Question 1

Sam is at lunch trying to decide between a small salad and a cheeseburger. Sam loves cheeseburgers, but he really does not like salad. In fact, salad gives him negative utility. What choice would you expect Sam to make?

Accepted Answer

A)   Sam will choose a salad, because he knows it is in his best interest to eat healthy food.
B)   Sam will choose a cheeseburger, because it will send his utility meter through the roof.
C)   Sam will choose both the salad and the cheeseburger, because he will get healthy food plus an increase in his utils.
D)   Sam will probably buy 2 salads.

Question 2

Explain the assumptions made about consumers and households used to build utility theory.
-Why is it not possible to precisely measure utility or pleasure?

Accepted Answer

The answer of Explain the assumptions made about consumers and...

Question 3

Explain the assumptions made about consumers and households used to build utility theory.
-Why is income limited? Does everyone get to make the same choices? Why or why not?

Accepted Answer

Income is always limited because resources are scarce relative to unlimited wants

Question 4

Whats defention of terms:
-revised sequence

Accepted Answer

The answer of Whats defention of terms:
-revised sequence...

Question 5

Understand and demonstrate how the demand curve is derived.
-Why does the marginal utility increase if the consumer purchases

Accepted Answer

less
Assumption of diminishing marginal utility states that each additional unit of a product will lead to smaller marginal utility The reverse is also true, each fewer unit of a product consumed will lead to larger marginal utility

Question 6

Explain the assumptions made about consumers and households used to build utility theory.
-What does it mean if a person is rational and making rational choices?

Accepted Answer

The answer of Explain the assumptions made about consumers and...

Question 7

Discuss the criticisms of the assumptions of neoclassical consumer theory.
-What is conspicuous consumption? How is this type of decision not rational?

Accepted Answer

The answer of Discuss the criticisms of the assumptions of...

Question 8

Whats defention of terms:
-cardinal utility

Accepted Answer

The answer of Whats defention of terms:
-cardinal utility...

Question 9

Discuss the criticisms of the assumptions of neoclassical consumer theory.
-In general, is there scarcity in a capitalist system? Why or why not?

Accepted Answer

The answer of Discuss the criticisms of the assumptions of...

Question 10

Sam is maximizing his utility with a consumption bundle of 5 cookies, 10 DVDs, and 2 cheeseburgers. If the price of DVD's decreases, then

Accepted Answer

A)   Sam will continue to buy the same number of each good.
B)   Sam will tend to buy more DVDs
C)   Sam will tend to buy more cookies.
D)   Sam will tend to buy more cheeseburgers.

Question 11

Sam, the robot, has a utility meter on his forehead. Sam has just consumed 1 cookie, and the utility meter reads 15 utils. If Sam reacts according to economic theory, Sam's second cookie will increase his utility meter

Accepted Answer

A)   by another 15 utils for a total of 30 utils.
B)   by less than 15 utils
C)   by more than 15 utils.
D)   by zero. B

Question 12

The founders of neoclassical economics built on the philosophy of Jeremy Bentham who asserted that, "nature has placed mankind under the governance of two sovereign masters . . ." What "sovereign masters" was he referring to?

Accepted Answer

A)   utility and pleasure
B)   pain and suffering
C)   pain and pleasure
D)   hunger and thirst

Question 13

What does the phrase, "consumer sovereignty," mean?

Accepted Answer

A)   consumers can be swayed by advertisers to buy things they do not want.
B)   businesses make goods in response to the desires of consumers.
C)   consumers buy goods in response to the advertisements of businesses.
D)   consumers buy goods in response to their sovereign master, utility.

Question 14

Understand and demonstrate how the demand curve is derived.
-If the price of a good goes up and throws the utility-maximizing pattern of consumption out of whack, what does utility theory predict the consumer will do?

Accepted Answer

The answer of Understand and demonstrate how the demand curve...

Question 15

Whats defention of terms:
-diminishing marginal utility

Accepted Answer

The answer of Whats defention of terms:
-diminishing marginal utility...

Question 16

Explain how consumers maximize their utility (joy) within the bounds of their income.
-What is the utility-maximizing condition? What does that mean in words?

Accepted Answer

The answer of Explain how consumers maximize their utility (joy)...

