QUESTION 6Which of the following was insight regarding optimal pricing that we gleaned from behavioral economics?O Make costs lump sum (integrate the costs into one cost) and separate allof the benefits of a purchase (separate the gains from anexchange).O Consumers always act rationally in their consumption decisions.O Expectations about products' prices don't matter for consumer behavior - all that matter's is the price they actually face,O Default choices for consumers don't matter for their behavior.QUESTION 7Which of the following are the conditions for a firm to be able to profitably engage in bundlhpg?.O There is variation in consumers' willingness and abilities to pay for the goods, and consumers' valuations of the goods are positivelycorrelated.O Consumers must like the bundled goods relatively equally.Consumers' preferences across the goods are relatively consistent with each other.O There is variation in consumers' willingness and abilities to pay for the goods, and consumers' valuations of the goods are negativelycorrelated.

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Answered: QUESTION 6 Which of the following was…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 16P: Praxilla, who lived in ancient Greece, derives utility from reading poems and from eating cucumbers....

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Praxilla, who lived in ancient Greece, derives utility from reading poems and from eating cucumbers. Praxilla gets 30 units of marginal utility from her first poem 27 units of marginal utility from her second poem 24 units of marginal utility from her third poem, and so on, with marginal utility declining by three units for each additional poem. Praxilla gets six units of marginal utility for each of her next three cucumbers consumed, five units of marginal utility for each of her next three cucumbers consumed, four units of marginal utility for each of the following three cucumbers consumed, and so on, with marginal utility declining by one for every three cucumber consumed. A poem costs three bronze coins hut a cucumber costs only one bronze coin. Praxilla has 18 bronze coins. Sketch Praxillas budget set between poems and cucumbers, placing poems on the vertical axis and cucumbers on the horizontal axis. Start off with the choice of zero poems and 18 cucumbers, and calculate the changes in marginal utility of moving along the budget line to the next choice of one poem and 15 cucumbers. Using this step-by-step process based on marginal utility, create a table and identify Praxillas utilityâ€”maximizing choice. Compare the marginal utility of the two goods and the relative prices at the optimal choice to see if the expected relationship holds. Hint: Label the table columns: 1) Choice, 2} Marginal Gain from More Poems, 3) Marginal Loss from Fewer Cucumbers, 4) Overall Gain or Loss, 5) Is the previous choice Optimal? Label the table rows: 1) 0 Poems and 18 Cucumbers, 2) 1 Poem and 15 cucumbers, 3) 2 Poems and 12 cucumbers, 4) 3 Poems and 9 Cucumbers, 5) 4 Poems and 6 cucumbers 6) 5 Poems and 3 Cucumbers, 7) 6 Poems and 0 Cucumbers.
When deciding which goods to consume, you should choose to consume the good with the highest marginal utility per dollar. O False, you should choose a combination of goods with equal marginal utility per dollar. O True, consumers are maximizing marginal utility and should always choose the highest amount per dollar. O False, you should buy the cheapest good to get a higher level of total utility. True, with diminishing marginal returns consuming more goods will reduce the marginal utility per dollar.
A consumer is making purchases of products Alpha and Beta such that the marginal utility of product Alpha is 63 and the marginal utility of product Beta is 40. The price of product Alpha is $9, and the price of product Beta is $5. The utility-maximizing rule suggests that, to stay within a given budget constraint, this consumer should Multiple Choice O O O increase consumption of product Beta and increase consumption of product Alpha. make no change in the consumption of Alpha or Beta. increase consumption of product Beta and decrease consumption of product Alpha. increase consumption of product Alpha and decrease consumption of product Beta.
Which of the following is true about utility? O Utility same for all the consumers O Utlity is subjective Utility for a good is constant O Utlity is same as usefulness
You like to eat apples and carrots. The graph shows your budget for both of these items at Harris Teeter. The table shows your total utility when you consume apples or carrots. Given this, what is your optimal consumption point? Carrots 30 40 50 30- 23 O a. A O b. E O c. F O d. C 15 10 5 A B Apples (Quantity) Total Utility Carrots (Quantity) Total Utility 10 100 20 10 20 30 40 50 Apples 190 C 270 330 360 5 10 15 20 23 25 30 50 95 160 205 240 250 280
Refer to the information provided in Figure below to answer the question that follow. O O O Total utility 28 25 15 0 1 2 3 4 Number of movies rented per month Refer to Figure The total utility of the three movies is utility of the third movie is Select one: a. 0; 0 b. 25; 10 c. 28; 3 d. 15; 0 and the marginal
Question 1 Considering a consumer's indifference curves, which statement is true? O utility is the same along any given indifference curve O indifference curves can cross, but only at the axes O a consumer is indifferent between any bundles on an indifference curve O both a and care correct O all of the above Question 2 Consider a utility function given by U = X2 x2. what is the marginal utility of good 2? O MU; = x^ x;2 O MU; = X2 X;2 -1/2 O MU = O MU: = X x2 O MU: = x
Suppose the seventh carrot you consume provides a marginal utility of 1 util and after eating the eighth carrot, you would have a total of 5 utils. If you consume the eighth carrot your marginal utility will O decrease by 4 O increase by 4 decrease by 1 increase by 1 O not enough information to determine the answer.
Mylie’s total utility from singing the same song over andover is 50 utils after one repetition, 90 utils after tworepetitions, 70 utils after three repetitions, 20 utils afterfour repetitions, 250 utils after five repetitions, and 2200utils after six repetitions. Write down her marginal utilityfor each repetition. Once Mylie’s total utility beginsto decrease, does each additional singing of the songhurt more than the previous one or less than the previousone?
Assume the following behavioral equations for a macroeconomy: C = 100 + .9Yd ,I = 50, T= $100 and G = $40 from the above behavioral equation the Equilibrium level of output is Select one: O a. $1000 O b. $1100 O c. None of the options O d. $900
QUESTION 3 Why do people tend to eat more at all-you-can-eat buffet restaurants than at restaurants where each item is purchased separately? O MU/P is consistently greater at all-you-can-eat restaurants. O Food at all-you-can-eat restaurants tends to have fewer calories, so consumers feel the need to consume greater volume of food. O People who eat at all-you-can-eat restaurants do not experience diminishing marginal utility. O Once the all-you-can-eat meal purchased, consumers view additional trips back to the buffet as having a price of zero. QUESTION 4 Total utility is best defined as the O additional satisfaction received from consuming one more unit of a product. O total satisfaction received from consuming a given amount of a product. O maximum amount of satisfaction from consuming a product. O change in marginal utility multiplied by the price of a product.
QUESTION 4 Diminishing marginal utility provides an explanation for the slope of the demand curve. O True O False QUESTION 5 Diminishing marginal utility provides a theory of consumer behavior. O True O False QUESTION 6 If total utility is increasing, marginal utility must be increasing. O True O False

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