ch.6 RA study

A consumer is in equilibrium and is spending income in such a way that the marginal utility of product X is 40 units and Y is 16 units. The unit price of X is $5. The price of Y is:

$2 per unit

Answer the next question(s) 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. Product X/Y Quantity........MUx/y 1...................32/24 2...................28/20 3...................24/16 4...................20/12 5...................16/8 Refer to the above table. When the consumer purchases the utility-maximizing combination of product X and product Y, total utility will be:

156

number of units.......total utility 3............................36 4............................80 What is the marginal utility of the fourth unit?

44

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $3 and $4, respectively, and that consumer income is $18. units of x/y.....total utility x/y 1.....................9/16 2.....................15/28 3.....................19/36 4.....................21/40 5.....................22/42 Refer to the above table information. What is the level of total utility for the consumer in equilibrium?

51

Answer the next question(s) 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. Product X/Y Quantity........MUx/y 1...................32/24 2...................28/20 3...................24/16 4...................20/12 5...................16/8 Refer to the above table. If the consumer can only buy product X, how much will the consumer buy and what will be the total utility?

5X and 120

Given that MUa/Pa< MUb/Pb, consumers who spend all of their income on these two goods:

Can increase utility by buying more of b and less of a

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $3 and $4, respectively, and that consumer income is $18. units of x/y.....total utility x/y 1.....................9/16 2.....................15/28 3.....................19/36 4.....................21/40 5.....................22/42 Refer to the above table information. Which represents the demand curve for X at the $2 and $3 price range? a) P:$3&2 Qd:1&4 b) P:$3&2 Qd:2&5 c) P:$3&2 Qd:2&3 d) P:$3&2 Qd:2&4

Choice c

According to utility theory, when total utility reaches a maximum, then marginal utility is:

Equal to zero

The marginal utility of leisure time appears to:

Increase as the quantity of available leisure time decreases

After eating four slices of pizza, you are offered a fifth slice. You turn down the slice. Your refusal indicates that the:

Marginal utility is positive for the fourth slice and negative for the fifth slice

Assume that a consumer purchases a combination of product A and product B such that the MUa/Pa = 8 and MUb/Pb = 6. To maximize utility without spending more money, the consumer should:

Purchase more of product A and less of product B

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $3 and $4, respectively, and that consumer income is $18. units of x/y.....total utility x/y 1.....................9/16 2.....................15/28 3.....................19/36 4.....................21/40 5.....................22/42 Refer to the above table information. How many units of the two products will the consumer buy?

2 of X and 3 of Y

The table shows the total utility data for products X and Y. Assume that the prices of X and Y are $3 and $4, respectively, and that consumer income is $18. units of x/y.....total utility x/y 1.....................9/16 2.....................15/28 3.....................19/36 4.....................21/40 5.....................22/42 Refer to the above table information. If the price of X decreases to $2, then the utility-maximizing combination of the two products is:

3 of X and 3 of Y

Answer the next question(s) 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. Product X/Y Quantity........MUx/y 1...................32/24 2...................28/20 3...................24/16 4...................20/12 5...................16/8 Refer to the above table. If the consumer buys both product X and product Y, how much will the consumer buy of each to maximize utility?

3X and 4Y

A consumer makes purchases of an existing product X such that the marginal utility is 10 and the price is $5. The consumer also tries a new product Y and at the current level of consumption it has a marginal utility of 8 and a price of $1. The utility-maximizing rule suggests that this consumer should:

Increase consumption of product Y and decrease consumption of product X

A consumer with a fixed income will maximize utility when each good is purchased in amounts such that the:

Marginal utility per dollar spent is the same for all goods

If total utility is increasing, then marginal utility:

May either be increasing or decreasing, but it must be greater than zero

Compared to noncash gifts, cash gifts are preferred:

More because they increase total utility

The reason people are charged for each additional can of soda obtained from a soda machine, but are not charged for each additional paper taken from a newspaper dispensing machine is that the marginal utility of additional:

Sodas diminishes slowly, but the marginal utility of additional newspapers is close to zero

Which situation is consistent with the law of diminishing marginal utility?

The more pizza Henry eats, the less he enjoys another slice