Exam 4: Choice-Part A

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Clara's utility function is U(x, y)= (x + 2)(y +1).If her marginal rate of substitution is -4 and she is consuming 14 units of good x, how many units of good y must she be consuming?

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Question 1

Correct Answer:

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Jane's utility function is U(x, y)= x +2y, where x is her consumption of good X and y is her consumption of good Y.Her income is $2.The price of Y is $2.The cost per unit of X depends on how many units she buys.The total cost of x units of X is the square root of x.

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Question 2

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Angela consumes only two goods, x and y.Her income doubles and the prices of the two goods remain unchanged.Assuming that she is a utility maximizer and likes both goods,

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Question 3

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Elmer's utility function is U(x, y)=min{x, y²}.If the price of x is $25 and the price of y is $15 and if Elmer chooses to consume 7 units of y, what must his income be?

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Question 4

If his wage rate increases, then a utility maximizing consumer will necessarily

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Question 5

Linus has utility function U(x, y)= x + 2y.If the price of x is $1 and the price of y is .50 cents then Linus must consume equal amounts of both goods in order to maximize his utility.

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Question 6

Danny Featherweight is taking a tough course in law school.His professor agreed to give him a course grade of max{2x, 3y} where x and y are the number of answers he gets right on the first and second midterms, respectively.Danny needs a course grade of 150 to pass.He finds that for the first midterm, for every A minutes of study, he will get one more answer right.For the second midterm, for every B minutes that he studies, he will get one more answer right.If he doesn't study at all, Danny will get nothing right on either exam.All Danny cares about is passing.He doesn't want to waste any time getting a higher grade than he needs.

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Question 7

Coke and Pepsi are perfect substitutes for Mr.Drinker and the slope of his indifference curves is - 1.One day he bought 2 cans of Coke and 20 cans of Pepsi.(The cans of both drinks are the same size.)

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Question 8

Harold's utility function is U(x, y)= (x + 3)(y + 2).The price of x is $1.The price of y is $2.At all incomes for which Harold consumes positive amounts of both goods, he will consume

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Question 9

Peter consumes no commodities other than Miller Lite and Bud Light.His annual budget for these two commodities is described by the equation 5x +y = 300, where x is sixpacks of Miller Lite and y is cases of Bud Light.Peter considers 2 cases of Bud Light to be perfect substitutes for 6 sixpacks of Miller Lite.

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Question 10

Mort's utility function is U(x₁, x₂)=x₁x₂.His income is $100.The price of good 2 is $10.Good 1 is priced as follows.The first 6 units cost $10 per unit and any additional units cost $5 per unit.What consumption bundle does Mort choose?

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Question 11

Harold consumes chardonnay and quiche.His utility function is U(c, q)= min{c, q²}.Draw a diagram showing three or four of Harold's indifference curves.If the price of chardonnay is $10 and the price of quiche is $3 and if Harold is consuming 4 units of quiche, how many units of chardonnay is he consuming?

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Question 12

If a consumer does not have convex preferences, then a point of tangency between her indifference curve and her budget line must be an optimal consumption point.

(True/False)

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Question 13

Andrew's utility function is U(x₁, x₂)=4x²₁ + x₂.Andrew's income is $32, the price of good 1 is $16 per unit, and the price of good 2 is $1 per unit.What happens if Andrew's income increases to $80 and prices do not change? (Hint: Does he have convex preferences?)

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Question 14

Isobel consumes positive quantities of both jam and juice.The price of jam is 5 cents per unit and the price of juice is 10 cents per unit.Her marginal utility of jam is 10 and her marginal utility of juice is 5.

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Question 15

Minnie Applesauce is shopping for a summer lake cottage.Minnie hates mosquito bites, but the cheapest lake cottages have the most mosquitos.The price of a lake cabin is related to b, the number of mosquito bites you can expect per hour, according to the formula p = $20,000 - 100b.Minnie's utility function is u = x - 5b², where x is her expenditure on all goods other than her lake cabin.If Minnie makes her best choice of lake cabin, how many mosquito bites per hour will she get?

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Question 16

Janet consumes two commodities x and y.Her utility function is min{x+2y, y + 2x}.She chooses to buy 10 units of good x and 20 units of good y.The price of good x is $1.Janet's income is

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Question 17

Howard has the utility function U(x, y)= x - (1/y).His income is $30.

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Question 18

If a consumer maximizes her preferences subject to her budget by choosing a consumption bundle where the ratio of her marginal utilities of shelter and food, MU_S/MU_F, is greater than the ratio of the prices of shelter and food, p_S/p_F, then she must

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Question 19

George has $49 which he decides to spend on x and y.Commodity x costs $5 per unit and commodity y costs $11 per unit.He has the utility function U(x, y)=3x² + 6y² and he can purchase fractional units of x and y.George will choose

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Question 20

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Exam 4: Choice-Part A

Clara's utility function is U(x, y)= (x + 2)(y +1).If her marginal rate of substitution is -4 and she is consuming 14 units of good x, how many units of good y must she be consuming?

Jane's utility function is U(x, y)= x +2y, where x is her consumption of good X and y is her consumption of good Y.Her income is $2.The price of Y is $2.The cost per unit of X depends on how many units she buys.The total cost of x units of X is the square root of x.

