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Exam 6: Household Behavior and Consumer Choice

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Question 31

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Refer to the information provided in Figure 6.1 below to answer the questions that follow. Figure 6.1 -Refer to Figure 6.1. Assume Tom's budget constraint is AC. He does NOT spend his entire income at point

A) A.
B) B.
C) E.
D) D.

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Question 32

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If the price of a normal good rises, the opportunity cost of that good rises and households buy less of the good.

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Question 33

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The price of leisure is the wage rate.

Refer to the information provided in Figure 6.2 below to answer the questions that follow. Figure 6.2 -Refer to Figure 6.2. Assume Mr. Lingle is on budget constraint AC. If the price of a beer is $5, Mr. Lingle's monthly income is

Income increases cause an increase in a household's choice set.

The law of diminishing marginal utility refers to

Refer to the information provided in Figure 6.16 below to answer the question that follows. Figure 6.16 -Refer to Figure 6.16. Why was Jason NOT maximizing his utility at point C?

Assume Sally is initially in equilibrium and that X and Y are normal goods for her. Then the price of X rises. For Sally to move to a new equilibrium point, her consumption of

Refer to the information provided in Figure 6.2 below to answer the questions that follow. Figure 6.2 -Refer to Figure 6.2. Mr. Lingle's budget constraint is AC. His choice set is all points

Refer to the information provided in Figure 6.10 below to answer the questions that follow. Figure 6.10 -Refer to Figure 6.10. The current price of a turkey sandwich is $6. If Kyle is currently buying nine turkey sandwiches a week, he ________ maximizing utility because the marginal utility ________ than its price.

Refer to the information provided in Figure 6.16 below to answer the question that follows. Figure 6.16 -Refer to Figure 6.16. The highest indifference curve depicted is the one on which point D lies. Why is Jason NOT maximizing his utility at point D?

Refer to the information provided in Table 6.1 below to answer the questions that follow. Table 6.1 $\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Number of } \\\text { Hamburgers per } \\\text { Day }\end{array} & \text { Total Utility } & \text { Marginal Utility } \\\hline 1 & 30 & \\2 & 52 & \\3 & 67 & \\4 & 76 & \\5 & & 4\\\hline \text { Number of } & \text { Total Utility } & \text { Marginal Utility } \\\text { Sodas per Day } & & \\\hline 1 & 20 & \\2 & 35 & \\3 & 47 & \\4 & 57& \\5 & &7\\\hline\end{array}$ -Refer to Table 6.1. Assume that a store is giving hamburgers and sodas away for free. Consumers can have as many sodas and hamburgers as they want, but the food has to be consumed one unit at a time. If George has already had one soda and two hamburgers, then George should

A price change would have the largest income effect on a

Refer to the information provided in Figure 6.15 below to answer the questions that follow. Figure 6.15 -Refer to Figure 6.15. Jason maximizes utility at point

Refer to the information provided in Figure 6.6 below to answer the questions that follow. Figure 6.6 -Refer to Figure 6.6. Bill's budget constraint is BD. If the price of bell peppers increases, Bill's new budget constraint is

The law of diminishing marginal utility implies that total utility never reaches a maximum.

Jon is consuming X and Y so that he is spending his entire income and MUx/Px = 8 and MUy/Py = 4. To maximize utility, he should consume

A negative marginal utility implies negative total utility.

Refer to the information provided in Table 6.1 below to answer the questions that follow. Table 6.1 $\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Number of } \\\text { Hamburgers per } \\\text { Day }\end{array} & \text { Total Utility } & \text { Marginal Utility } \\\hline 1 & 30 & \\2 & 52 & \\3 & 67 & \\4 & 76 & \\5 & & 4\\\hline \text { Number of } & \text { Total Utility } & \text { Marginal Utility } \\\text { Sodas per Day } & & \\\hline 1 & 20 & \\2 & 35 & \\3 & 47 & \\4 & 57& \\5 & &7\\\hline\end{array}$ -Refer to Table 6.1. The total utility of five hamburgers per day is

Refer to the information provided in Figure 6.8 below to answer the questions that follow. Figure 6.8 -Refer to Figure 6.8. The ________ movie rental has a marginal utility of zero.