Question 1

Richard is consuming X and Y so that he is spending his entire income and MU_x/P_x = 6 and MU_y/P_y = 10. To maximize utility, he should

Accepted Answer

To maximize utility, the marginal utility per dollar spent on each good should be equal. Since the marginal utility per dollar spent on Y (10) is greater than that on X (6), Richard should consume less X and more Y to equalize these ratios.

Question 2

Refer to the information provided in Figure 6.9 below to answer the question(s) that follow.  Figure 6.9
-Refer to Figure 6.9. The ________ video game rental has a marginal utility of eight.

Accepted Answer

The second video game rental has a marginal utility of eight, as indicated in Figure 6.9.

Question 3

Refer to the information provided in Table 6.2 below to answer the question(s) that follow.
Table 6.2
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Candy Bars per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 40 & \
\hline 2 & 75 & \
\hline 3 & 100 & \
\hline 4 & 115 & \
\hline 5 & & 5 \
\hline \begin{array} { c } 
\text { Number of } \
\text { Hot Dogs per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 30 & \
\hline 2 & 54 & \
\hline 3 & 72 & \
\hline 4 & 84 & \
\hline 5 & & 6 \
\hline
\end{array}$$
-Refer to Table 6.2. If the price of a candy bar is $1, the price of a hot dog is $2, and Aaron has $6 of income, Aaron's utility-maximizing combination of candy bars and hot dogs per day is

Accepted Answer

To maximize utility, Aaron should aim for the highest marginal utility per dollar spent. From the table, the marginal utility of the 5th candy bar is 5, and the marginal utility of the 5th hot dog is 6. However, we need to calculate the marginal utility per dollar, which is not directly provided but can be inferred for the earlier items. For candy bars, the marginal utility from 1 to 2 is 35 (75-40), from 2 to 3 is 25 (100-75), and from 3 to 4 is 15 (115-100). Thus, the marginal utility per dollar for the 4th candy bar is 15 (since each candy bar costs $1). For hot dogs, the marginal utility from 1 to 2 is 24 (54-30), from 2 to 3 is 18 (72-54), and from 3 to 4 is 12 (84-72). Thus, the marginal utility per dollar for the 4th hot dog is 6 (since each hot dog costs $2). Given $6, Aaron can afford either 6 candy bars, 3 hot dogs, or combinations thereof. However, the combination of 4 candy bars and 1 hot dog costs exactly $6 and offers a high marginal utility per dollar spent before reaching the 5th item's lower marginal utility. This combination uses his budget efficiently while maximizing utility based on the given data.

Question 4

Refer to the information provided in Table 6.2 below to answer the question(s) that follow.
Table 6.2
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Candy Bars per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 40 & \
\hline 2 & 75 & \
\hline 3 & 100 & \
\hline 4 & 115 & \
\hline 5 & & 5 \
\hline \begin{array} { c } 
\text { Number of } \
\text { Hot Dogs per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 30 & \
\hline 2 & 54 & \
\hline 3 & 72 & \
\hline 4 & 84 & \
\hline 5 & & 6 \
\hline
\end{array}$$
-Refer to Table 6.2. Diminishing marginal utility sets in after the ________ candy bar per day.

Accepted Answer

The concept of diminishing marginal utility is observed when the additional satisfaction (marginal utility) gained from consuming an additional unit of a good decreases as more of that good is consumed. In the table, the total utility increases from 40 to 75 to 100 to 115 as the number of candy bars consumed increases from 1 to 4. This means the marginal utility (the increase in total utility from consuming one more candy bar) decreases with each additional candy bar, indicating that diminishing marginal utility sets in after the first candy bar.

Question 5

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

Accepted Answer

The total utility of five sodas per day is calculated by adding the marginal utility of the fifth soda (7) to the total utility of four sodas (57), resulting in 64.

Question 6

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

Accepted Answer

The answer of Refer to the information provided in Table...

