overall satisfaction or happiness from consuming goods and services subject to consumers' preferences incomes and prices is known as:

utility maximization.

The law of diminishing marginal utility states that the _ (total/marginal) utility associated with the consumption of a good or service becomes _ (less/more) with each additional unit that is consumed in a given time period.

Marginal; less

The budget condition is given by which of the following?

PA x QA + PB x QB

Suppose that a household can purchase fruit for $3 per pound and vegetables for $2 per pound. If the household can contribute $12 a week toward the consumption of these goods which of the following points could be found on the budget line?

4 pounds of fruit and 0 pounds of vegetables.