Lesson 06
Some individuals receive a high value of utility from not spending all of their income and therefore choose to save a reasonable amount of money.
True
These utility concepts can be applied to a decision of what to purchase given utility patterns for two goods as listed in the figure below. If you assume that good R and good S both cost $2 each, how many of each would you purchase if you have an income of $8?
1 R and 3 S
With the consumption of the third brownie you gain a marginal utility of ___ utils.
5
As we spend more money our total pleasure increases to a maximum point, but with additional increases in spending our marginal utility (additional pleasure) never actually declines.
False
Consider the example of an individual in a grocery store examining two cans of peaches, Alpha Peaches and Beta Peaches. If Alpha is thought to provide 6 units of pleasure per dollar and Beta is thought to provide 8 units per dollar, then Alpha should be chosen.
False
In the field of Marketing the concepts of marginal values and marginal utility per dollar are not used for brand comparisons because measuring "pleasure" is difficult.
False
The utility obtained per unit of consumption will not vary based upon "need at the moment" such as with police or doctor services.
False
Assume you are going to lunch and have a choice of two meals. The first meal would give an increase in marginal utility of 100 with a $25 price. The second meal would give you an increase of only 10 with a $1 price. The third meal will give you an increase of 50 with a $10price. Which meal should you logically choose ?
Second
_____________ was the founder of the institutionalist school of economics and was also a critic of marginalist theory.
Thorstein Veblen
________________ concept of "conspicuous consumption" suggested that consumer behavior is often based on sociology and is, thereby ,difficult to quantify.
Thorstein Veblen's
Economists recognize the difficulty in measuring pleasure, but an understanding of consumer behavior requires a comparison of marginal values based upon economic reasoning.
True
In the Indifference Diagram below, each of the curved lines X, Y, and Z represent combinations of consumption for A and B that will yield the same amount of additional pleasure.
True
The $ $ $ benefit received by a person paying a lower price than the person would have been willing to pay is called ___________ .
consumer surplus
The diminishing marginal utility effect states that as more of an item is consumed and the amount of additional satisfaction decreases, the seller must ________ price to induce the consumer to buy more.
decrease
The Law of Diminishing Returns states that as more units are consumed past some point, _________ additional pleasure will be received.
less
