In the consumer choice problem, consumers are confronted with which of the following? a. A...
Question:
In the consumer choice problem, consumers are confronted with which of the following?
a. A finite budget that constrains the quantity of goods and services that consumers can buy.
b. A set of prices for those goods and services.
c. A set of different consumer goods and services to choose from.
d. Preferences or utility associated with consuming different quantities of each of the different goods and services.
e.All of the above answers are correct.
Consumer Theory:
The concept of consumer theory is essential when the subject of preferences and utilities of the consumers come into the discussion. This theory embarks each condition or an assumption which consumer upholds to fulfill their optimal utility desires.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answer- e.All of the above answers are correct
It is because the consumer choice problems consist of all the phenomena which detect the preferences of the...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Consumer Preferences & Choice in Economics
from
Chapter 3 / Lesson 9
87K
Learn about consumer preferences in economics and understand the importance of the consumer choice theory - study examples of consumer preference assumptions.
Related to this Question
- Suppose an individual consumers two goods, with utility function U (x1, x2) = x1 + 6{\sqrt{x1x2 +9x2 Formulate the consumers utility maximization problem when she faces a budget line p1x1 + p2x2
- Which of the following is not an assumption of the decision-making process followed by consumers to maximize utility? a. The consumer has a limited income. b. The consumer is able to rank his preferences. c. The consumer behaves rationally. d. The consume
- A consumers budget constraint identifies the different bundles of goods and services that can be purchased, given income and prices. A bundle of goods that is located inside the budget constraint: i.
- The consumer is choosing between two goods- good1 and good2. Good 1 is priced at $2 and good 2 is priced at $3. The consumer has a total of $600 to spend on both the goods. Let the utility function of the consumer be U (X1, X2) = Min (X1,X2) a) Calculat
- In allocating their limited incomes over a large set of goods and services, consumers should purchase those goods and services that: a. provide the most utility. b. fit their tastes and preferences. c. provide the most utility per dollar spent. d. are rea
- Consumers have to make tradeoffs in deciding what to consume because: A. they are limited by a budget constraint. B. there are not enough of all goods produced. C. not all goods give them the same amount of satisfaction. D. the prices of goods vary.
- Consider a consumer who consumes only two goods, x and y. His utility over these two goods is given by U (x, y) = x + y. The budget constraint of the consumer is given by 3x + 6y = 300, where 3 is the price of good x, 6 is the price of good y, and 300 is
- A consumer has the following utility function: U(x, y) =x(y+1), where x and y are quantities of two consumption goods whose prices are P_x and P_y, respectively. The consumer also has a budget of B. Therefore, the consumer's Lagrangian is x(y+1)+Lambda(B
- For economists, the "buyer's problem" refers to: A. the trouble consumers have in distinguishing high-quality products from low-quality products. B. the difficulty consumers have in financing their purchases. C. how consumers arrive at a choice as to what
- The consumer is choosing between two goods: good 1 and good 2. Good 1 is priced at $2 and good 2 is priced at $3. The consumer has a total of $600 to spend on both the goods. 1. Let the utility function of the consumer be U (X1, X2) = X1(1/2)X2(1/2). a)
- The consumer is choosing between two goods- good1 and good2. Good 1 is priced at $2 and good 2 is priced at $3. The consumer has a total of $600 to spend on both the goods. Let the utility function of the consumer be U (X1, X2) = 2X1 + X22. a) Calculate
- The consumer is choosing between two goods- good1 and good2. Good 1 is priced at $2 and good 2 is priced at $3. The consumer has a total of $600 to spend on both the goods. Let the utility function of the consumer be U (X1, X2) = X1*X2 a) Calculate the
- The consumer is choosing between two goods- good1 and good2. Good 1 is priced at $2 and good 2 is priced at $3. The consumer has a total of $600 to spend on both the goods. Let the utility function of the consumer be U (X1, X2) = 2X1+3X2. a) Calculate t
- The consumer is choosing between two goods- good1 and good2. Good 1 is priced at $2 and good 2 is priced at $3. The consumer has a total of $600 to spend on both the goods. Let the utility function of the consumer be U (X1, X2) = X1+X2. a) Calculate the
- Which of the following is not an assumption of our Rational Consumer Choice Model? A) Consumers observe and set prices of goods. B) Consumers have a given income. C) Consumers have preferences over goods. D) B and C are not assumptions. E) All of t
- The consumer's budget line: a. indicates the options from which the consumer can choose. b. identifies the optimal basket for the consumer. c. identifies the tastes of the consumer. d. ranks the baskets of goods in the order the consumer prefers them. e.
