Interpreting Consumer Behavior
An economist observes that a consumer's willingness to pay for an additional hour of high-speed internet access per month does not change, even after the consumer receives a significant salary increase. Explain what this observation implies about the structure of the consumer's utility function for internet access and all other goods. In your explanation, describe the specific mathematical property of the utility function that leads to this outcome and provide its general form.
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CORE Econ
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.10 Market successes and failures: The societal effects of private decisions - The Economy 2.0 Microeconomics @ CORE Econ
Analysis in Bloom's Taxonomy
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Consider a consumer whose preferences for a specific good (x) and money for all other goods (m) can be represented by the utility function u(x, m) = 20√x + m. If this consumer's income significantly increases, while the price of good x remains constant, their marginal willingness to pay for an additional unit of good x will also increase.