# Quiz 4: Consumer Behavior

Business

Q 1Q 1

Sonia says she prefers two theater tickets and one bottle of French wine to three games of bowling and one pitcher of draft beer. In this example, Sonia is demonstrating the _____ assumption of consumer behavior.
A) more is better than less
B) completeness and rankability
C) transitivity
D) diminishing marginal utility

Free

Multiple Choice

B

Q 2Q 2

Suppose that MU

_{Y}= 15, MU_{X}= 10, P_{Y}= $2, and P_{X}= $1. Which of the following statements is TRUE? A) The consumer is maximizing utility. B) The consumer could increase utility by giving up 1 unit of good Y for 2 units of good X. C) The consumer could increase utility by giving up 2 units of good X for 1 unit of good Y. D) The consumer is receiving more marginal utility per dollar from good Y than from good X.Free

Multiple Choice

B

Q 3Q 3

(Figure: Good Y and Good X IV) Which of the following changes could have rotated the budget constraint in the direction indicated by the arrow in the graph?
A) an increase in the price of good X
B) a decrease in the price of good Y
C) a decrease in income
D) an increase in the price of good Y

Free

Multiple Choice

D

Q 4Q 4

Randy likes baseball more than football, football more than basketball, and basketball more than baseball. Which assumption about consumer preferences does this violate?
A) completeness and rankability
B) more is better
C) transitivity
D) The more a consumer has of a particular good, the less she is willing to give up of something else to get even more of that good.

Free

Multiple Choice

Q 5Q 5

(Figure: Tomatoes and Carrots IV) Which of these indifference curves is convex to the origin?
A) U

_{1}B) U_{2}C) U_{3}D) U_{4}Free

Multiple Choice

Q 6Q 6

Martha loves to eat chili, especially an award-winning chili recipe that calls for using 2 tablespoons of chili powder for every 1 pound of ground buffalo. Which of the following utility functions could represent Martha's preferences, where U is a function of tablespoons of chili powder (P) and pounds of ground buffalo (B)?
A) U = min{2B, P}
B) U = min{0.50B, P}
C) U = 2P + B
D) U = 2PB

Free

Multiple Choice

Q 7Q 7

(Figure: Good Y and Good X III) The indifference curve _____ indicates that the two goods, X and Y, are relatively poor substitutes for one another, whereas the indifference curve _____ indicates that the two goods are close substitutes for one another.
A) U

_{1}; U_{3}B) U_{3}; U_{2}C) U_{2}; U_{1}D) U_{3}; U_{1}Free

Multiple Choice

Q 8Q 8

(Figure: Tomatoes and Carrots III) This figure violates the assumption:
A) of convex indifference curves.
B) of transitivity.
C) of rankability.
D) that the more you have of a good, the less you are willing to give up to get even more of it.

Free

Multiple Choice

Q 9Q 9

Kalini spends all of her income on movie tickets and groceries. Suppose Kalini is presented with two options: A and B. Option A gives her a voucher of $X that she can only spend on groceries. Option B gives her $X that she can spend on either or both of the goods (a transfer of cash). Assuming Kalini prefers Option B to Option A and purchases positive values of movie tickets and groceries, which of the following is correct?
A) Kalini values the choice that the cash transfer offers.
B) Kalini does not gain any utility by consuming groceries.
C) Kalini does not value the choice that the cash transfer offers.
D) Kalini does not gain any utility by consuming movie tickets.

Free

Multiple Choice

Q 10Q 10

(Figure: Coats and Sweaters I) Which of the following statements is FALSE? I. At point A, the consumer is willing to give up three winter coats for one wool sweater.
II) At point B, the consumer is willing to give up one winter coat for four wool sweaters.
III) At point A, the consumer is willing to give up three wool sweaters for one winter coat.
IV) At point B, the consumer is willing to give up four wool sweaters for one winter coat.
A) I only
B) I and II
C) III
D) IV

Free

Multiple Choice

Q 11Q 11

If a consumer's budget constraint has a slope that is less than -1:
A) the consumer gets more utility from good X than from good Y.
B) the price of good X is less than the price of good Y.
C) the consumer gets less utility from good X than from good Y.
D) the price of good X is greater than the price of good Y.