- Suppose there are two goods, labeled x, y. A consumer has a budget of w = 220. Suppose the following two consumption bundles: (x = 4, y = 10), (x = 6, y = 4) all cost the consumer 220. (a) What's the
- Consider a consumer choice scenario where consumption and leisure are perfect complements. Assume that the consumer always desires a consumption bundle where the quantities of consumption and leisure
- A consumer has a utility function U(X, Y) = X^{1/4}Y^{3/4}. The consumer has $24 to spend and the prices of the goods are P_X = $2 and P_Y = $3. Note that MU_X = (1/4)X^{-3/4}Y^{3/4} and MU_Y = (3/4)X^{1/4}Y^{-1/4}. Draw the consumer's budget constraint a
- How do consumers choose what goods to purchase? 1. They purchase the least expensive goods so that they can maximize the amount of products they own. 2. They choose items that are easily accessible and have minimal shipping costs. 3. They minimize thei
- The consumer is choosing between two goods- good1 and good2. Good 1 is priced at $2 and good 2 is priced at $3. The consumer has a total of $600 to spend on both the goods. Let the utility function of the consumer be U (X1, X2) = X1(1/4)X2(3/4). a) Calc
- Which of the following best describes how consumers may benefit from specialization? a. Consumers can only purchase high-quality goods. b. Consumers receive more sales offers. c. Consumers find products at lower prices. d. Consumers have more price option
- Consider a consumer with $10 to spend on these two goods where the price of apples is always $2 each. a) Find the utility maximizing combination of apples and oranges if oranges cost $4 each. Explain why the consumer didn't choose the bundle of 3 apples a
- Every point on the demand curve: Choose from the following. a. Does not consider the consumer's preferences b. Represents an optimal choice of the consumer for a given income and prices c. Does not co
- Given the consumer's decision to buy a particular good or service relies on an varying array of consideration, what economic model of demand help simplify a description of consumer choices? List the three key relationships and give examples for each.
- Consider a consumer with the following preferences: U (x, y) = 20 log x + 5 log y who face prices px = 10, py = 10, and has wealth w = 100. Write the consumer maximization problem, with all constraints.
- A consumer's utility function is U(x; y) = (x + 2)(y + 1). The prices are p_x = $8; p_y = $2. The consumer consumes both goods. If his consumptions of good x is 14 units, what is his consumption of good y? Why?
- A consumer's utility function is given by U(x,y)=(x-2)(x+y-2) where x and y are the quantities of two goods consumed. Find the bundle of these two goods that maximize this consumer's utility.
- At what point does buying in bulk stop being a wise spending choice? a. when the consumer buys more than is needed. b. when the consumer has a lot of space to store bulk items. c. when costs rise too quickly due to demand. d. when bulk items are not
- Suppose that there are two goods (X and Y). The price of X is $2 per unit, and the price of Y is $1 per unit. There are two consumers ( A and B). The utility functions for the consumers are: for consumer A: U (X,Y)= X^.5Y^.5 and for consumer B: U(X,Y)=X^.
- "The objective of the consumer is to choose the bundle that maximizes his or her utility, or satisfaction. If there was no scarcity, the more-is-better property would imply that the consumer would want to consume bundles that contained infinite amounts of
- A utility function is U(x,y) = min(x,y^2). If the price of x is $25, the price of y is $10, and consumer chooses 5 units of y. How much is the consumer's income?
- The slope of a consumer's budget constraint represents the of buying one good in terms of the quantity of the other good the consumer gives up.
- Suppose a consumer has an income of $30 that is spent on two goods: X and Y. The price of good X is $3.00 and the price of good Y is $1.00. Which of the following bundles of X and Y lie on the individual's budget constraint? a. 8X and 6Y b. 6X and 8Y c. 8
- Suppose a consumer has an income of $30 that is spent on two goods: X and Y. The price of good X is $1.00 and the price of good Y is $3.00. Which of the following bundles of X and Y lie on the individual's budget constraint? a. 8X and 6Y. b. 6X and 8Y. c.
