Exam 7: Utility Maximization

Answer the question based on the table below showing the marginal utility schedules for product X and product Y for a hypothetical consumer. The price of product X is $4, and the price of product Y is $2. The income of the consumer is $20. If the consumer buys product X or product Y one unit at a time, which of the following will the consumer's first two purchases be?

The table shows a consumer's utility schedule. Based on the data, you can conclude that the consumer

Marginal utility can be

Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer would get from successive quantities of products J and K. If the consumer's money income were cut from $52 to $28, and the prices of J and K remain at $8 and $4, respectively, she would maximize her satisfaction by purchasing

A consumer is in equilibrium and is spending income in such a way that the marginal utility of product X is 40 units and that of Y is 16 units. If the unit price of X is $5, then the price of Y must be

If the price of product X rises, then the resulting decline in the amount purchased will

An indifference map implies that

Edith is buying products X and Y with her money income. Suppose her budget line shifts rightward (outward). This might be the result of

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 How many units of the two products will the rational consumer purchase?

In a topographic map, each line represents a particular elevation above sea level, and in an indifference map, each line represents a particular level of

The substitution effect of a price decrease for a good causes an increase in the consumption of the good, regardless of whether the good is normal or inferior.

When total utility reaches a maximum, then marginal utility is

The fact that most medical care purchases are financed through insurance

Assume that Tonya consumes only two products, pizza and potato chips, out of a given budget. Both are normal goods for Tonya. If the price of pizza decreases, then Tonya's consumption of pizza will

In moving along a given budget line,

A consumer maximizes total utility when she or he purchases the combination of the two products at which her or his budget line is tangent to an indifference curve.

Refer to the diagram. If the budget line shifts from ab to ac, the

In deciding what to buy, the consumer will choose the good with the

What do the income effect, the substitution effect, and diminishing marginal utility have in common?

The marginal rate of substitution