Free

Multiple Choice

Q 12Q 12

For the utility function U(X,Y) = 10X + 4Y, the marginal utility of X is:
A) 10X.
B) 10.
C) 10X + 4Y.
D) 10 + 4Y.

Free

Multiple Choice

Q 13Q 13

Mika spends all of her income on pizza and gasoline. Suppose Mika is presented with two options: A and B. Option A will subsidize gasoline by decreasing its price by 50%. Option B will increase Mika's income by the cost of the subsidy in Option A. Which of the following must be true?
A) Mika will always strictly prefer Option A to Option B.
B) Mika will always strictly prefer Option B to Option A.
C) Mika will never prefer Option A to Option B.
D) Mike will never prefer Option B to Option A.

Free

Multiple Choice

Q 14Q 14

Suppose that MRS

_{XY}= Y/X. As X increases: A) MRS_{XY}increases. B) MRS_{XY}decreases. C) MRS_{XY}remains constant. D) MRS_{XY}increases and then decreases.Free

Multiple Choice

Q 15Q 15

The equation for the marginal rate of substitution of good X for good Y (that is, MRS

_{XY}) is given by: A) ΔU(X,Y)/ΔX. B) -ΔY/ΔX. C) ΔY × ΔX. D) -X/Y.Free

Multiple Choice

Q 16Q 16

Hideki spends all of his money on movie tickets and groceries. Suppose Hideki is presented with two options: A and B. Option A gives him a voucher of $X that he can only spend on groceries. Option B gives him $X that he can spend on either or both of the goods. Which of the following is correct?
A) Hideki always prefers Option A to Option B.
B) Hideki can never be indifferent between Option A and Option B.
C) Hideki is always indifferent between Option A and Option B.
D) Hideki can prefer Option B to Option A but cannot prefer Option A to Option B.

Free

Multiple Choice

Q 17Q 17

Rohan is maximizing utility subject to his limited income. As a result, which of the following statements is TRUE?
A) The slope of the indifference curve is twice the slope of the budget constraint.
B) The indifference curve intersects the budget constraint at precisely two points.
C) The budget constraint is tangent to the indifference curve.
D) The MRS

_{XY}= P_{X}P_{Y}.Free

Multiple Choice

Q 18Q 18

Veronika's utility function for regular-flavored toothpaste (R) and mint-flavored toothpaste (M) is given by U = 2R + 4M. Which of the following statements is TRUE?
A) MRS

_{MR}= 2M/R. B) Veronika's indifference curves are vertical. C) Veronika's indifference curves are horizontal. D) Veronika is willing to give up two tubes of regular-flavored toothpaste for one tube of mint-flavored toothpaste.Free

Multiple Choice

Q 19Q 19

(Figure: Mushrooms and Spinach I) The consumer maximizes utility by consuming:
A) 7 mushrooms and no spinach.
B) 8 units of spinach and no mushrooms.
C) on indifference curve U

_{2}. D) approximately 4 mushrooms and 4 units of spinach.Free

Multiple Choice

Q 20Q 20

A consumer spends his limited income on three goods such that the MU

_{X}= 4, MU_{Y}= 4, MU_{Z}= 4; and P_{X}= 4, P_{Y}= 2, P_{Z}= 1. Which of the following statements is (are) TRUE? I) Because the marginal utilities of all three goods are equal, the consumer is maximizing utility. II) The consumer receives the most bang for the buck from good Z. III) The marginal utility per dollar spent is not equal across all three goods, so the consumer is not maximizing utility. A) I B) II C) III D) II and IIIFree

Multiple Choice

Q 21Q 21

Sofia spends all of her income on pizza and gasoline. Suppose Sophia is presented with two options: A and B. Option A will subsidize gasoline by decreasing its price by 50%. Option B will increase Sophia's income by the cost of the subsidy in Option A. Assuming Sophia strictly prefers Option B to Option A, which of the following must be true?
A) Sophia consumes at least some of each good.
B) Sophia gains more utility from pizza than gasoline.
C) Sophia gains more utility from gasoline than pizza.
D) Sophia only consumes gasoline.

