Exam 7: Utility Maximization

Answer the question on the basis of the following total utility data for products L and M. Assume that the prices of L and M are $3 and $4, respectively, and that the consumer's income is $18. What level of total utility does the rational consumer realize in equilibrium?

A consumer who has a limited budget will maximize utility or satisfaction when the

In introducing the opportunity cost of time into the theory of consumer behavior, we find that, all else equal,

While eating at Alex's "Pizza by the Slice" restaurant, Kara experiences diminishing marginal utility. She gained 10 units of satisfaction from her first slice of pizza consumed and would only receive 5 units of satisfaction from consuming a second slice, at the same price. Based on this information, we can conclude that

When a consumer shifts purchases from product X to product Y, the marginal utility of

Assume you are spending your full budget and purchasing such amounts of X and Y that the marginal utility from the last units consumed is 40 and 20 utils, respectively. Assume (a) the prices of X and Y are $8 and $4 respectively; (b) it takes 3 hours to consume a unit of X and 1 hour to consume a unit of Y; and (c) your time is worth $2 per hour. You

The ability of a good or service to satisfy wants is called

Someone who pays $800 to fly from one city to another instead of paying only $100 for a bus trip between the two cities is making an irrational choice and is thus not maximizing his utility.

If the budget line shifts from BB to bb in the diagram, we can infer that the

The price of diamonds is substantially greater than the price of water because

In 2015 the federal government started requiring restaurants to print calorie counts next to menu items. The intent was to persuade consumers to

The marginal utility of the last unit of apples consumed is 12, and the marginal utility of the last unit of bananas consumed is 8. What set of prices for apples and bananas, respectively, would be consistent with consumer equilibrium?

The consumer will select that point on the budget line which puts him or her on the highest attainable indifference curve.

To maximize utility, a consumer should allocate money income so that the

An increase in the price of a product normally enables a consumer to reach a higher indifference curve.

The diamond-water paradox occurs because

Assume a round of golf requires four hours of leisure time, and attending a concert requires two hours. If the price of a round of golf is $40 and the price of a concert is $80, ceteris paribus, Joe will play

Refer to the budget line shown in the diagram. If the consumer's money income is $20, the

(Consider This) The lines on a topographical map are analogous to a(n)

From the viewpoint of potential criminals, the probability of being fined or imprisoned