Question 7

Refer to the information provided in Table 6.1 below to answer the question(s) that follow.
Table 6.1
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Hamburgers per } \
\text { Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 30 & \
\hline 2 & 52 & \
\hline 3 & 67 & \
\hline 4 & 76 & \
\hline 5 & & 4 \
\hline \begin{array} { c } 
\text { Number of } \
\text { Sodas per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 20 & \
\hline 2 & 35 & \
\hline 3 & 47 & \
\hline 4 & 57 & \
\hline 5 & & 7 \
\hline
\end{array}$$
-Refer to Table 6.1. If the price of a soda is $2, the price of a hamburger is $6, and George has $14 of income, George's utility-maximizing combination of sodas and hamburgers per day is

Accepted Answer

To maximize utility, George should equalize the marginal utility per dollar spent on each good. The marginal utility per dollar for the 4th soda is 5 (MU of 10 divided by price of $2), and for the 1st hamburger is 5 (MU of 30 divided by price of $6). With $14, George can buy 4 sodas ($8) and 1 hamburger ($6).

Question 8

Ellie is spending her entire income on goods X and Y. Her marginal utility from the last unit of X is 100 and the marginal utility from the last unit of Y that she consumes is 50. Ellie's utility is only maximized if

Accepted Answer

Ellie's utility is maximized when the marginal utility per dollar spent on each good is equal. Since the marginal utility from the last unit of X is twice that of Y, for her to maximize utility, the price of X must be twice that of Y to equalize the marginal utility per dollar spent on both goods.

Question 9

Refer to the information provided in Table 6.2 below to answer the question(s) that follow.
Table 6.2
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Candy Bars per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 40 & \
\hline 2 & 75 & \
\hline 3 & 100 & \
\hline 4 & 115 & \
\hline 5 & & 5 \
\hline \begin{array} { c } 
\text { Number of } \
\text { Hot Dogs per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 30 & \
\hline 2 & 54 & \
\hline 3 & 72 & \
\hline 4 & 84 & \
\hline 5 & & 6 \
\hline
\end{array}$$
-Refer to Table 6.2. The marginal utility of the second candy bar per day is

Accepted Answer

The answer of Refer to the information provided in Table...

Question 10

Refer to the information provided in Table 6.2 below to answer the question(s) that follow.
Table 6.2
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Candy Bars per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 40 & \
\hline 2 & 75 & \
\hline 3 & 100 & \
\hline 4 & 115 & \
\hline 5 & & 5 \
\hline \begin{array} { c } 
\text { Number of } \
\text { Hot Dogs per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 30 & \
\hline 2 & 54 & \
\hline 3 & 72 & \
\hline 4 & 84 & \
\hline 5 & & 6 \
\hline
\end{array}$$
-Refer to Table 6.2. The total utility of five candy bars per day is

Accepted Answer

The total utility of five candy bars per day is found by adding the marginal utility of the fifth candy bar (5) to the total utility of four candy bars (115), resulting in 120.

Question 11

Jon is consuming X and Y so that he is spending his entire income and MU_x/P_x = 4 and MU_y/P_y = 4. To maximize utility, he should consume

Accepted Answer

Jon is already maximizing his utility because the marginal utility per dollar spent on both goods X and Y is equal, which is a condition for utility maximization according to consumer theory.

Question 12

Sue is maximizing her utility. Her MU_x/P_x = 10 and MU_y = 40. Then the price of Y must be

Accepted Answer

The utility maximization condition states that for a consumer to maximize utility, the ratio of the marginal utility of good X to its price (MUx/Px) should equal the ratio of the marginal utility of good Y to its price (MUy/Py). Given MUx/Px = 10 and MUy = 40, to find Py when the ratios are equal, we set 10 = 40/Py, solving for Py gives Py = $4.

Question 13

If MU_x/P_x < MU_y/P_y, then

Accepted Answer

The given inequality suggests that the marginal utility per dollar spent on Y (MU_y/P_y) is greater than that for X (MU_x/P_x). This implies that reallocating spending from X to Y (spending a dollar less on X and a dollar more on Y) would increase the overall utility, as you get more utility per dollar spent on Y compared to X.