Free

Multiple Choice

Q 22Q 22

For the utility function U(X,Y) = X

^{0.75}Y^{0.25}, the marginal utility of Y is: A) 0.75X^{0.75}Y^{0.25}. B) 0.25X^{0.75}Y^{0.25}. C) 0.75X^{-0.25}Y^{0.25}. D) 0.25X^{0.75}Y^{-0.75}.Free

Multiple Choice

Q 23Q 23

Mika's marginal rate of substitution of apples (A) for oranges (O) is 5 (MRS

_{AO}= 5). This information implies that: A) Mika is willing to trade away five apples for one more orange, holding her utility constant. B) Mika will move to a higher indifference curve if she trades away five apples for one more orange. C) Mika should own five times as many apples as oranges. D) the slope of the indifference curve is five and thus upward sloping.Free

Multiple Choice

Q 24Q 24

The utility function U = Y/X violates the assumption(s) of:
A) rankability.
B) completeness.
C) more is better.
D) rankability and completeness.

Free

Multiple Choice

Q 25Q 25

(Figure: Good Y and Good X V) For budget constraint 1, the price of good X and the price of good Y could equal _____, respectively.
A) $175 and $100
B) $80 and $140
C) $160 and $140
D) $6 and $4

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Multiple Choice

Q 26Q 26

A graph of the utility function U = 4Y + X would reveal that goods X and Y are:
A) perfect substitutes.
B) near substitutes.
C) perfect complements.
D) near complements.

Free

Multiple Choice

Q 27Q 27

(Figure: Good Y and Good X I) Which of the following statements is TRUE? I. The consumer prefers any point on indifference curve U

_{2}to any point on indifference curve U_{1}. II) The consumer receives 20% more satisfaction from consuming along indifference curve U_{2}than along indifference curve U_{1}. III) This consumer is not willing to give up units of good X for more units of good Y. A) I and III B) I C) II D) I and IIFree

Multiple Choice

Q 28Q 28

Ezra spends all of his income on pizza and gasoline. Suppose Ezra is presented with two options: A and B. Option A will subsidize gasoline by decreasing its price by 50%. Option B will increase Ezra's income by the cost of the subsidy in Option A. Which of the following is correct?
A) Ezra will never prefer Option A to Option B.
B) Ezra needs to spend all of his income on gasoline to prefer Option B.
C) Ezra needs to spend all of his income on pizza to prefer Option B to Option A.
D) Ezra would never be indifferent between Option A and Option B.

Free

Multiple Choice

Q 29Q 29

For the utility function U(X,Y) = X

^{0.5}Y^{0.5}, the marginal rate of substitution MRS_{XY}is: A) 0.5Y/X. B) 0.5X/Y. C) X/Y. D) Y/X.Free

Multiple Choice

Q 30Q 30

Suppose that the marginal utility of good Y = 2X

^{2}and the marginal utility of good X = 4XY. What is the slope of the indifference curve when Y = 7 and X = 2? Assume that good X is on the horizontal axis and good Y is on the vertical axis. A) 7 B) 0.143 C) -14 D) -0.143Free

Multiple Choice

Q 31Q 31

Yanas ratio of marginal utility for coffee and soda is 3:1, while the price ratio of coffee to soda is 1.5:1. Which of the following statements is (are) TRUE?
I) Coffee provides Yana with 3 times the marginal utility of soda.
II) Yana could increase utility by decreasing her consumption of coffee by 3 units and increasing her consumption of soda by 1.5 units.
III) Yana could increase utility by decreasing her consumption of soda by 3 units and increasing her consumption of coffee by 2 units.
IV) Yana could increase utility by decreasing her consumption of coffee by 1 unit and increasing her consumption of soda by 3 units.
A) IV only
B) I and II
C) I and III
D) III only

Free

Multiple Choice

Q 32Q 32

For the utility function U(X,Y) = 6X + Y

^{0.5}, the marginal utility of Y is: A) 6X + 0.5Y^{-0.5}. B) 6 + 0.5Y^{-0.5}. C) Y^{-0.5}. D) 0.5Y^{-0.5}.Free

Multiple Choice

Q 33Q 33

The consumer's utility function for goods X and Y is U = 3X + 15Y. Good X is placed on the x-axis and good Y is placed on the y-axis. Which of the following statements is TRUE?
I) The marginal utility of good Y is 15.
II) The MRS

