Exam 10: The Rational Consumer

George has a weekly income (I)of $50,which he uses to purchase doughnuts (D)and coffee (C).The price of a doughnut is $1 and the price of coffee is $2.50.Suppose George's income increases to $100 and the prices of both doughnuts and coffee remain unchanged.Given this income change,one would expect George's budget line to:

Use the following to answer question: -(Table: The Utility of Macaroni and Cheese)Use Table: The Utility of Macaroni and Cheese.Carmen loves eating macaroni and cheese on Thanksgiving.The marginal utility she derives from the sixth serving she eats is _____ units.

John consumes pizza and pasta,both normal goods.He is maximizing his utility in consumption of both goods.The price of pasta rises.Assuming that diminishing marginal utility applies to both goods,as John adjusts to this event,the marginal utility of pizza will _____,and the marginal utility of pasta will _____.

Use the following to answer question: -(Table: Consumer Equilibrium)Use Table: Consumer Equilibrium.Assume that the price of both goods is $1 per unit,that you consume three units of good X and three units of good Y,and that you are spending all of your income.To maximize utility,assuming that the goods are divisible,you would want to consume _____ of X and _____ of Y.

George has a weekly income (I)of $50,which he uses to purchase doughnuts (D)and coffee (C).If the price of a doughnut is $1 and the price of coffee is $2.50,which consumption bundle lies BEYOND George's budget constraint?

Assume that Siri is consuming the utility-maximizing quantities of pork and chicken.We can conclude that:

Use the following to answer question: -(Table: Alaina's Utility from Consuming Cups of Coffee)Use Table: Alaina's Utility from Consuming Cups of Coffee.Diminishing marginal utility is:

George has a weekly income (I)of $50,which he uses to purchase doughnuts (D)and coffee (C).The price of a doughnut is $1 and the price of coffee is $2.50.Suppose George's income drops to $25 and the prices of doughnuts and coffee each fall to one-half their initial prices.One would expect George's budget line to:

If the substitution effect and the income effect of a price change move in opposite directions for a particular good,then the good must be an inferior good.

A consumer's spending is restricted because of:

Which statement BEST describes the income effect of a price increase?

Choices that maximize total utility generally produce demand curves that are:

Steven consumes staples and paper clips.He is maximizing his utility in consumption of both goods.The price of staples falls.After the change in price,Steven should consume _____ staples and _____ paper clips.

Kawamura,a careful utility maximizer,consumes peanut butter and ice cream.Assume that both peanut butter and ice cream are normal goods and that diminishing marginal utility applies to both goods.Right after he achieves the utility-maximizing level of consumption of the two goods,the price of peanut butter falls.After he adjusts to this event,the marginal utility of peanut butter goes _____ and that of ice cream goes _____.

Wolfgang really likes both rutabagas and broccoli.The price of each good is $0.60 per pound and Wolfgang is maximizing utility.At the point of maximal utility,the marginal utility of:

A decrease in the price of a good,holding income and the prices of all other goods constant,is associated with:

In economics,the ability of pumpkin pie to satisfy a want is referred to as its:

The principle of diminishing marginal utility:

If the price of laundry detergent equals the price of dishwashing powder,then a utility-maximizing consumer will always buy equal amounts of laundry detergent and dishwashing powder.

Sam always tries to maximize his utility in his consumption of popcorn and soft drinks.Both of these goods are subject to diminishing marginal utility.Suppose the prices of these goods,along with Sam's budget (and spending)for these items,stay the same,but Sam decides to decrease his consumption of popcorn.Holding everything else constant,this means that Sam must _____ his consumption of soft drinks,and his marginal utility per dollar spent on popcorn will be _____ than it used to be.