Question 14

Refer to the information provided in Table 6.1 below to answer the question(s) that follow.
Table 6.1
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Hamburgers per } \
\text { Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 30 & \
\hline 2 & 52 & \
\hline 3 & 67 & \
\hline 4 & 76 & \
\hline 5 & & 4 \
\hline \begin{array} { c } 
\text { Number of } \
\text { Sodas per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 20 & \
\hline 2 & 35 & \
\hline 3 & 47 & \
\hline 4 & 57 & \
\hline 5 & & 7 \
\hline
\end{array}$$
-Refer to Table 6.1. Diminishing marginal utility sets in after the ________ soda per day.

Accepted Answer

The answer of Refer to the information provided in Table...

Question 15

Ellen is spending her entire income on goods X and Y. Her marginal utility from the last units of X and Y that she consumes is 25. Ellen's utility is only maximized if

Accepted Answer

The marginal utility of a good is the additional utility that a consumer receives from consuming one more unit of that good. If the marginal utility of the last unit of a good is greater than the price of that good, then the consumer can increase their utility by consuming more of that good. In this case, the marginal utility of the last unit of both goods is the same, so Ellen can maximize her utility by consuming equal amounts of both goods.

Question 16

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

Accepted Answer

The answer of Refer to the information provided in Table...

Question 17

Refer to the information provided in Figure 6.9 below to answer the question(s) that follow.  Figure 6.9
-Refer to Figure 6.9. The marginal utility of the third video game rental is

Accepted Answer

Marginal utility refers to the additional satisfaction or utility that a consumer gains from consuming one more unit of a good or service. In this context, the marginal utility of the third video game rental would be the difference in total utility between renting three video games and renting two. Without the specific figure (Figure 6.9) to refer to, the correct answer is based on the assumption that the information provided in the choices is meant to reflect the scenario accurately. Thus, if the marginal utility of the third video game rental is given as an option, it is assumed to be the correct answer based on the choices provided.

Question 18

Jon is consuming X and Y so that he is spending his entire income and MU_x/P_x = 8 and MU_y/P_y = 4. To maximize utility, he should consume

Accepted Answer

To maximize utility, the consumer should equalize the marginal utility per dollar spent across all goods. Given that the marginal utility per dollar spent on X is 8 and on Y is 4, Jon should consume more of X (where he gets more utility per dollar spent) and less of Y to maximize his utility.

Question 19

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

Accepted Answer

The marginal utility of the third hamburger per day is calculated by subtracting the total utility of consuming two hamburgers (52) from the total utility of consuming three hamburgers (67), which equals 15.

Question 20

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

Accepted Answer

The total utility of five hamburgers per day is calculated by adding the marginal utility of the fifth hamburger (4) to the total utility of four hamburgers (76), resulting in 80.

Quiz 6: Household Behavior and Consumer Choice

Richard is consuming X and Y so that he is spending his entire income and MUx/Px = 6 and MUy/Py = 10. To maximize utility, he should

Refer to the information provided in Figure 6.9 below to answer the question(s) that follow. Figure 6.9 -Refer to Figure 6.9. The ________ video game rental has a marginal utility of eight.

Ellie is spending her entire income on goods X and Y. Her marginal utility from the last unit of X is 100 and the marginal utility from the last unit of Y that she consumes is 50. Ellie's utility is only maximized if

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

Sue is maximizing her utility. Her MUx/Px = 10 and MUy = 40. Then the price of Y must be

If MUx/Px < MUy/Py, then

Ellen is spending her entire income on goods X and Y. Her marginal utility from the last units of X and Y that she consumes is 25. Ellen's utility is only maximized if

Refer to the information provided in Figure 6.9 below to answer the question(s) that follow. Figure 6.9 -Refer to Figure 6.9. The marginal utility of the third video game rental is

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

Richard is consuming X and Y so that he is spending his entire income and MU_x/P_x = 6 and MU_y/P_y = 10. To maximize utility, he should

Jon is consuming X and Y so that he is spending his entire income and MU_x/P_x = 4 and MU_y/P_y = 4. To maximize utility, he should consume

Sue is maximizing her utility. Her MU_x/P_x = 10 and MU_y = 40. Then the price of Y must be

If MU_x/P_x < MU_y/P_y, then

Jon is consuming X and Y so that he is spending his entire income and MU_x/P_x = 8 and MU_y/P_y = 4. To maximize utility, he should consume