_{XY}= 5. III) The consumer is always willing to trade away 5 units of good X for 1 unit of good Y. A) I and II B) II only C) I and III D) I, II, and IIIFree

Multiple Choice

Q 34Q 34

Ahmed spends all of his money on movie tickets and groceries. Suppose Ahmed is presented with two options: A and B. Option A gives him a voucher of $X that he can only spend on groceries. Option B gives him $X that he can spend on either or both of the goods. Which of the following is correct assuming Ahmed is indifferent between the two options?
A) Ahmed spends at least $X on groceries.
B) Ahmed spends less than $X on groceries.
C) Ahmed must be indifferent between movie tickets and groceries.
D) Ahmed spends his entire income on movie tickets.

Free

Multiple Choice

Q 35Q 35

Suppose that U = U(P, M), where P and M are peanuts and marshmallows. The marginal utility of marshmallows, MU

_{M}, is given by: A) P + M. B) P/M. C) ΔU(P, M)/ΔM. D) ΔU(P, M) × ΔM.Free

Multiple Choice

Q 36Q 36

Gael's utility function for trout (T) and salmon (S) is given by U = ST, where the MU

_{T}= S and MU_{S}= T. Which pair of consumption bundles lies on the same indifference curve? A) bundles of (S = 2 and T = 4) and (S = 3 and T = 3) B) bundles of (S = 5 and T = 5) and (S = 25 and T = 1) C) bundles of (S = 10 and T = 2) and (S = 5 and T = 1) D) bundles of (S = 8 and T = 6) and (S = 7 and T = 10)Free

Multiple Choice

Q 37Q 37

Suppose that Maria cares only about shoes and clothes. Her utility function is U = S

^{0.5}C^{0.5}, where S is the number of pairs of shoes and C is the number of clothing items that she owns. The price of shoes is $80, and the price of clothes is $100. Suppose that Maria must have 1,000 units of utility and wants to achieve this level of utility with the lowest possible expenditure. How can Maria's expenditure minimization problem be expressed as a Lagrangian equation? A) B) C) D)Free

Multiple Choice

Q 38Q 38

(Figure: Good Y and Good X II) What type of good is good X, assuming a person increases the level of happiness when consuming more of good Y?
A) perfect substitute
B) perfect complement
C) bad
D) neutral good

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Multiple Choice

Q 39Q 39

Sofia's utility is a function of golf (G) and music lessons (M), where MU

_{G}= 1/G and MU_{M}= 1/M. What is MRS_{GM}when M = 10 and G = 4? A) 2.5 B) 14 C) 0.4 D) 6Free

Multiple Choice

Q 40Q 40

Louis's utility function is U = 10X + 6Y. Louis has a budget of $60 to spend on goods X and Y. The price of good X is $3 and the price of good Y is $2. How many units of good X and good Y does Louis purchase?
A) X = 20 and Y = 0
B) X = 0 and Y = 10
C) X = 30 and Y = 0
D) X = 10 and Y = 20

Free

Multiple Choice

Q 41Q 41

Suppose that U = min{2X, 0.5Y}, where X is units of good X and Y is units of good Y. The price of good X is $1 and the price of good Y is $2. What is the minimum expenditure necessary to achieve a utility level of 100?
A) $333.33
B) $550
C) $1,200
D) $450

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Multiple Choice

Q 42Q 42

Sofia's utility is a function of golf (G) and music lessons (M), where MU

_{G}= 1/G and MU_{M}= 1/M. What is the equation for the marginal rate of substitution of music lessons for golf (MRS_{GM})? A) GM B) M/G C) G/M D) M - GFree

Multiple Choice

Q 43Q 43

Juanita spends all of her income on movie tickets and groceries. Suppose Juanita is presented with two options: A and B. Option A gives her a voucher of $X that she can only spend on groceries. Option B gives her $X that she can spend on either or both of the goods. Assuming Juanita prefers Option B to Option A, which of the following is correct?
A) Juanita spends her entire income on groceries.
B) Juanita spends less than $X on groceries.
C) Juanita spends more than $X on groceries, but still buys some movie tickets.
D) Juanita would never prefer Option B to Option A.

