Teddy Buys Only Chocolate Chip Cookies and Hot Chocolate and Spends

question 322

Multiple Choice

Teddy buys only chocolate chip cookies and hot chocolate and spends all of his income on the two items. Suppose the price of a cookie rises. According to marginal utility theory, Teddy will buy

• A) more cookies and less hot chocolate, which decreases his marginal utility from cookies and increases his marginal utility from hot chocolate.
• B) more cookies and less hot chocolate, which increases his marginal utility from cookies and decrease his marginal utility from hot chocolate.
• C) fewer cookies and more hot chocolate, which decreases his marginal utility from cookies and increases his marginal utility from hot chocolate.
• D) fewer cookies and more hot chocolate, which increases his marginal utility from cookies and decreases his marginal utility from hot chocolate.

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Definitions:

Habit Control

Techniques and strategies employed to change or modify undesirable habits and behaviors through reinforcement or punishment.

Behavioral Autonomy

A situation in which the continued reinforcement of a specific behavior leads to the occurrence of the response despite a devalued reinforcement.

Mental Representation

The mental imagery of things that are not currently seen or present, including abstractions such as ideas and concepts.

Event Contingencies

The relationship or dependency between certain events, where the occurrence of one event affects the likelihood of another.