Exam 10: The Rational Consumer

Use the following to answer questions: -(Table: Utility from Burgers and Milkshakes) Look at the table Utility from Burgers and Milkshakes. David's marginal utilities for milkshakes and burgers are given in the table. The price of milkshakes is $2, and the price of burgers is $5. If David's income is $22, to maximize his utility, he buys _____ shake(s) and _____ burger(s).

Use the following to answer question: Figure: The Optimal Choice of CDs and Movies -(Figure: The Optimal Choice of CDs and Movies) Look at the figure The Optimal Choice of CDs and Movies. Nina likes to spend her income on new CDs (CD) and tickets to see movies (M). The graph shows Nina's budget line and the optimal consumption bundle E. What is the price of movies in terms of CDs at point E?

Use the following to answer questions: Figure: Indifference Curves and Consumption Bundles -(Figure: Indifference Curves and Consumption Bundles) Look at the figure Indifference Curves and Consumption Bundles. In the figure, the initial optimum is at a. The price of hot dogs increases, and the new equilibrium point is c. The change in hot dog consumption due to the income effect of the price change is:

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.

Consumption bundles that yield equal levels of total utility are shown on the same:

Ms. Sweettooth always consumes iced tea and sugar in fixed proportions: 8 ounces of iced tea to 3 teaspoons of sugar. This implies that for Ms. Sweettooth:

Use the following to answer questions: -(Table: Alaina's Utility from Consuming Cups of Coffee) Look at the table Alaina's Utility from Consuming Cups of Coffee. Alaina's marginal utility from consuming her sixth cup of coffee is _____ utils.

Use the following to answer question: -(Table: Marginal Utility per Dollar) Look at the table Marginal Utility per Dollar. If Damian has $9 to spend on potatoes and clams, then the utility-maximizing combination is _____ pounds of clams and _____ pounds of potatoes.

Use the following to answer questions: -(Table: Consumer Equilibrium) Look again at the table Consumer Equilibrium. Assume that the price of good X is $1 per unit and the price of good Y is $2 per unit and you consume 4 units of good X and 2 units of good Y, and you are spending all of your income. To maximize utility, assuming that the goods are divisible, you would consume _____ of X and _____ of Y.

The assumption that a rational consumer seeks to maximize his or her utility implies that utility is measurable according to some objective scale.

If ramen is a Giffen good and the price of ramen decreases:

Use the following to answer questions: Figure: Oreos and Apples -(Figure: Oreos and Apples) Look at the figure Oreos and Apples, which provides an indifference curve map for Diego. The consumption bundle that provides the highest level of utility is bundle:

The principle of diminishing marginal utility means that when Sarah eats pizza, her satisfaction from the second slice of pizza is probably _____ that from the first.

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:

In terms of indifference curves, a demand curve is generated by changes in:

Faced with two goods to buy, diamonds and silver, a utility-maximizing individual will buy according to the statement that:

Use the following to answer questions: Figure: Kristin's Budget Line -(Figure: Kristin's Budget Line) Look at the figure Kristin's Budget Line. The price of a cup of cappuccino is $3, and the price of an apple is $1. Given her income and the prices of the two goods, Kristin can consume _____ cappuccinos and _____ apples.

Use the following to answer questions: Scenario: E-Books and Sports Tickets Phillip has an income of $300 per month, which he uses to purchase two goods, e-books and sports tickets. Each e-book costs $10, and each ticket costs $15. -(Scenario: E-Books and Sports Tickets) Read the scenario E-Books and Sports Tickets. Suppose Phillip discovers that if he spends all of his money on sports tickets, he can buy more sports tickets than he could previously because something changed. This is a result of a(n) _____ in the price of _____.

A demand curve is generated from indifference curves by changing:

Assume that diminishing marginal utility applies to both dish soap and floor wax and that Minh is spending all of her income. If Minh purchases a combination of dish soap and floor wax such that MU_{Dish soap} / P_{Dish soap} = 50 and MU_{Floor wax} / P_{Floor wax} = 30, to maximize utility, Minh should buy _____ soap and _____ floor wax.