What is consumer optimum according to utility theory?
What will be an ideal response?
Consumer optimum is the set of goods and services that maximizes the level of satisfaction for a consumer, given the consumer's income and the prices of the goods and services. At consumer optimum, the marginal utility per dollar spent is equal across all goods and services purchased.
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The word "util" has been used by economists in the past as an objective measure of utility. Today economists believe that
A) the util truly is an objective, rather than a subjective, measure of utility. B) utility can be measured objectively because people can use prices of different goods to measure utility. C) utility cannot be measured objectively. D) all of the important conclusions of the economic model of consumer behavior depend on utility being measured objectively.
A nonexcludable public good is characterized by nonrivalry in
A. production and nonexcludability. B. consumption and rivalry in production. C. consumption and excludability. D. consumption and nonexcludability. E. none of the above
After a price ceiling of $8 is placed on the market in the graph shown, which area represents total surplus?
A. A + B + C + D + E + F + G
B. A + B + C + D + E
C. A + C + E
D. A + B + C + D + E + F
Which of the following theories applies to strategic behavior?
a. Field Theory b. Game Theory c. Theory of Consumers' Behavior d. Social Contract Theory e. Rational Choice Theory