Exam 10: The Rational Consumer

Josh is a house painter who always purchases two paintbrushes for every gallon of paint, regardless of the relative prices. In a graph, these indifference curves would appear as:

Joseph chooses a combination of apples and oranges along his budget line. The marginal rate of substitution of apples for oranges is 2, the price of an apple is $0.50, and the price of an orange is $0.10. Joseph:

Use the following to answer questions: Figure: Indifference Curve Map I -(Figure: Indifference Curve Map I) Look at the figure Indifference Curve Map I. It shows that:

Which of the following statements is FALSE?

Use the following to answer questions: Scenario: Music Downloads and Streamed Movies Phillip has an income of $300 per month, which he uses to purchase music downloads (MD) and streamed movies (SM). Each music download costs $1 and each streamed movie costs $5. -(Scenario: Music Downloads and Streamed Movies) Read the scenario Music Downloads and Streamed Movies. Suppose Phillip's income falls by half, and the prices for both music downloads and streamed movies also fall by half. As a result of this, Phillip:

Ladan has $500 each semester to spend on textbooks and sandwiches. Textbooks are $100 each and sandwiches are $5 each. Assume that diminishing marginal utility applies to both goods. She has purchased 3 textbooks this semester and 40 sandwiches. She tells you that her marginal utility from the next textbook is about 100 utils and the marginal utility from the next sandwich is about 15 utils. Has Ladan successfully maximized her utility this semester? Should she adjust her spending next semester?

In terms of indifference curves, the optimal consumption bundle is determined by the:

Indifference curves that exhibit a diminishing marginal rate of substitution are:

If the price of a cookie is $1 and the price of a brownie is $2, the price of cookies in terms of brownies is:

How much _____ Susan obtains from eating green beans is a measure of the utility of green beans for her.

Use the following to answer questions: Figure: Consumer Equilibrium II -(Figure: Consumer Equilibrium II) Look at the figure Consumer Equilibrium II. Ashyra consumes at point I. Ashyra could gain more utility by choosing point _____, all other things held equal.

Use the following to answer questions: Figure: Harold's Indifference Curves The figure shows three of Harold's indifference curves for bread and cheese. -(Figure: Harold's Indifference Curves) Look at the figure Harold's Indifference Curves. If the price of bread is $1 per loaf, the price of cheese is $2 per pound, and Harold has $10 to spend on bread and cheese, Harold's optimal consumption bundle is _____ loaves of bread and _____ pounds of cheese.