- Suppose a consumer's budget set between goods X and Y is defined by 600 is greater than equal to 3X+6Y. a. Draw a diagram to illustrate the consumer's feasible choices. b. Suppose the consumer's incom
- Consider the choice of a representative consumer. Suppose the consumer experiences a wage decrease (w1 is greater than w2). Graphically, analyze the labor supply, leisure and consumption choice of t
- Assume a consumer is currently purchasing a combination of goods, X and Y, that maximizes her utility given her budget constraint, i.e., MUx/MUy = PX/PY. Now assume that there is a decrease in the price of Y. In this case, to once again maximize her utili
- The slope of a consumer's budget constraint represents the [{Blank}] of buying one good in terms of the quantity of the other good the consumer gives up.
- Suppose that the price of good x is $30 and the price of good y is $30 and a hypothetical consumer has $600 to spend per period on goods x and y. Sketch the consumer's budget constraints. Be sure to i
- Assume that there are two goods (X and Y). The price of X is $2 per unit, and the price of Y is $1 per unit. There are two consumers ( A and B). The utility functions for the consumers are: for consumer A: U (X,Y)= X^.5Y^.5 and for consumer B: U(X,Y)=X^.8
- A consumer's preferences can be represented by the utility function U(X,Y) = Min (2X,Y). The consumer has $300 to spend and the price of Good X is PX = $2 and the price of Good Y is PY = $5. If the consumer maximizes their utility subject to their budget
- 1. In a perfectly competitive market_ a. Buyers and sellers do not set prices and can only decide how much to buy and sell b. All of the above c. Most goods are services are not standardized d. No
- A consumer with income y= $120 obtains utility from two goods X & Y with prices PX =$20 and Py= $10. The consumers budget constraint is written is 20x + 10 y= 120 (or as a first degree polynomial y =
- The consumer must decide how to split $20 between spending and saving. Refer to Figure 7.5. If the consumer is subject to present bias, he will consume now and save to maximize utility.
- Inefficient output and price, few choices for consumers, and rent seeking are all problems associated with _____.
- Suppose a consumer has 600 dirhams to spend on goods X and Y. the market prices for these goods are P_x = 10 and P_y = 40. A. Write the equation for the consumer budget line. B. Illustrate the consumer's opportunity set C. Show how the consumer's budget s
- Consider a market with two goods, x and z, and two consumers, A and B. The utility functions for consumers A and B are as follows \bar{U}_A = x_A^{0.75} z_A^{0.25} \bar{U}_B = x_B^{0.25} z_B^{0.75} and the initial endowments for each consumer are e_A
- (a) What is the combined consumer surplus for the following five consumers who buy Spyders when the price drops to $800,000 and who had the willingness-to-pay indicated in brackets? Fr
- Which of the following is an assumption of the decision-making process followed by consumers to maximize utility? a. Marginal utility always increases as more units of a good are consumed. b. The consumer oftentimes is not sure about her preferences. c
- The affordable set of goods and services for the consumer is bounded on which side of the budget line?
- Consumer goods are goods that are: A. sold to final users, satisfying wants directly. B. used to produce goods and services. C. used to satisfy wants indirectly. D. provided by government.
- Utility measures: a. the satisfaction a consumer receives from consuming a bundle of goods. b. the satisfaction a consumer places on their budget constraint. c. the income a consumer receives from consuming a bundle of goods. d. all of the above are corre
- ____ is a type of market where consumers decide what to produce and purchase, prices are determined by supply and demand, and with limited or no government control.
