Exam 10: The Rational Consumer

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.Carmen's marginal utility from eating macaroni and cheese is 0 for the _____ serving.

The substitution effect of a price change is described by the statement that:

Juan spends all of his income on packs of baseball cards and boxes of candy.At his current consumption bundle,the marginal utility of baseball card packs is 20 and the marginal utility of candy boxes is 10.Assuming that diminishing marginal utility applies to both goods,if the price of baseball card packs is $10 and the price of candy boxes is $2,Juan should:

Smedley,a careful utility maximizer,consumes peanut butter and broccoli.Assume that both peanut butter and broccoli are normal goods.Right after he achieves the utility-maximizing level of consumption of the two goods,the price of broccoli increases.To adjust to this event,he consumes _____ peanut butter and _____ broccoli.

The substitution effect always involves a change in consumption in the _____ direction as (to)the _____ change.

Marge has spent her entire budget on milk and cookies.The last glass of milk provided Marge with 10 additional utils,and the last cookie provided her with 25 additional utils.The price of a cookie is twice the price of a glass of milk.Assuming that diminishing marginal utility applies to both goods,Marge should consume _____ milk and _____ cookies.

Sally devotes all of her income to the consumption of apples and Reese's Peanut Butter Cups.At her current level of consumption,the marginal utility of an apple is 6 and the marginal utility of a Reese's Peanut Butter Cup is 8.Assume that diminishing marginal utility applies to both apples and Reese's Peanut Butter Cups.Suppose the price of an apple is $0.10,while the price of a Reese's Peanut Butter Cup is $0.25.To maximize her total utility,assuming that the goods are divisible,she would:

Use the following to answer question: -(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.A(n)_____ in the price of clams would rotate the budget line,changing the intercept on the _____ axis and moving it _____ the origin.

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 second serving she eats is _____ units.

Use the following to answer question: -(Figure: Budget Lines for Tea and Scones)Use Figure: Budget Lines for Tea and Scones.For months now,Agnes has had $20 per month to spend on tea and scones.The price of each cup of tea and each scone is $1.Which chart shows what will happen to her budget line if her income increases to $25?

Assuming that diminishing marginal utility applies to both goods,if a consumer buys more plastic bins and fewer door hooks,the _____ utility of plastic bins will _____,and the _____ utility of door hooks will _____.

If marginal utility is diminishing,the marginal utility curve is _____ sloping since each additional unit of the good consumed yields _____ satisfaction than the unit that preceded it.

If the price of a good changes so that the income effect and the substitution effect reinforce one another,this means the good is:

(Table: Utility from Milk and Honey)Use Table: Utility from Milk and Honey.The price of milk is $2,and the price of honey is $4.If Max's income is $16,he buys _____ bottle(s)of milk and _____ jar(s)of honey.

Use the following to answer question: -(Table: Consumer Equilibrium)Use Table: Consumer Equilibrium.Assume that goods X and Y both cost $1 per unit and you have $4 to spend on both goods.To maximize utility,you would consume _____ unit(s)of X and _____ unit(s)of Y.

For a Giffin good,the income effect works in the opposite direction from the substitution effect,and the income effect is larger than the substitution effect.

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.Alaina's marginal utility from consuming her sixth cup of coffee is _____ utils.

The satisfaction that a consumer gets from the consumption of a bundle of goods and services is:

Nancy is consuming her optimal consumption bundle of burritos and margaritas.The marginal utility of her last burrito was 75 utils,and each burrito costs $3.Her marginal utility of her last margarita was 100 utils.What is the price of a margarita?

The optimal consumption rule implies that,if Pascal is maximizing his utility by spending all of his income on concert tickets and cab rides,with prices equal to P_Tickets and P_Rides,respectively,then it must be the case that MU_Tickets/MU_Rides = P_Tickets/P_Rides.