Angela consumes only two goods, x and y.Her income doubles and the prices of the two goods remain unchanged.Assuming that she is a utility maximizer and likes both goods,

Elmer's utility function is U(x, y)=min{x, y2}.If the price of x is $25 and the price of y is $15 and if Elmer chooses to consume 7 units of y, what must his income be?

If his wage rate increases, then a utility maximizing consumer will necessarily

Linus has utility function U(x, y)= x + 2y.If the price of x is $1 and the price of y is .50 cents then Linus must consume equal amounts of both goods in order to maximize his utility.

Coke and Pepsi are perfect substitutes for Mr.Drinker and the slope of his indifference curves is - 1.One day he bought 2 cans of Coke and 20 cans of Pepsi.(The cans of both drinks are the same size.)

Harold's utility function is U(x, y)= (x + 3)(y + 2).The price of x is $1.The price of y is $2.At all incomes for which Harold consumes positive amounts of both goods, he will consume

Mort's utility function is U(x1, x2)=x1x2.His income is $100.The price of good 2 is $10.Good 1 is priced as follows.The first 6 units cost $10 per unit and any additional units cost $5 per unit.What consumption bundle does Mort choose?

If a consumer does not have convex preferences, then a point of tangency between her indifference curve and her budget line must be an optimal consumption point.

Andrew's utility function is U(x1, x2)=4x21 + x2.Andrew's income is $32, the price of good 1 is $16 per unit, and the price of good 2 is $1 per unit.What happens if Andrew's income increases to $80 and prices do not change? (Hint: Does he have convex preferences?)

Isobel consumes positive quantities of both jam and juice.The price of jam is 5 cents per unit and the price of juice is 10 cents per unit.Her marginal utility of jam is 10 and her marginal utility of juice is 5.

Janet consumes two commodities x and y.Her utility function is min{x+2y, y + 2x}.She chooses to buy 10 units of good x and 20 units of good y.The price of good x is $1.Janet's income is

Howard has the utility function U(x, y)= x - (1/y).His income is $30.

If a consumer maximizes her preferences subject to her budget by choosing a consumption bundle where the ratio of her marginal utilities of shelter and food, MUS/MUF, is greater than the ratio of the prices of shelter and food, pS/pF, then she must

George has $49 which he decides to spend on x and y.Commodity x costs $5 per unit and commodity y costs $11 per unit.He has the utility function U(x, y)=3x2 + 6y2 and he can purchase fractional units of x and y.George will choose

Budget Constraint-Part A

Budget Constraint-Part B

Preferences-Part A

Preferences-Part B

Utility-Part A

Utility-Part B

Choice-Part B

Demand-Part A

Demand-Part B

Revealed Preference-Part A

Revealed Preference-Part B

Slutsky Equation-Part A

Slutsky Equation-Part B

Buying and Selling-Part A

Buying and Selling-Part B

Intertemporal Choice-Part A

Intertemporal Choice-Part B

Asset Markets-Part A

Asset Markets-Part B

Uncertainty-Part A

Uncertainty-Part B

Risky Assets-Part A

Risky Assets-Part B

Consumers Surplus-Part A

Consumers Surplus-Part B

Market Demand-Part A

Market Demand-Part B

Equilibrium-Part A

Equilibrium-Part B

Auctions-Part A

Auctions-Part B

Technology-Part A

Technology-Part B

Profit Maximization-Part A

Profit Maximization-Part B

Cost Minimization-Part A

Cost Minimization-Part B

Cost Curves-Part A

Cost Curves-Part B

Firm Supply-Part A

Firm Supply-Part B

Industry Supply-Part A

Industry Supply-Part B

Monopoly-Part A

Monopoly-Part B

Monopoly Behavior-Part A

Monopoly Behavior-Part B

Factor Markets-Part A

Factor Markets-Part B

Oligopoly-Part A

Oligopoly-Part B

Game Theory-Part A

Game Theory-Part B

Game Applications-Part A

Game Applications-Part B

Behavioral Economics

Exchange-Part A

Exchange-Part B

Production-Part A

Production-Part B

Welfare-Part A

Welfare-Part B

Externalities-Part A

Elmer's utility function is U(x, y)=min{x, y²}.If the price of x is $25 and the price of y is $15 and if Elmer chooses to consume 7 units of y, what must his income be?

Mort's utility function is U(x₁, x₂)=x₁x₂.His income is $100.The price of good 2 is $10.Good 1 is priced as follows.The first 6 units cost $10 per unit and any additional units cost $5 per unit.What consumption bundle does Mort choose?

Andrew's utility function is U(x₁, x₂)=4x²₁ + x₂.Andrew's income is $32, the price of good 1 is $16 per unit, and the price of good 2 is $1 per unit.What happens if Andrew's income increases to $80 and prices do not change? (Hint: Does he have convex preferences?)

If a consumer maximizes her preferences subject to her budget by choosing a consumption bundle where the ratio of her marginal utilities of shelter and food, MU_S/MU_F, is greater than the ratio of the prices of shelter and food, p_S/p_F, then she must

George has $49 which he decides to spend on x and y.Commodity x costs $5 per unit and commodity y costs $11 per unit.He has the utility function U(x, y)=3x² + 6y² and he can purchase fractional units of x and y.George will choose