- If the consumer's budget constraint is given by 10F + 5S = 100 where F is the quantity of food and S is the quantity of shelter, how much food can he buy with his income remaining if he purchases 2 units of shelter? A. 10 B. 5 C. 20 D. 9 E. None of the ab
- Any bundle of goods located inside (versus outside) of a consumers budget constraint: i. is unobtainable with the consumers income ii. implies the consumer is not spending all of her income on goods a
- A consumer chooses how much clothing and food to purchase. Suppose that the relative price of cloth falls. It must be the case that a) The amount of clothing demanded rises b) The amount of food dem
- Consider a consumer allocating a budget of $ 100 between two goods, X and Y. The price of X is $ 10 per unit and the price of Y is $ 5 per unit. (a) In a diagram show how the consumer's budget constr
- Consider a consumer who allocates her income m to the consumption of goods 1 and 2. Denote by pi the price of good i = 1, 2. The consumer's preferences are such that there exists a bundle x = (x1, x2)
- A consumer has $300 to spend on goods X and Y. The market prices of these two goods are Px=$15 and Py=$5. a) What is the market rate of substitution between goods X and Y? b) Illustrate the consumer's
- How can consumers and producers confront the condition of scarcity by making choices that involve opportunity costs and trade-offs?
- Consumer protection laws might result in _______. (a) low prices of products and services (b) fewer unwanted promotional calls (c) sale of goods and services to the consumers through coercion (d) monopolization of the market.
- A utility function is U(x, y) = min {x, y2}. If the price of x is $25, the price of y is $10, and consumer chooses 5 units of y. How much is the consumer's income?
- If the price of a good starts out above the equilibrium price, then: (check all that apply) a. Consumers will lose welfare due to lower consumption b. Consumers will compete to bid the price down c. S
- Which one of the following would not occur if the market price was above the market-clearing price? a. Consumers would bid up the price b. Producers would want to produce and sell more than consumers
- A consumer spends all her income on goods x and y. Her income is 400. Prices of x and y are px = 6 and py = 2. The preferences of the consumer are represented by U(x, y) = x3y, where x and y denote th
- (a) How does a consumer?s optimal choice of goods change if all prices and consumer?s income double? (Focus on the budget constraint.) (b) Lead Zeus, a small family-owned and operated business, is pro
- According to the figure below, if the price of X is $5, what combination of X and Y will a utility-maximizing consumer choose? a. 80X, 20Y, b. 120X, 620Y, c. 120 X, 250Y, d. 200 X, 620Y, e. None of the above.
- How did consumers weaken the economy in the late 1920s? A. Consumers only bought a limited number of products. B. Consumers bought too many goods they could not afford. C. Consumers refused to pay high prices for agricultural goods. D. Consumers inc
- Suppose goods 1 and 2 are perfect complements. All consumers have utility function U(q1,q2) = min{q1,q2}. The sum of consumers' income is 100. Supply of the two goods is given by: S1(p1) = 2p1 and S2(
- A consumer is trying to make up her mind about what market basket to purchase. She's got so much good 1 in her shopping cart and so much good 2. The cost of those quantities adds up to her income. When she consumes those quantities of goods 1 and 2, her M
- Assume that a consumer purchases a combination of product A and product B such that the MUa/Pa=8 and MUb/Pb=6. To maximize utility without spending more money, the consumer should:
- The consumer price index overestimates inflation because it: a) Measures the cost of a market basket in the second year that has too many units of the most inflated items (ex: consumers switched to relatively less expensive goods), b) Allows consumers t
- The following utility functions represent preferences of a consumer over goods x_1, x_2 (and x_3). Prices of these goods are denoted p_1, p_2 (and p_3). Consumer has income m. Derive the demand functi
- Based on the below graph showing a consumer's budget line and some indifference curves, answer the following questions. The consumer's income is. a) If the consumer is buying the combination at point
- A consumer must divide $600 between the consumption of product X and product Y. The relevant market prices are P_X = $10 and P_Y = $40. a. Write the equation for the consumer's budget line. b. Show how the consumer's opportunity set changes when the price
- Suppose a consumer's utility function is given by U(X, Y) = XY. Also, the consumer has $720 to spend. The price of X is PX = $9, and the price of Y is PY = $9. a. How much X and Y should the consumer purchase in order to maximize her utility? b. How much
- Describe the criterion rational consumers use in deciding what product to purchase in order to maximize their utility. What two pieces of information must a consumer know in order to be able to accurately act on this criterion?
