Chapter 6: Q. 13 (page 152)
Think back to a purchase that you made recently. How would you describe your thinking before you made that purchase?
The products were purchased with a thought of increasing marginal utility.
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Who determines how much utility an individual will receive from consuming a good?
Would you expect total utility to rise or fall with additional consumption of a good? Why?
As a college student you work at a part-time job, but your parents also send you a monthly “allowance.” Suppose one month your parents forgot to send the check. Show graphically how your budget constraint is affected. Assuming you only buy normal goods, what would happen to your purchases of goods?
If people do not have a complete mental picture of total utility for every level of consumption, how can they find their utility-maximizing consumption choice?
As a general rule, is it safe to assume that a change in the price of a good will always have its most significant impact on the quantity demanded of that good, rather than on the quantity demanded of other goods? Explain.
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