ECON 3411 Chapter Notes - Chapter 5: Consumer Choice, Indifference Curve, Demand Curve

44 views3 pages

orchidfrog391

7 Jul 2015

School

York University

Department

Economics

Course

ECON 3411

Professor

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

The concept of utility and the basic assumptions underlying consumer preferences. Explain the equilibrium condition for an individual consumer to be maximizing utility subject to a budget constraint. Use indifference curves to derive a demand curve for an individual consumer. Identify the substitution, income, and total effects of a change in the price of a good. Explain why demand curves are downward sloping. Derive a market demand curve by horizontally summing individual demand curves. Preferences are complete when for every possible pair of consumption bundles, a and b, the consumer can say one of the following relations holds: a is preferred to b, b is preferred to a, or the consumer is indifferent between a and b. A utility function shows an individual"s perception of the level of utility that would be attained from consuming each conceivable bundle of goods: indifference curves provide a means of depicting graphically the preferences of a consumer.

Related Questions

6. Describe each of the four properties of indifference curves.

7. describe and explain the budge constraint. How does a consumer maximize utility under a given budget constratin? How do consumers know if they are not maximizing utility?

8. Explain what is meant by "asymmetric info" Identify and explain the two basic types of problems that arise when their is assymetric info.

9. Explain the condorcet Paradox, the failure of majority rule to produce transitive preferences for society. Explain arrows impossibility theorem. What does this say about societies choice?

10. When prices change, the income effect and substituion effect both contribute to the impact on quantities consumed. Explain how both effect a consumers utility maxization.

1. If marginal utility is negative, total utility is

a. Positive

b. Negative

c. Decreasing

d. Constant

e. Increasing

2. If utility-maximizing consumers face identical prices, they will have identical

a. Marginal utilities for each good

b. Ratio of marginal utilities for each good

c. Preferences

d. Ratios of total utilities for each good

e. Total utilities for each good

3. The substitution effect

a. Always increases quantity demanded of a good whose relative price has fallen

b. Is opposite in sign to the income effect for all normal goods

c. Is opposite in sign to the income effect for all normal goods

d. May cause demand curves to be upward sloping

e. Is always dominated by the income effect for normal goods

4. Demand curves for normal goods slope downward because

a. The substitution effect of a price change is greater than the income effect

b. Substitution and income effects work in the same direction

c. The income effect is always greater than the substitution effect

d. The income effect is always less than the substitution effect

e. None of the above

5. The idea that a consumer derives less additional satisfaction from consuming successive units of a good is called

a. Diminishing consumer surplus

b. The paradox of value

c. Diminishing marginal utility

d. Diminishing total value of consumption

e. Diminishing total utility

indigolocust149

budget line

marginal utility

complete property of preferences

market demand

consumption bundle

substitution effect

Giffen good

total effect

income effect

transitive property of preferences

indifference curves

utility

the marginal rate of substitution

utility function

1.	_____	The satisfaction or benefit that consumers receive from consuming goods or services.
2.	________________ _	A particular combination of specific quantities of goods or services
3.	________________ _	Consumers can rank all conceivable bundles of goods or services
4.	_____	If A is preferred to B, and B is preferred to C, then A is always preferred to C.
5.	_____	Equation showing a consumerâs perception of the total utility forthcoming from consuming each bundle of goods and services.
6.	_____	A set of consumption bundles each and every one of which provides a consumer with exactly the same level of total utility.
7.	_____	The number of units of Y that must be given up for total utility to remain the same when one more unit of X is consumed.
8.	_____	The addition to total utility attributable to consuming one more unit of a good, holding the consumption of all other goods constant.
9.	_____	The line showing all bundles of goods that can be purchased at given prices if the entire income is spent.
10.	_____	The change in the consumption of a good that would result if the consumer remained on the original indifference curve after the price of the good changes.
11.	_____	The change in consumption of goods results strictly from the change in purchasing power after the price of a good changes.
12.	________________ _	The sum of the substitution and income effects.
13.	_____	A good for which quantity demanded varies directly with price, causing an upward sloping demand curve.
14.	_____	A list of prices and the corresponding quantity consumers are willing and able to purchase at each price.

blushwildebeest943

ECON 3411 Chapter Notes - Chapter 5: Consumer Choice, Indifference Curve, Demand Curve

Document Summary

Get access

Related Documents

ECON 3411 Lecture Notes - Lecture 22: Budget Constraint, Consumer Behaviour, Indifference Curve

ECON 3411 Lecture Notes - Lecture 2: Economic Equilibrium, Equilibrium Point, Demand Curve

Economics 2150A/B Study Guide - Yottabyte, Tangent

Related Questions