Chapter 21 Study Guide.doc

Chapter 21 Study Guide.doc - Chapter 21Consumer Choice...

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Chapter 21—Consumer Choice: Maximizing Utility and Behavioral Economics MULTIPLE CHOICE 1. The diamond-water paradox is the observation that 2. When an economist talks about utility, she is talking about 3. A util is an artificial construct used as a means of measuring the 4. Total utility is defined as the 5. Marginal utility is defined as the 6. Suppose Alice receives 123 utils from consuming one hamburger and 90 utils from consuming a second hamburger. What is the marginal utility of the second hamburger? 7. Suppose Will receives 50 utils from consuming one banana and 92 utils from consuming two bananas. What is the marginal utility of the second banana? 8. Suppose you are eating slices of pizza and after consuming the first slice you receive 14 utils of total utility, after the second you receive 22 utils of total utility, and after the third 25 utils of total utility. Then 9. Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 80, 116, 136, 146, respectively. The marginal utility of the seventh wing is __________ utils. 10. Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 80, 116, 136, 150, respectively. The marginal utility of the sixth wing is __________ utils. 11. Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 30, 50, 65, 72, respectively. In this situation we have __________ marginal utility, which is generally __________ in the analysis of consumer choice. 12. The law of diminishing marginal utility can be stated as follows: 13. The law of diminishing marginal utility says that 14. Suppose you are consuming a particular good and you could somehow give back the last unit you consumed. What would happen to total and marginal utility (assuming that the marginal utility of the unit given back is positive)? 15. Which of the following is true? 16. We take one dollar from a millionaire and give it to a pauper. Assuming a diminishing marginal utility of money, 17. We take one dollar from a pauper and give it to a millionaire. Assuming a diminishing marginal utility of money, 18. Jackson says that his fifth game of chess gave him greater utility than his first, and therefore the law of diminishing marginal utility does not hold. An economist who believes that marginal utility definitely and always declines with the consumption of equal successive units of a good will likely say 19. Suppose you just finished your third plateful of Thanksgiving dinner and it yielded zero units of additional satisfaction. Should you go back for more? 20. You and your roommate are eating pizza and have already consumed all but the last slice. Your roommate claims that he is hungrier than you and therefore should get the last slice of pizza. Your roommate has made
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21. Which of the following statements is false ?
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