Free

Multiple Choice

Q 44Q 44

Suppose that Arthur cares only about video games and coffee. His utility function is U = VC, where V is the number of video games that he plays and C is the number of cups of coffee that he drinks. The price of video games is $50, and the price of coffee is $3. Arthur has a budget of $800. Which levels of V and C maximize Arthur's utility?
A) V = 10 and C = 100
B) V = 13 and C = 50
C) V = 16 and C = 0
D) V = 8 and C = 133.33

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Multiple Choice

Q 45Q 45

(Figure: Good Y and Good X V) Suppose the budget constraint shifted from constraint 2 to constraint 1. What could have caused this change?
A) a decrease in income
B) a decrease in the price of good X relative to that of good Y
C) a decrease in income and an increase in the price of good X relative to that of good Y
D) an increase in the price of good X and no change in the price of Y

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Multiple Choice

Q 46Q 46

Which of the following is NOT a result of completeness and rankability?
I) A person prefers one consumption bundle to another.
II) A person is indifferent between two consumption bundles.
III) A person likes jelly beans more than hamburgers.
A) I
B) II
C) III
D) None of the above

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Multiple Choice

Q 47Q 47

Beth has $400 of income to spend on e-books (E), priced at $20 per book, and exercise classes called Zumba (Z), priced at $16 per class. Which of the following consumption bundles is infeasible?
A) E = 20 and Z = 0
B) E = 2 and Z = 22
C) E = 10 and Z = 13
D) E = 8 and Z = 15

Free

Multiple Choice

Q 48Q 48

(Figure: Video Games and Guitars I) _____ is willing to give up a lot guitars for a small number of video games, and _____ is willing to give up a lot of video games for a small number of guitars.
A) John; Paul
B) Paul; John
C) Paul; Paul
D) John; John

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Multiple Choice

Q 49Q 49

(Figure: Tomatoes and Carrots I) Joanne's utility function is U = TC, where T is baskets of tomatoes and C is bags of carrots. One of Joanne's indifference curves will go through points:
A) A, B, and F.
B) B, D, and E.
C) A, D, and E.
D) B, C, and F.

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Multiple Choice

Q 50Q 50

(Figure: Pineapples and Oranges I) This figure shows the level of happiness that Sam receives when consuming pineapples and oranges. Sam's grandmother, who is visiting from Florida, gives Sam 10 oranges and 1 pineapple. According to his levels of happiness in consuming pineapples and oranges, Sam will be willing to:
A) trade away more than one orange for an additional pineapple.
B) trade lots of pineapples for an additional orange.
C) trade his only pineapple for one more orange.
D) give up all of his oranges for four more pineapples.

Free

Multiple Choice

Q 51Q 51

Maggie prefers cheese to crayons, and she prefers crayons to coconuts. To satisfy the assumption of _____, Maggie must also prefer _____.
A) rankability; cheese to coconuts
B) transitivity; cheese to coconuts
C) transitivity; coconuts to cheese
D) rankability; coconuts to cheese

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Multiple Choice

Q 52Q 52

The consumer's budget constraint is $6 = 0.50G + P, where G is packs of gum and P is bags of pretzels. The marginal utility of pretzels is MU

_{P}= G^{0.5}, and the marginal utility of gum is MU_{G}= 0.5G^{-0.5}P. The consumer's utility function is U = G^{0.5}P. The utility-maximizing bundle consists of _____ packs of gum and _____ bags of pretzels. A) 8; 2 B) 4; 4 C) 2; 5 D) 6; 3Free

Multiple Choice

Q 53Q 53

Suppose a consumer spends all income on goods X and Y. Suppose the price of good Y increases and the consumer's income decreases. Which of the following must be true?
A) The amount of good Y that the consumer can purchase increases.
B) The amount of good X that the consumer can purchase increases.
C) The amount of good X that the consumer can purchase decreases and the amount of good Y that the consumer can purchase increases.
D) The amounts of good X and good Y that the consumer can purchase decrease.