Question 17

Discuss the criticisms of the assumptions of neoclassical consumer theory.
-Do people always behave in rational ways? Give an example.

Accepted Answer

The answer of Discuss the criticisms of the assumptions of...

Question 18

A consumer will maximize utility when

Accepted Answer

A)   the marginal utility per dollar of the last item of each good consumed is the same.
B)   he or she consumes as much as possible of his or her favorite good.
C)   the marginal utility of the last item of each good consumed is the same.
D)   the marginal utility of the last item of each good is exactly zero.

Question 19

Explain the conditions under which utility is maximized.
-Explain what happens if the marginal utility of the last unit consumed divided by the price (bang per buck) is

Accepted Answer

The answer of Explain the conditions under which utility is...

Question 20

Table 28 a	ext { Table 28 a}   Table 28 a 
  Ouantity of DVDs  Marginal Utility  Total Utility 1100100290190380270470340560400650450740490830520920540101055011055012−1054013−2052014−30490\begin{array}{|c|c|c|}\hline 	ext { Ouantity of DVDs } & 	ext { Marginal Utility } &	ext { Total Utility }\\hline 1 & 100 & 100 \\hline 2 & 90 & 190 \\hline 3 & 80 & 270 \\hline 4 & 70 & 340 \\hline 5 & 60 & 400 \\hline 6 & 50 & 450 \\hline 7 & 40 & 490 \\hline 8 & 30 & 520 \\hline 9 & 20 & 540 \\hline 10 & 10 & 550 \\hline 11 & 0 & 550 \\hline 12 & -10 & 540 \\hline 13 & -20 & 520 \\hline 14 & -30 & 490 \\hline\end{array} Ouantity of DVDs 1234567891011121314​ Marginal Utility 1009080706050403020100−10−20−30​ Total Utility 100190270340400450490520540550550540520490​​ 
-Table 28a represents Sam's utility schedule for DVDs. Assuming no budget constraints, Sam is likely to consume

Accepted Answer

A)   1 or 2 DVDs
B)   8 DVDs
C)   10 or 11 DVDs
D)   12 DVDs

Exam 28: Consumption Theory: Demand

Sam is at lunch trying to decide between a small salad and a cheeseburger. Sam loves cheeseburgers, but he really does not like salad. In fact, salad gives him negative utility. What choice would you expect Sam to make?

Correct Answer
verified

Explain the assumptions made about consumers and households used to build utility theory. -Why is it not possible to precisely measure utility or pleasure?

Correct Answer
verified

Explain the assumptions made about consumers and households used to build utility theory. -Why is income limited? Does everyone get to make the same choices? Why or why not?

Correct Answer
verified
Income is always limited because resources are scarce relative to unlimited wants

Whats defention of terms: -revised sequence

Correct Answer
verified

Understand and demonstrate how the demand curve is derived. -Why does the marginal utility increase if the consumer purchases

Correct Answer
verified
less Assumption of diminishing marginal utility states that each additional unit of a product will lead to smaller marginal utility The reverse is also true, each fewer unit of a product consumed will lead to larger marginal utility

Explain the assumptions made about consumers and households used to build utility theory. -What does it mean if a person is rational and making rational choices?

Correct Answer
verified

Discuss the criticisms of the assumptions of neoclassical consumer theory. -What is conspicuous consumption? How is this type of decision not rational?

Correct Answer
verified

Whats defention of terms: -cardinal utility

Correct Answer
verified

Discuss the criticisms of the assumptions of neoclassical consumer theory. -In general, is there scarcity in a capitalist system? Why or why not?

Correct Answer
verified

Sam is maximizing his utility with a consumption bundle of 5 cookies, 10 DVDs, and 2 cheeseburgers. If the price of DVD's decreases, then

Correct Answer
verified

Sam, the robot, has a utility meter on his forehead. Sam has just consumed 1 cookie, and the utility meter reads 15 utils. If Sam reacts according to economic theory, Sam's second cookie will increase his utility meter

Correct Answer
verified
B

The founders of neoclassical economics built on the philosophy of Jeremy Bentham who asserted that, "nature has placed mankind under the governance of two sovereign masters . . ." What "sovereign masters" was he referring to?

Correct Answer
verified

What does the phrase, "consumer sovereignty," mean?

