Econ Exam 2

the term marginal utility denotes the amount by which _____ changes when consumption changes by ______ unit(s)

total utility; 1

refer to the accompanying figure. The marginal utility of the 7th pizza is

-5

for Michael, the first cup of coffee he drinks every morning is heavenly. The second one is pretty good, but not as good as the first, and if he drinks a third cup he feels jittery and sick. For Michael, the marginal utility from drinking a cup of coffee is clearly

decreasing

If a consumer buys two different goods, the rational spending rule requires that the

ratio of marginal utility to price be equal for the two goods

The goal of utility maximization is to allocate your _______ in order to maximize your _______

resources; satisfaction

When the price of a good falls, marginal utility per dollar spent on that good ______, prompting consumers to purchase _______ of that good

rises; more

You are trying to decide how to spend you last lunch dollar. You should use that dollar to buy more of the item

that gives you the highest marginal utility per dollar

The tendency for marginal utility to decline as consumption increases beyond some point is called

the law of diminishing marginal utility

the additional utility gained from consuming an additional unit of a good is called

marginal utility

Refer to the accompanying figure. If Laura and Chris are the only two consumers in this market then at a price of $2.50 per pound, the market demand for hamburger is

4.5 pounds per week

Jamie's marginal utility from muffins and from doughnuts (in utils) is shown in the accompanying table. Jamie spends a total of $8 on muffins and/or doughnuts every morning. The price of each muffin is $2 and the price of each doughnut is $1. If Jamie consumes 3 muffins a day, then what is her marginal utility per follow spent on the third muffin?

10

refer to the accompanying table. The marginal utility of the 4th dinner out per week is

15

Suppose the price of an apple is $0.75, and the price of a banana is $0.50. If Hugh is maximizing his utility, and his marginal utility from consuming an apple is 24 utils, then his marginal utility from consuming a banana must be

16 utils

Jamie's marginal utility from muffins and from doughnuts (in utils) is shown in the accompanying table. Jamie spends a total of $8 on muffins and/or doughnuts every morning. The price of each muffin is $2 and the price of each doughnut is $1. What is Jamie's optimal combination of muffins and doughnuts each day

2 muffins, 4 doughnuts

What is the price elasticity of demand when P=8 on the demand curve in the following Figure?

2/3

Assume that Destiny has $30 in income, the price of a load of bread is $1.50, and the price of a jar of peanut butter is $3. Destiny can buy a maximum of _____ loaves of bread or a maximum of ______ jars of peanut butter

20; 10

Consider the market for a new CD, where the price is initially $6.00 and 36 thousand copies are sold, as indicated in the figure to the right at point A. The music company is considering lowering the price to $4.00, at which price 44 thousand copies would be sold. What is total revenue (thousand) at point A and point B respectively? Given this change in total revenue, is demand between these prices elastic or inelastic?

216, 176, inelastic

Laura's total utility from consuming 8,9, and 10 bonbons is 35, 42, and 45, respectively. Her marginal utility from the 9th bonbon is _____

7

Let MUc denote the marginal utility that Pablo receives from a cup of coffee, and let Pc denote the price of a cup of coffee. We typically expect that as Pablo buys more coffee

MUc/Pc will fall

Figure A represents the polar case where the demand curve is ______. And in figure B ______ is more elastic

Perfectly inelastic D2

according to the law of diminishing marginal utility

as you consume less of something, your marginal utility from consuming that good will increase

If consumers cannot readily switch to a close substitute when the price of a good increases, the demand for that good is likely to be

inelastic

For two goods, coffee and scones, suppose that MUcoffee/Pcoffee=4 and Mscone's/Pscones=3. To maximize your total utility from these two goods, you should purchase

more coffee and fewer scones

Joaquin's marginal utility from an additional slice of pumpkin pie is 4 utils and his marginal utility from an additional slice of pecan pie is 6 utils. If a slice of pumpkin pie costs $2.50, and a slice of pecan costs $3, then Joaquin

should reallocate his spending towards pecan pie and away from pumpkin pie

When Taylor raised the price of earrings at Taylor's Boutique, her total revenue from selling earrings increased. This suggests that

the demand for Taylor's earrings at the original price was inelastic