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Exam 6: Household Behavior and Consumer Choice

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Question 51

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Sue is maximizing her utility. Her MUx/Px = 10 and MUy = 40. Then the price of Y must be

A) $1.
B) $4.
C) $10.
D) $40.

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Question 52

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Refer to the information provided in Table 6.2 below to answer the questions that follow. Table 6.2 $\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Number of } \\\text { Candy Bars per Day }\end{array} & \text { Total Utility } & \text { Marginal Utility } \\\hline 1 & 40 & \\2 & 75 & \\3 & 100 & \\4 & 115 & \\5 & & 5\\\hline \text { Number of } & \text { Total Utility } & \text { Marginal Utility } \\ \text { Hot Dogs per Day } & & \\\hline 1 & 30& \\2 & 54 & \\3 & 72& \\4 & 84& \\5 & & 6 \\\hline\end{array}$ -Refer to Table 6.2. The marginal utility of the second candy bar per day is

A) 10.
B) 15.
C) 35.
D) 55.

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Question 53

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When consumers maximize utility, they are equating the ratio of marginal utility to price across all goods consumed.

Refer to the information provided in Figure 6.2 below to answer the questions that follow. Figure 6.2 -Refer to Figure 6.2. Along budget constraint AC, the opportunity cost of one beer is

For normal goods,

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 6.13 below to answer the question that follows. Figure 6.13 -Refer to Figure 6.13. If Arthur moves from indifference curve 1 to indifference curve 2, then Arthur's

Ted has $600 a week to spend on clothing (c) and food (f) . The price of clothing is $30 and the price of food is $5. What is the equation for Ted's budget constraint?

The diamond/water paradox states that things with the ________ value in use frequently have ________ value in exchange.

Assume leisure is a normal good. The substitution effect of a wage decrease implies a ________ demand for leisure and a ________ labor supply.

Ellen is spending her entire income on goods X and Y. Her marginal utility from the last units of X and Y that she consumes is 25. Ellen's utility is only maximized if

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 6.5 below to answer the questions 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

Refer to the information provided in Figure 6.2 below to answer the questions that follow. Figure 6.2 -Refer to Figure 6.2. Assume Mr. Lingle's budget is AC. Given his current monthly income, he CANNOT purchase the quantities of the two goods at point

Homogeneous products are distinguishable from each other.

If MUx/Px exceeds MUy/Py, then a household can increase its utility by spending more on X and less on Y.

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

The diamond/water paradox helps to illustrate the concept of marginal value.

Refer to the information provided in Table 6.1 below to answer the questions that follow. Table 6.1 $\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Number of } \\\text { Hamburgers per } \\\text { Day }\end{array} & \text { Total Utility } & \text { Marginal Utility } \\\hline 1 & 30 & \\2 & 52 & \\3 & 67 & \\4 & 76 & \\5 & & 4\\\hline \text { Number of } & \text { Total Utility } & \text { Marginal Utility } \\\text { Sodas per Day } & & \\\hline 1 & 20 & \\2 & 35 & \\3 & 47 & \\4 & 57& \\5 & &7\\\hline\end{array}$ -Refer to Table 6.1. The marginal utility of the second hamburger per day is

Assuming the properties of normal indifference curves, a consumer will maximize his utility where his indifference curve is just tangent to his budget constraint.