Exam 25: Consumer Choice

Use the following to answer questions: Figure: Comic Books and Coffee 2 -(Figure: Comic Books and Coffee 2) Refer to the figure. If the price of comic books in the figure is $0.50, the marginal utility per dollar for the third comic book is:

If the marginal utility of apples is 4 and marginal utility of grapes is 4, the consumer is maximizing utility.

Use the following to answer questions: Figure: Budget Constraint 2 -(Figure: Budget Constraint 2) Refer to the figure. A consumer has $45 to spend on movie and music downloads per month. What is the price per movie and music download?

Preferences are characterized generally by:

Consumption Bundle A contains 6 donuts and 2 cups of coffee, and consumption Bundle B contains 4 donuts and 1.5 cups of coffee. Bundle A and Bundle B could lie on the same indifference curve.

Which statement best illustrates the concept of diminishing marginal utility?

The consumption bundle that maximizes utility for a consumer is the bundle that:

Countries in Western Europe tend to have more generous unemployment benefits for their workers than the United States. All else equal, you would expect workers in Western Europe to:

Marginal utility is the change in utility from consuming an additional unit.

The demand curve is downward sloping because of diminishing marginal utility.

Figure: Music and Movie Downloads 4 Refer to the figure. According to this figure, which of the following statements is FALSE?

Use the following to answer questions: Figure: Optimal Choice -(Figure: Optimal Choice) Refer to the figure. Suppose the figure represents indifference curves of a consumer who purchases flip-flops and sneakers. If the dotted line represents this consumer's budget constraint, then Bundle D on the graph:

Use the following to answer questions: Figure: Optimal Choice -(Figure: Optimal Choice) Refer to the figure. If the dotted line in the figure represents this consumer's budget constraint, then the utility-maximizing bundle for this consumer is:

Diminishing marginal utility means that marginal utility ______ as consumption ______.

At the consumer's optimal consumption bundle, the MRS_XY is 4, and the marginal utility of good X is 8. What is the marginal utility of good Y?

Use the following to answer questions: Figure: Budget Constraint 4 -(Figure: Budget Constraint 4) Refer to the figure. This figure represents the budget constraint of a consumer who purchases flip-flops and sneakers. If the price of sneakers rises, then the budget constraint will:

If the price of apples rises, oranges become relatively less expensive. The increase in the orange consumption resulting from this price change is an example of the income effect.

Use the following to answer questions: Figure: Indifference Curve -(Figure: Indifference Curve) Refer to the figure. This figure represents the indifference curve of a consumer who purchases flip-flops and sneakers. Which point generates the highest level of utility for the consumer?

A point above the budget constraint is sometimes affordable.

Assume that the unit price of good A is $2, and the unit price of good B is $2. If an individual has income of $20, which consumption bundles of (good A, good B) is on the edge of the budget constraint?