Correct Answer
verified

Understand and demonstrate how the demand curve is derived. -If the price of a good goes up and throws the utility-maximizing pattern of consumption out of whack, what does utility theory predict the consumer will do?

Correct Answer
verified

Whats defention of terms: -diminishing marginal utility

Correct Answer
verified

Explain how consumers maximize their utility (joy) within the bounds of their income. -What is the utility-maximizing condition? What does that mean in words?

Correct Answer
verified

Discuss the criticisms of the assumptions of neoclassical consumer theory. -Do people always behave in rational ways? Give an example.

Correct Answer
verified

A consumer will maximize utility when

Correct Answer
verified

Explain the conditions under which utility is maximized. -Explain what happens if the marginal utility of the last unit consumed divided by the price (bang per buck) is

Correct Answer
verified

Correct Answer
verified

Exam 28: Consumption Theory: Demand

Sam is at lunch trying to decide between a small salad and a cheeseburger. Sam loves cheeseburgers, but he really does not like salad. In fact, salad gives him negative utility. What choice would you expect Sam to make?

Correct AnswerverifiedShow Answer

Explain the assumptions made about consumers and households used to build utility theory. -Why is it not possible to precisely measure utility or pleasure?

Correct AnswerverifiedShow Answer

Explain the assumptions made about consumers and households used to build utility theory. -Why is income limited? Does everyone get to make the same choices? Why or why not?

Correct AnswerverifiedIncome is always limited because resources are scarce relative to unlimited wants

Whats defention of terms: -revised sequence

Correct AnswerverifiedShow Answer

Understand and demonstrate how the demand curve is derived. -Why does the marginal utility increase if the consumer purchases

Correct Answerverifiedless Assumption of diminishing marginal utility states that each additional unit of a product will lead to smaller marginal utility The reverse is also true, each fewer unit of a product consumed will lead to larger marginal utility

Explain the assumptions made about consumers and households used to build utility theory. -What does it mean if a person is rational and making rational choices?

Correct AnswerverifiedShow Answer

Discuss the criticisms of the assumptions of neoclassical consumer theory. -What is conspicuous consumption? How is this type of decision not rational?

Correct AnswerverifiedShow Answer

Whats defention of terms: -cardinal utility

Correct AnswerverifiedShow Answer

Discuss the criticisms of the assumptions of neoclassical consumer theory. -In general, is there scarcity in a capitalist system? Why or why not?

Correct AnswerverifiedShow Answer

Sam is maximizing his utility with a consumption bundle of 5 cookies, 10 DVDs, and 2 cheeseburgers. If the price of DVD's decreases, then

Correct AnswerverifiedShow Answer

Sam, the robot, has a utility meter on his forehead. Sam has just consumed 1 cookie, and the utility meter reads 15 utils. If Sam reacts according to economic theory, Sam's second cookie will increase his utility meter

Correct AnswerverifiedB

The founders of neoclassical economics built on the philosophy of Jeremy Bentham who asserted that, "nature has placed mankind under the governance of two sovereign masters . . ." What "sovereign masters" was he referring to?

Correct AnswerverifiedShow Answer

What does the phrase, "consumer sovereignty," mean?

Correct AnswerverifiedShow Answer

Understand and demonstrate how the demand curve is derived. -If the price of a good goes up and throws the utility-maximizing pattern of consumption out of whack, what does utility theory predict the consumer will do?

Correct AnswerverifiedShow Answer

Whats defention of terms: -diminishing marginal utility

Correct AnswerverifiedShow Answer

Explain how consumers maximize their utility (joy) within the bounds of their income. -What is the utility-maximizing condition? What does that mean in words?

Correct AnswerverifiedShow Answer

Discuss the criticisms of the assumptions of neoclassical consumer theory. -Do people always behave in rational ways? Give an example.

Correct AnswerverifiedShow Answer

A consumer will maximize utility when

Correct AnswerverifiedShow Answer

Explain the conditions under which utility is maximized. -Explain what happens if the marginal utility of the last unit consumed divided by the price (bang per buck) is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified
Income is always limited because resources are scarce relative to unlimited wants

Correct Answer
verified

Correct Answer
verified
less Assumption of diminishing marginal utility states that each additional unit of a product will lead to smaller marginal utility The reverse is also true, each fewer unit of a product consumed will lead to larger marginal utility

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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B

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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