Exam 8: Utility and Demand

Suppose the price of a soda is $2 each, the price of a hot dog is $3 each and the budget is $20. If the marginal utility of the fourth soda is 100 and the marginal utility of the fourth hot dog is 150, to maximize utility, a person will buy

A person's consumption possibilities is defined by the budget line because

-Given the data in the above table, if income is $16, and the price is $1 for a bottle of water and $2 for a hamburger, what is the quantity of water and the quantity of hamburgers that will maximize the consumer's total utility?

As a person consumes more and more slices of pizza, the marginal utility of each extra slice diminishes.

As more of a good is consumed, its marginal utility ________ and its total utility ________.

-The above table gives some of Tammy's total and marginal utilities from comedy videos. Which of the following statements is TRUE?

Bianca consumes pizza. Marginal utility theory predicts that when the price of pizza increases

The total utility you get from eating slices of pizza on a given night is the

Magazines Chocolate bars -Sonya's budget for magazines and chocolate bars is $50. Her marginal utility from these goods is shown in the table above. The price of a magazine is $5 and the price of a chocolate bar is $2.50. Sonya currently buys 3 magazines and 14 chocolate bars. To maximize her utility, she should

Marginal utility diminishes as consumption of a good decreases.

John and Sally have identical preferences except that Sally's utility is exactly 10 times John's for each basket of goods. If they have the same income and face the same prices

Magazines Chocolate bars -Sonya's budget for magazines and chocolate bars is $50. Her marginal utility from these goods is shown in the table above. The price of a magazine is $5 and the price of a chocolate bar is $2.50. Sonya currently buys 4 magazines and 12 chocolate bars. To maximize her utility, she should

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

Let MU_a and MU_b stand for the marginal utilities of apples and bagels. Let P_a and P_b stand for their prices. The general necessary condition for consumer equilibrium is

Sub sandwiches Mountain Dew -The above table gives Sue's marginal utility schedules for sub sandwiches and Mountain Dew, the only products Sue consumes. Suppose the price of a sub sandwich is $4 each and the price of a Mountain Dew is $2 each. Sue's income is $12. If Sue is at a consumer equilibrium, she eats ________ sub sandwich(es) and drinks ________ Mountain Dews.

-The table above gives Cathy's total utility from Mt. Dew. Cathy's marginal utility from additional Mt. Dews is

When Alex eats 1 slice of pizza, his total utility is 80; when Alex eats 2 slices of pizza, his total utility is 120. Alex's marginal utility from the second pizza is

You are studying with a friend, and your friend says "To maximize utility, a consumer must consume the combination of goods so that the marginal utility of good X equals the marginal utility of good Y." Explain whether your friend's statement is correct or incorrect.

-The table above gives Cathy's total utility from Mt. Dew. Cathy's marginal utility from the 3rd Mt. Dew is ________ units.

-Lisa spends all her income on pizzas and DVDs. The above table shows Lisa's marginal utility for pizza and marginal utility for DVDs. If the price of a pizza is $10, the price of a DVD is $5, and Lisa has $40 to spend on the two goods, what combination of pizza and DVDs will maximize her utility?