Exam 13: Consumer Choice and Demand

For a consumer, the marginal utility of good A is 25 and its price is $5.The marginal utility of good B is 60 and its price is $12.The consumer has allocated his entire budget.Is this consumer maximizing his total utility? Explain your answer.

The price of coffee increases because of low crop yields.If the consumer's utility schedule for coffee remains constant, we can predict that coffee consumption

Kevin allocates his budget according to rules of utility maximization.What are the rules of utility maximization and how do they explain the paradox of value, which is that diamonds are expensive but useless, while water is inexpensive but essential?

-The table above shows Buffy's utility from wooden stakes and cloves of garlic.If Buffy increases her consumption of wooden stakes from 4 to 5 stakes, her marginal utility from the 5th stake is

A budget line

The slope of the budget line can be interpreted as which of the following?

-Suppose that you consume only pizza and Diet Pepsi.The table above gives your utility from consuming these two goods.What is the marginal utility you get from the fourth slice of pizza?

An indifference curve is a line that shows

-Tom is stranded on a deserted island where he can only consume coconuts and crabs.Two of his indifference curves are in the figure above. a∙Would Tom prefer his consumption to be at point a or at point b? At point b or at point c? Explain your answers. b∙Between points a and b, what is Tom's marginal rate of substitution for a crab?

Timmy makes $100 per week as a taxidermist.He spends all this income to buy pizza and hair gel.The price of a pizza is $10 and the price of a bottle of hair gel is $4.If Timmy buys 6 pizzas per week, how many bottles of gel can he purchase?

Suppose that Hank consumes only Mountain Dew and pizza.If Hank's total utility from all amounts of both Mountain Dew and pizza double from what they were before, then Hank's demand for

A consumer's demand for tuna can be found from an indifference curve diagram by doing which of the following?

A relative price is the

-The figure above shows a consumer's budget line between sodas and DVD rentals.Point d represents an

-The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.The price of pizza is $2 per slice and the price of soda is $1 per bottle.His marginal utility from the 4th slice of pizza is

-The table above gives Ali's total utility from consuming bottles of soda and slices of pizza.The price of pizza is $2 per slice and the price of soda is $1 per bottle.Ali has $14 in his budget.When Ali maximizes his utility, how many slices of pizza does he buy?

Which of the following is shown by a budget line? I∙The combinations of goods a person can afford Ii∙The production possibilities for a person Iii∙The combinations of goods a person cannot afford

At the point where the budget line is just touching an indifference curve at one point,

The figure above shows two budget lines. -Based on the figure above, which of the following would lead the budget line to change from BL₀ to BL₁?

What is "marginal utility?"