4. As a college student you work at a part-time job, but your parents also send you a monthly “allowance.”

Suppose one month your parents forgot to send the check. Show graphically how your budget constraint is

affected. Assuming you only buy normal goods, what would happen to your purchases of goods?

Review Questions

5. Who determines how much utility an individual will receive from consuming a good?

6. Would you expect total utility to rise or fall with additional consumption of a good? Why?

7. Would you expect marginal utility to rise or fall with additional consumption of a good? Why?

8. Is it possible for total utility to increase while marginal utility diminishes? Explain.
156 6 • Critical Thinking Questions

9. If people do not have a complete mental picture of total utility for every level of consumption, how can they

find their utility-maximizing consumption choice?
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