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Exam 7: Utility Maximization

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Question 101

True/False

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A rational consumer will try to achieve the highest indifference curve that his or her income will allow.

A) True
B) False

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Question 102

Multiple Choice

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Many people do not steal or commit fraud because to them, the resulting feelings of guilt and uneasiness make the

A) marginal utility of the act increase.
B) marginal utility of the act decrease.
C) marginal cost of the act increase.
D) marginal cost of the act decrease.

E) A) and C)
F) B) and C)

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Question 103

Multiple Choice

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Refer to the graphs. Pizza and beer are the only two goods Jon consumes. The price of beer is $2.00 per pitcher and pizza is $1.25 per slice. If Jon has only $10 to spend for the evening, which graph represents the set of possible combinations of beer and pizza that he can buy?

Discuss the decision a criminal must make before deciding whether or not to steal.

If the prices of X and Y are $2 and $4 per unit, respectively, and this consumer has $10 in income to spend, to maximize total utility, this consumer should buy

Each point on a single indifference curve reflects the same level of total utility for a consumer.

Indifference curve analysis

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 $20. If the consumer buys both product X and product Y, how much will the consumer buy of each in order to maximize utility?

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

While eating at Alex's "Pizza by the Slice" restaurant, Kara experiences diminishing marginal utility. She gained 10 units of satisfaction from her first slice of pizza consumed and would only receive 5 units of satisfaction from consuming a second slice, at the same price. Based on this information, we can conclude that

Give a brief description of the law of diminishing marginal utility, and use it to explain the downward slope of the demand curve.

The marginal utility of the last unit of apples consumed is 10, and the marginal utility of the last unit of bananas consumed is 15. What set of prices for apples and bananas, respectively, would be consistent with consumer equilibrium?

Suppose a consumer has an income of $16, the price of A is $2, and the price of B is $1. Which of the following combinations is on the consumer's budget line?

Which of the following statements is correct?

After eating four slices of pizza, you are offered a fifth slice for free. You turn down the fifth slice. Your choices indicate that the

An increase in the real income of a consumer is one result from an increase in the price of a product that the consumer is buying.

The marginal utility of the last unit of apples consumed is 12, and the marginal utility of the last unit of bananas consumed is 8. What set of prices for apples and bananas, respectively, would be consistent with consumer equilibrium?

Explain the three characteristics of utility.

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's money income were cut from $52 to $28, and the prices of J and K remain at $8 and $4, respectively, she would maximize her satisfaction by purchasing

Marginal utility is total utility divided by the number of units consumed.