Free

Multiple Choice

Q 54Q 54

(Figure: Coats and Sweaters II) What is the marginal rate of substitution between points A and B?
A) 4
B) 6
C) 2
D) 8

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Multiple Choice

Q 55Q 55

(Figure: Coats and Sweaters II) Suppose that the consumer moves from point A to point B along her indifference curve. If the marginal utility of winter coats is 25, the marginal utility of wool sweaters is:
A) 12.5.
B) 2.
C) 16.
D) 50.

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Multiple Choice

Q 56Q 56

Suppose a consumer spends all income on goods X and Y. Suppose the price of good X decreases and the consumer's income decreases. Which of the following must be true?
A) The amount of good Y that the consumer can purchase decreases.
B) The amount of good X that the consumer can purchase decreases.
C) Both A and B.
D) None of the above.

Free

Multiple Choice

Q 57Q 57

Joaquim has new babies at home, so he cares only about diapers and wipes. Joaquim's preferences are represented by U(D,W) = DW, where D is the number of diapers and W is the number of wipes that Joaquim purchases. Joaquim's preferences can also be represented by this utility function:
A) U(D,W) = D

^{0.5}W^{0.5}B) U(D,W) = D^{0.5}+ W^{0.5}C) U(D,W) = D + W D) U(D,W) = 0.5D + 0.5WFree

Multiple Choice

Q 58Q 58

Kyle's utility function is U = 4X + 3.7Y, where X is units of good X and Y is units of good Y. What is the marginal utility of good X?
A) 4X + 3.7
B) 4
C) 0.3X
D) U/4

Free

Multiple Choice

Q 59Q 59

Suppose that Lloyd cares only about shoes and clothes. Lloyd's utility function is U = S

^{0.5}C^{0.5}, where S is the number of pairs of shoes and C is the number of clothing items that Lloyd owns. The price of shoes is $80, and the price of clothes is $100. Lloyd has a budget of $3200. Which levels of S and C maximize Lloyd's utility? A) S = 40 and C = 0 B) S = 16 and C = 20 C) S = 20 and C = 16 D) S = 10 and C = 24Free

Multiple Choice

Q 60Q 60

Lars spends all of his income on pizza and gasoline. Suppose Lars is presented with two options: A and B. Option A will subsidize gasoline by decreasing its price by 50%. Option B will increase Lars's income by the cost of the subsidy in Option A. Assuming Lars is indifferent between Option A and Option B, which of the following is correct?
A) Lars gains more utility from Option A than Option B.
B) Lars purchases at least some pizza and at least some gasoline.
C) Lars gains more utility from Option B than Option A.
D) Lars must spend all of his money on gasoline.

Free

Multiple Choice

Q 61Q 61

(Figure: Good Y and Good X V) For budget constraint 2, suppose that the price of good Y is $90 per unit. What is the price of good X?
A) $92
B) $88
C) $81
D) $102.24

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Multiple Choice

Q 62Q 62

Suppose that Eugene cares only about action figures and ice cream. His utility function is U = A

^{0.33}C^{0.67}, where A is the number of action figures he owns and C is the number of scoops of ice cream he eats. The price of action figures is $10, and the price of ice cream is $4. Eugene has a budget of $100. How can Eugene's utility maximization problem be expressed as a Lagrangian equation? A) B) C) D)Free

Multiple Choice

Q 63Q 63

Suppose a consumer spends all income on goods X and Y. Suppose the price of good X increases and the consumer's income increases. Which of the following must be true?
A) The amount of good X that the consumer can purchase increases.
B) The amount of good Y that the consumer can purchase increases.
C) Both A and B.
D) None of the above.

Free

Multiple Choice

Q 64Q 64

Sarinda consumes crab cakes and tuna. Sarinda's utility increases with the consumption of crab cakes, but her utility neither increases nor decreases with the consumption of tuna. Assuming tuna is on the x-axis and crab cake is on the y-axis, what do Sarinda's indifference curves look like?
A) horizontal lines
B) vertical lines
C) upward-sloping lines from the origin
D) downward-sloping lines

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Multiple Choice

Q 65Q 65

Which assumption(s) allow(s) us to draw indifference curves?
A) cardinal measurement and cardinal ranking
B) rankability and completeness
C) that the more we have of a good, the less we are willing to give up to get even more of it
D) free disposal and more is better

