Chapter 22 - Consumer Choice: Utility Theory and Insights from Neuroscience

bundle of goods

The utility is maximized when the chosen ________ satisfies two conditions.

Present bias

________ occurs because there is a mismatch in the timing of benefits and costs.

Equimarginal Rule

The ________ is where they pick the combination of two activities where the marginal benefit per dollar for the first activity equals the marginal benefit per dollar for the second activity.

NAcc

When a person considers taking an action, the ________ is activated, and the greater the anticipated benefit from the action, the ________ is activated, the stronger the ________ activity.

opportunity cost

For consumers who buy movies and books, the ________ of a movie is the utility sacrificed by getting one movie rather than some number of books.

principle of opportunity cost

The ________ is the opportunity cost of something is what you sacrifice to get it.

substitution effect

The ________ is a decrease in the price of movies decreases the price of movies relative to the price of books, causing the consumer to substitute movies for books.

Dopamine

________ is the reward chemical of the brain- when it flows to receptors in your brain, you feel good.

marginal utility

An increase in price decreases the ________ per dollar on movies, shifting the marginal- bang- per- buck curve downward.

bundle

The ________ is affordable and satisfies the equimarginal rule, so it generates the highest affordable utility level.

Consumers

________ who are relatively inactive in a cognitive sense tend to make impulsive purchases.

original bundle

The decrease in the price of movies means that the ________ violates the equimarginal rule.

income effect

A(n) ________ is an increase in the price of movies that decreases the consumers real income, and the consumer will buy less of all "normal "goods, including movies.

substitution effect

A(n) ________ is an increase in the price of movies increases the price of movies relative to the price of books, causing the consumer to substitute books for movies.

Marginal Principle

The ____________ is to increase the level of an activity as long as its marginal benefits exceed the marginal cost p. Choose the level at which the marginal benefit equals the marginal cost.

Dopamine

_____________ is the reward chemical of the brain- when it flows to receptors in your brain, you feel good.