According to consumer choice theory, rational behavior requires that consumers compare the marginal utility of each purchase with its price.
Answer the following statement true (T) or false (F)
True
Rational behavior requires one to compare the anticipated utility of each expenditure with its price. The smart thing to do, then, is to choose those products that promise to provide the most pleasure for the amount of income available.
You might also like to view...
The increase in the demand for widgets, shown in the figure above, is the result of an increase in the price of McBoover devices. Therefore
A) widgets and McBoover devices are substitutes. B) widgets and McBoover devices are complements. C) widgets are a normal good. D) McBoover devices are a normal good.
If the substitution effect is stronger than the income effect, a decrease in real interest rates will ________ current consumption for households who are lenders and will ________ current consumption for households who are borrowers
A) increase; decrease B) decrease; increase C) increase; increase D) increase; have an unclear effect on
A lender of last resort is a financial institution that is willing and able to lend to: a. individuals who have other debts outstanding
b. individuals who do not have a positive net worth. c. banks that are not members of the Federal Reserve System. d. fractional reserve system banks experiencing runs on their deposits. e. Federal Reserve System member banks experiencing runs on their deposits.
You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field. Assume the ticket has no resale value. Willie Nelson is performing on the same night, and his concert is your next-best alternative activity. Tickets to see Willie Nelson cost $40 . On any given day, you would be willing to pay up to $50 to see and hear Willie Nelson perform. Assume there are no
other costs of seeing either event. Based on this information, at a minimum, how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game? a. $0 b. $10 c. $40 d. $50