Free

Multiple Choice

Q 66Q 66

Suppose that Arthur cares only about video games and coffee. His utility function is U = VC, where V is the number of video games that he plays and C is the number of cups of coffee that he drinks. The price of video games is $50, and the price of coffee is $3. Arthur has a budget of $800. What is the Lagrangian equation that can be used to solve Arthur's utility maximization problem?
A)
B)
C)
D)

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Multiple Choice

Q 67Q 67

The utility function for Raj is U = min{4M, T}, where M is pints of milk and T is cans of tuna. Raj has $90 to spend on tuna (priced at $2 per can) and milk (priced at $1 per pint). What is Raj's utility-maximizing consumption bundle?
A) M = 30 and T = 30
B) M = 40 and T = 25
C) M = 10 and T = 40
D) M = 15 and T = 65

Free

Multiple Choice

Q 68Q 68

Suppose that MU

_{X}= Y and MU_{Y}= X. The prices of good X and good Y are $5 and $4, respectively. How many units of good X does the consumer buy if she has $410 of income? A) 15 B) 41 C) 25 D) 33Free

Multiple Choice

Q 69Q 69

(Figure: Tomatoes and Carrots II) Which of the following statements is FALSE given the two goods tomatoes and carrots?
A) Indifference curve U

_{2}provides a higher level of utility than indifference curve U_{1}. B) Bundle C is preferred to bundle D. C) Bundle A is preferred to bundle C. D) The consumer is indifferent between bundle A and bundle D.Free

Multiple Choice

Q 70Q 70

Suppose that Eugene cares only about action figures and ice cream. His utility function is U = A

^{0.33}C^{0.67}, where A is the number of action figures he owns and C is the number of scoops of ice cream he eats. The price of action figures is $10, and the price of ice cream is $4. Eugene has a budget of $100. Which levels of A and C maximize Eugene's utility? A) A = 6.66 and C = 8.33 B) A = 3.33 and C = 16.66 C) A = 10 and C = 0 D) A = 6 and C = 10Free

Multiple Choice

Q 71Q 71

(Figure: Left Shoes and Right Shoes I) Nikolai enjoys eating sandwiches that have one slice of meat and two slices of cheese. His indifference curves are presented in Figure 4.12. Based on the shape of Nikolai's indifference curves, meat and cheese are:
A) perfect substitutes.
B) perfect complements.
C) consumed in changing proportions.
D) neither perfect substitutes nor perfect complements.

Free

Multiple Choice

Q 72Q 72

Which of the following statements is FALSE?
A) Utility is the difference between the consumer's assets and her liabilities.
B) One person's utility cannot be compared to another person's utility.
C) A utility function gives the relationship between a consumer's well-being and the quantity of goods consumed.
D) Inputs into a utility function may include wool socks, DVD rentals, roller coaster rides, asparagus, and Sunday church services.

Free

Multiple Choice

Q 73Q 73

The additional utility obtained from consuming an extra unit of a good is called:
A) marginal utility.
B) marginal rate of substitution.
C) disutility.
D) population-averaged utility.

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Multiple Choice

Q 74Q 74

Nikolai enjoys eating sandwiches that have one slice of meat and two slices of cheese. Which set of market bundles provides Nikolai with the highest level of utility?
A) 4 slices of meat and 4 slices of cheese
B) 3 slices of meat and 6 slices of cheese
C) 2 slices of meat and 2 slices of cheese
D) 1 slice of meat and 2 slices of cheese

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Multiple Choice

Q 75Q 75

For the utility function U(X,Y) = 2X + 10Y, the marginal rate of substitution MRS

_{XY}is: A) 1/5. B) 5. C) X/5Y. D) 5Y/X.Free

Multiple Choice

Q 76Q 76

Suppose a consumer spends all income on goods X and Y. Suppose the price of good Y decreases and the consumer's income increases. Which of the following must be true?
A) The amount of good Y that the consumer can purchase decreases.
B) The amount of good X that the consumer can purchase decreases.
C) The amount of good X that the consumer can purchase decreases and the amount of good Y that the consumer can purchase increases.
D) The amounts of good X and good Y that the consumer can purchase increase.

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Multiple Choice

Q 77Q 77

Allen earns $1,000 per week and purchases healthcare (H) goods at $200 per unit and non-healthcare (N) goods at $50 per unit.
a. What is the equation for Allen's budget constraint?
b. Graph Allen's budget constraint.

