1.What impact does increased consumer choice have on utility? Why?

Increased choice should increase utility, all else constant.

2.What impact do reduced prices of all goods by, say, 5%, have on a consumer's budget line?

This should provide an income effect, shifting the budget line outward in a parallel shift.

3.When Wal-Mart comes to town, how does the distribution of consumer and producer surplus change? Why?

As prices fall, surplus is redistributed towards consumers.

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