Exam 13: Consumer Choice and Demand

If Sarah gets 40 units of utility from her first piece of toast for breakfast and a total of 70 units from two pieces of toast, then the marginal utility of the first piece is ________ units and the marginal utility of the second piece is ________ units.

A budget line

To maximize utility, why does a consumer consume the combination of goods that equates marginal utility per dollar from the different goods rather than just equating the marginal utility of the different goods?

-Based on the figure above, on which budget line is the relative price of gum the highest?

In the indifference curve/budget line framework, at the consumer equilibrium, the consumer

Marginal utility is equal to which of the following?

Does the fact that diamonds are so expensive imply that the demand curve for diamonds has a positive slope? Use marginal utility theory to answer the question.

Explain why total utility is maximized when the marginal utility per dollar from a good is equal across goods.

The marginal rate of substitution is equal to the magnitude of the

Reb buys fishing lures and steaks.If his budget does not change and the price of a fishing lure decreases, the maximum number of fishing lures he can purchase ________ and the maximum number of steaks he can purchase ________.

If a consumer's marginal rate of substitution is greater than the relative price of the goods, the consumer 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 bottles of soda does he buy?

John likes to spend Thursday nights playing pool and drinking soda.John's budget for Thursday nights is $10, a soda costs $2, and one game of pool costs $1. a∙Draw a graph of John's budget line in the figure below. b∙In your graph, label the affordable and unaffordable areas.

Juan's marginal utility from strawberries is 200 and his marginal utility from cream is 100.Juan spends all his budget.The price of strawberries is $5 per pound and the price of cream is $5 per pint.To maximize his utility, Juan should

-Which of the above figures reflects an increase in the price of fish?

Carter spends his entire budget on pizza and Pepsi.He maximizes his utility when he allocates his entire available budget and buys pizza and Pepsi so that the

-The above table shows Homer's utility from boxes of doughnuts.As Homer's consumption of doughnuts increases, his

A consumption point inside the budget line

How are total and marginal utility related?

We have asked Mac to rank his preferences between three market baskets, A, B, and C.If Mac prefers B to C but does not care if he gets A or B, then