"Essential" water is cheaper than "nonessential" diamonds because:
the supply of water is great relative to demand and the supply of diamonds is small relative to demand.
A consumer who has a limited budget will maximize utility or satisfaction when the:
ratios of the marginal utility of each product purchased divided by its price are equal.
A consumer's demand curve for a product is downsloping because:
marginal utility diminishes as more of a product is consumed.
How did Apple overcome consumers' diminishing marginal utility for iPods?
Apple introduced new features to entice previous buyers to purchase new models.
If total utility is increasing, marginal utility:
is positive, but may be either increasing or decreasing.
In introducing the opportunity cost of time into the theory of consumer behavior we find that, all else
equal:
one should consume less of time-intensive goods.
Last month Laura saw the value of her stock portfolio rise by $20,000. This month she saw the value of
her portfolio decline by $20,000. According to behavioral economics:
The positive utility Laura received from seeing her portfolio value rise was less than the disutility she felt
when its value declined.
Marginal utility is the:
change in total utility obtained by consuming one more unit of a good.
Mary says, "You would have to pay me $50 to attend that pro wrestling event." For Mary, the marginal
utility of the event is:
negative.
The ability of a good or service to satisfy wants is called:
utility.
The fact that most medical care purchases are financed through insurance:
increases the amount of health care consumed by reducing the price of additional units of care.
The law of diminishing marginal utility explains why:
demand curves slope downward.
The law of diminishing marginal utility states that:
beyond some point additional units of a product will yield less and less extra satisfaction to a consumer.
The theory of consumer behavior assumes that consumers attempt to maximize:
total utility.
The theory of consumer behavior assumes that:
consumers behave rationally, attempting to maximize their satisfaction.
To maximize utility a consumer should allocate money income so that the:
marginal utility obtained from the last dollar spent on each product is the same.
What do the income effect, the substitution effect, and diminishing marginal utility have in common?
They all help explain the downsloping demand curve.
When a consumer shifts purchases from product X to product Y the marginal utility of:
X rises and the marginal utility of Y falls.
Where total utility is at a maximum, marginal utility is:
zero.
Which of the following is correct?
If marginal utility is diminishing and is a positive amount, total utility will increase.