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Exam 7: Utility Maximization

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Question 141

Multiple Choice

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Ben is exhausting his money income consuming products A and B in such quantities that MU a/ Pₐ = 7 and MU b/ Pᵦ = 9. Ben should purchase

A) more of A and less of B.
B) more of B and less of A.
C) more of both A and B.
D) less of both A and B.

E) None of the above
F) A) and B)

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Question 142

Multiple Choice

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To the average consumer, the marginal utility of a second copy of today's newspaper is

A) constant.
B) increasing.
C) close to zero.
D) close to one.

E) None of the above
F) A) and B)

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Question 143

Multiple Choice

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At each point on an indifference curve,

The consumer will select that point on the budget line which puts him or her on the highest attainable indifference curve.

Refer to the data. The value for W is

If you receive a gift whose market price is $20, but you consider it to be worth only $10, then

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 $30. If the consumer buys both product X and product Y, how much will the consumer buy of each in order to maximize utility?

If the marginal utility from consuming the fifth unit of a product is 6 and the total utility from all five units is 162, then the total utility from consuming four units must be

An increase in the price of a product normally enables a consumer to reach a higher indifference curve.

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 has money income of $52 and the prices of J and K are $8 and $4 respectively, the consumer will maximize her utility by purchasing

Which of the following statements is not correct?

Betty is maximizing her satisfaction from spending her budget on two items, movie rentals and music downloads. If her marginal utility from the last movie rental is twice that from the last music download, what is the price of a movie rental if the price of a music download is $0.80?

With a fixed money income, an increase in the price of one good and a decrease in the price of the other will cause the new budget line to intersect the original budget line.

If the total utility from consuming six units of a product is 43 and the marginal utility of a seventh unit is 6, then the total utility from consuming seven units would be

The table shows the utility schedule for a consumer of candy bars. Based on the data in the table, you can conclude that the

Assume that a consumer purchases a combination of products Y and Z and that the MU y/ Pᵧ = 30/2 and MU z/ P_z = 45/3. To maximize utility, without spending more money, the consumer should

Ben is exhausting his money income consuming products A and B in such quantities that MU a/ Pₐ = 5 and MU b/ Pᵦ = 8. Ben should purchase

The table shows an indifference schedule for several combinations of X and Y. How much of X is the consumer willing to give up to obtain the fourth unit of Y?

If the price of A is $12 and the price of B is $3, the budget line tells us that a consumer in effect can trade

Explain the meaning of the marginal rate of substitution.