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Exam 7: Utility Maximization

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Question 51

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When a consumer shifts purchases from X to Y,the marginal utility of X falls and the marginal utility of Y rises.

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Question 52

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The theory of consumer behavior assumes that:

A) consumers behave rationally,attempting to maximize their satisfaction.
B) consumers have unlimited money incomes.
C) consumers do not know how much marginal utility they obtain from successive units of various products.
D) marginal utility is constant.

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Question 53

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(Last Word) All of the following would reduce property crime by increasing its "price," except:

A consumer's demand curve for a product is downsloping because:

The theory of consumer behavior assumes that consumers attempt to maximize:

Where total utility is at a maximum,marginal utility is:

Answer the question on the basis of the following marginal utility data for products X and Y.Assume that the prices of X and Y are $4 and $2 respectively and that the consumer's income is $18. $\begin{array}{c}\begin{array}{c}\text {Units}\\\underline{\text {of X }}\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Utility, X}}\\20\\16\\12\\8\\6\\4\end{array}\begin{array}{c}\text {Units}\\\underline{\text {of Y }}\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Utility, Y}}\\16\\14\\12\\10\\8\\6\end{array}\end{array}$ Refer to the data.Which of the following represents the demand schedule for X?

Edith is buying products X and Y with her money income.Suppose her budget line shifts rightward (outward) .This might be the result of:

If money income increases and the prices of products A and B both increase,then the budget line:

An indifference curve shows all:

Why do people tend to eat more at all-you-can-eat buffet restaurants than at restaurants where each item is purchased separately?

The marginal rate of substitution:

A consumer who has a limited budget will maximize utility or satisfaction when the:

A budget line shows the:

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. $\begin{array}{c}\begin{array}{ccc}Unit&&\\\text { of } J & & M U_{j} \\\hline1 & & 56 \\2 & & 48 \\3 & & 32 \\4 & & 24 \\5 & & 20 \\6 & & 16 \\7 & & 12\end{array}\begin{array}{ccc}Unit&&\\\text { of } K & & M U_{k} \\\hline1 & & 32 \\2 & & 28\\3 & & 24\\4 & & 20\\5 & & 12\\6 & & 10\\7 & & 8\end{array}\end{array}$ Refer to the data.What level of total utility is realized from the equilibrium combination of J and K,if the consumer has a money income of $52 and the prices of J and K are $8 and $4 respectively?

If the price of product X rises,then the resulting decline in the amount purchased will:

Susie buys two goods: rounds of golf and massages.Suppose that the price of a round of golf is $20 and the price of a massage is $30.In a typical week,Susie will play two rounds of golf,getting 20 units of satisfaction from the second round.She normally buys three massages each week,with the third giving her 30 units of satisfaction.If she were to buy a fourth massage in a week,it would give her 20 units of satisfaction.If the price of massages is reduced to $15,which of the following outcomes might we expect to occur?

Suppose that MU_x/P_x exceeds MU_y/P_y.To maximize utility,the consumer who is spending all her money income should buy:

A consumer is maximizing her utility with a particular money income when:

Answer the question on the basis of the following total utility data for products L and M.Assume that the prices of L and M are $3 and $4 respectively and that the consumer's income is $18. $\begin{array}{l}\begin{array}{ccc}\text { Units}&\text{ Total }\\\text { of L } & \text { Utility } \\\hline1 & 9 \\2 & 15 \\3 & 18 \\4 & 20 \\5 & 21\end{array}\begin{array}{ccc}\begin{array}{c}\text { Units } \\\text { of M }\\\hline\end{array} & \begin{array}{c}\text { Total } \\\text { Utility }\\\hline\end{array} \\1 & 16 \\2 & 28 \\3 & 36 \\4 & 40 \\5 & 42\end{array}\end{array}$ Refer to the data.What level of total utility does the rational consumer realize in equilibrium?