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Exam 6: Household Behavior and Consumer Choice

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Question 81

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Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 -Refer to Figure 6.2. Assume Mr. Lingleʹs budget is AC. At which point does Mr. Lingle spend exactly his income?

A) A.
B) B.
C) C.
D) All of the above are correct.

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Question 82

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Refer to the information provided in Table 6.1 below to answer the question(s) that follow. Table 6.1 $\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Number of } \\\text { Hamburgers per } \\\text { Day }\end{array} & \text { Total Utility } & \text { Marginal Utility } \\\hline 1 & 30 & \\\hline 2 & 52 & \\\hline 3 & 67 & \\\hline 4 & 76 & \\\hline 5 & & 4 \\\hline \begin{array} { c } \text { Number of } \\\text { Sodas per Day }\end{array} & \text { Total Utility } & \text { Marginal Utility } \\\hline 1 & 20 & \\\hline 2 & 35 & \\\hline 3 & 47 & \\\hline 4 & 57 & \\\hline 5 & & 7 \\\hline\end{array}$ -Refer to Table 6.1. Diminishing marginal utility sets in after the ________ soda per day.

A) first
B) second
C) third
D) fourth

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Question 83

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The price of leisure is the wage rate.

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 -Refer to Figure 6.2. Assume Mr. Lingle is on budget constraint AC. If the price of a beer is $5, Mr. Lingle's monthly income is

Refer to the information provided in Figure 6.14 below to answer the question(s) that follow. Figure 6.14 -Refer to Figure 6.14. Jason cannot afford the bundle represented by point

For Matthew, the marginal utility of the 9th soda in a day is positive and the marginal utility of the 10th soda in a day is zero. This

Refer to the information provided in Figure 6.1 below to answer the question(s) that follow. Figure 6.1 -Refer to Figure 6.1. Along budget constraint AC, the opportunity cost of one hot dog

Assume leisure is an inferior good instead of a normal good. The income effect of a wage increase will lead to a ________ demand for leisure and a ________ labor supply.

The law of diminishing marginal utility implies that as a household consumes more of a product, its total utility will increase by larger amounts -assuming marginal utility remains positive.

Refer to the information provided in Table 6.1 below to answer the question(s) that follow. Table 6.1 $\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Number of } \\\text { Hamburgers per } \\\text { Day }\end{array} & \text { Total Utility } & \text { Marginal Utility } \\\hline 1 & 30 & \\\hline 2 & 52 & \\\hline 3 & 67 & \\\hline 4 & 76 & \\\hline 5 & & 4 \\\hline \begin{array} { c } \text { Number of } \\\text { Sodas per Day }\end{array} & \text { Total Utility } & \text { Marginal Utility } \\\hline 1 & 20 & \\\hline 2 & 35 & \\\hline 3 & 47 & \\\hline 4 & 57 & \\\hline 5 & & 7 \\\hline\end{array}$ -Refer to Table 6.1. Assume that a store is giving hamburgers and sodas away for free. Consumers can have as many sodas and hamburgers as they want, but the food has to be consumed one unit at a time. If George has already had one soda and two hamburgers, then George should

If MU_x/P_x exceeds MU_y/P_y, then a household can increase its utility by spending more on Y and less on X.

Refer to the information provided in Figure 6.5 below to answer the question(s) that follow. Figure 6.5 -Refer to Figure 6.5. Molly's budget constraint is EF. If her income decreases while the price of the goods are unchanged, her new budget constraint is

Assuming a perfectly competitive market implies that households have perfect knowledge of qualities and prices of everything available in the market.

Refer to the information provided in Figure 6.8 below to answer the question(s) that follow. Figure 6.8 -Refer to Figure 6.8. The marginal utility of the third movie rental is

If the price of an inferior good rises, the income effect will result in households buying ________ of the good and the substitution effect will result in households buying ________ of the good.

The diamond/water paradox is only true in theory, but no real-world examples have yet to be discovered.

Refer to the information provided in Table 6.2 below to answer the question(s) that follow. Table 6.2 $\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Number of } \\\text { Candy Bars per Day }\end{array} & \text { Total Utility } & \text { Marginal Utility } \\\hline 1 & 40 & \\\hline 2 & 75 & \\\hline 3 & 100 & \\\hline 4 & 115 & \\\hline 5 & & 5 \\\hline \begin{array} { c } \text { Number of } \\\text { Hot Dogs per Day }\end{array} & \text { Total Utility } & \text { Marginal Utility } \\\hline 1 & 30 & \\\hline 2 & 54 & \\\hline 3 & 72 & \\\hline 4 & 84 & \\\hline 5 & & 6 \\\hline\end{array}$ -Refer to Table 6.2. If the price of a candy bar is $1, the price of a hot dog is $2, and Aaron has $6 of income, Aaron's utility-maximizing combination of candy bars and hot dogs per day is

Refer to the information provided in Figure 6.1 below to answer the question(s) that follow. Figure 6.1 -Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hamburger is $8.00. Tom's monthly income is

Refer to the information provided in Figure 6.2 below to answer the question(s) that follow. Figure 6.2 -Refer to Figure 6.2. Assume Mr. Lingleʹs budget constraint is AC. He will have leftover income if he purchases the bundle represented by point

Refer to the information provided in Figure 6.5 below to answer the question(s) that follow. Figure 6.5 -Refer to Figure 6.5. Molly's budget constraint is EF. If her income decreases while the price of the goods are unchanged, her new budget constraint could be