- If consumers find that there are substantial transaction costs to purchasing a product, then _____ A) Overall consumer demand is greater at each price. B) Overall consumer demand is the same at each
- A consumer's willingness to pay reflects A) the maximum price at which he or she would buy the good or service. B) the minimum price at which he or she would buy the good or service. C) the cost of producing the good or service. D) the equilibrium pri
- Consumer surplus measures the value between the price consumers are willing to pay and which of the following? a. producer surplus price b. deadweight gain price c. actual price paid d. preference price
- When prices are (P1, P2)= (1,2), the consumer demands (X1, X2) = (1,2). When prices are (Q1, Q2) = (2,1), the consumer demands (Y1, Y2) = (2,1). Is this consumer behavior consistent with Weak Axiom of revealed preference?
- In general, increased information for consumers has which of the following impacts on consumers' quantity demanded? \\ A. It makes it less responsive to price changes because consumers trust their providers. B. It makes it more responsive to price chang
- Suppose a consumer maximizes the utility function U=ln (xy) subject to the budget constraint 4x +2y =12. Find the consumption bundle (x*,y*) that maximizes utility for the consumer.
- For the two good utility functions \rm{U = x^2y^2} a) Is the assumption that more is better satisfied for both goods? b) Does this consumer's preferences exhibit diminishing marginal utility of X? c) Does this consumer's preferences exhibit diminishing
- The slope of the budget constraint is determined by the: a. relative price of the goods measured on the axis, b. relative price of the goods measured on the axis and the consumer's income, c. preferences of the consumer, d. Both b) and c) are correct.
- Consumer surplus is the: a. quantity of a good consumers get without paying anything. b. amount a consumer pays minus the amount the consumer is willing to pay. c. amount a consumer is willing to pay minus the amount the consumer pays. d. value of a good
- A consumer faces a utility function defined as U ( X ? Y ? ) and has a budget constraint represented by M = P x X + P y Y . Find the consumers equilibrium
- The amount of profit that can be achieved using uniform pricing is {Blank} the profit that can be achieved from price discrimination because {Blank}. \\ Select one: \\ a. greater than; the cost of trying to determine every single consumer's individual d
- If the consumer can choose, which policy would the consumer prefer, assuming that he can afford the same consumption bundle under each policy? a. Either policy because he can afford the same consumption bundle. b. A price subsidy to an income tax refund.
- Which of the following is not a consideration when setting the selling price of a product in a market? a. Break-even point b. Cash balance c. Competitors' prices d. Consumer response
- Suppose a consumer's utility function is U(X, Y) = X + 2Y. The consumer has $8 to spend (M = 8). The price of good Y is P_Y = $2. What are the respective demands of good X when P_X = 1/4, 1/2, 2, and 4 dollars?
- Consider a rational utility maximizing consumer who is choosing between two goods clothing (C) and food (F), where the total utilities of the two goods are independent so that total utility (U) = Util
- 1. When prices are (p_1, p_2) = (1, 2) a consumer demands (x_1, x_2) = (1, 2), and when prices are (q_1, q_2) = (2, 1) a consumer demands (y_1, y_2) = (2, 1). Is this behavior consistent with the model of maximizing behavior? 2. When prices are (p_1, p_2)
- Budget constraints impose scarcity, and are based upon a. How much utility one more unit of a good will provide b. The prices of the items purchased c. The limitation of the budget
- Assume that a consumer can buy only two goods X and Y, and has an income of $120. The price of X is $10, and the price of Y is $20. If the consumer spends all of her money on X and Y, which of the fol
- Suppose a consumer's utility function is given by U(X, Y) = X*Y. Also, the consumer has $360 to spend, and the price of X, P_x = 9, and the price of Y, P_y = 1. a) How much X and Y should the consume
- Suppose there are three consumers for a public good. The demands for the consumers are as follows: Consumer 1: P_1 = 48 - 4Q Consumer 2: P_2 = 80 - 2Q Consumer 3: P_3 = 112 - 6Q where Q measures the n
- What is another name for the difference between the price that consumers are willing to pay for a good and a lower price that they may actually have to pay? a) profit. b) revenue. c) consumer utility. d) consumer surplus.
- Consider three consumers indexed by i ∈ {1, 2, 3) with the following demand functions for a public good G. p1 = 20 - (1/10) G, p2 = 20 - (1/10) G, p3 = 30 - (2/10) G Where pi is the price consumer i is willing to pay for a quantity of G. If marginal
Explore our homework questions and answers library
Browse
by subject