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Q 78Q 78

The marginal utility for a pair of black socks is 4 and the marginal utility for a pair of white socks is 1.
a. What is the MRS

_{WB}? b. If the consumer traded 8 pairs of white socks for 1 pair of black socks, what would happen to the consumer's utility?Free

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Q 79Q 79

Peter's utility function is U = 5X + 2Y. What is Peter's marginal utility of good X and good Y? Interpret your answer.

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Q 80Q 80

Parker consumes goods X and Y. Her utility function is U = XY, which means that MU

_{X}= Y and MU_{Y}= X. Prove that Parker's utility function satisfies all four assumptions of consumer preferences.Free

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Q 81Q 81

Ivy claims that if a consumer is maximizing utility and happens to be purchasing equal quantities of good X and good Y, the MRS

_{XY}must equal 1. Prove this claim incorrect by drawing an appropriate budget constraint and indifference curve.Free

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Q 82Q 82

Esther has an income of $80, and she consumes pizza (P) and soda (S). The price of pizza is $10, and the price of soda is $4.
a. Graph Esther's budget constraint.
b. Graph Esther's budget constraint assuming that there is a buy-one-get-one-free pizza special.
c. Graph Esther's budget constraint assuming that there is a buy-two-get-one-free pizza special.

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Essay

Q 83Q 83

Mark's utility function over football tickets (F) and baseball tickets (B) can be expressed as U(F,B) = F + 5B.
a. Use calculus to argue whether Mark's preferences also can be represented by U(F,B) = 5FB.
b. If Mark's utility function is U(F,B) = F + 5B, is the Lagrangian approach an appropriate way to solve for his optimal quantities? Explain why or why not.
c. If Mark's utility function is U(F,B) = 5FB, is the Lagrangian approach an appropriate way to solve for his optimal quantities? Explain why or why not.

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Q 84Q 84

Larry's utility function is U = 4X + 12Y. Which property of consumer preferences does Larry's utility function violate? Explain your answer.

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Q 85Q 85

Manu wants to achieve a utility level of 100. His utility function is U = XY, where MU

_{X}= Y and MU_{Y}= X. What is the least amount of money (M) that Manu can spend to achieve a utility level of 100? Manu's budget constraint is M = 8X + 2Y.Free

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Q 86Q 86

Bianca purchases coffee (C), bagels (B) and juice (J). At her current levels of consumption, her MU

_{C}= 10, MU_{B}= 15, and MU_{J}= 20. The price of coffee is $2, the price of bagels is $3, and the price of juice is $4. Is Bianca maximizing her utility? If so, why? If not, what must she do to move her consumption toward equilibrium?Free

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Q 87Q 87

Jimi's utility function for guitars (G) and haircuts (H) is U = 1.05GH. Eddie's utility function for guitars and haircuts is U = GH + H

^{0.5}. Does Jimi or Eddie receive more satisfaction from consuming 10 guitars and 9 haircuts?Free

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Q 88Q 88

Cashews are sold in either 8-ounce (C

_{8}) or 16-ounce (C_{16}) cans. a. Write an equation that represents a person's utility function for C_{8}and C_{16}. b. What is the MRS? (Assume that 16-ounce cans are measured on the y-axis and 8-ounce cans are measured on the x-axis.)Free

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Q 89Q 89

Suppose that a consumer's utility function can be written U(X,Y) = XY

^{2}. a. Use calculus to determine whether this consumer's marginal rate of substitution MRS_{XY}is increasing or decreasing in X. b. Is this consumer's marginal rate of substitution MRS_{XY}increasing or decreasing in Y?Free

Essay

Q 90Q 90

A consumer buys coffee (C) for $3 each and bagels (B) for $1.50 each. If she has income of $40, what is the equation of her budget constraint? If a tax of $0.25 were placed on the purchase of bagels, what would be the equation of her new budget constraint?

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Essay

Q 91Q 91

Suppose that Ken cares only about bathing suits (B) and flip-flops (F). His utility function is U = B

^{0.8}F^{0.2}. The price of bathing suits is $30, and the price of flip-flops is $2. Ken has a budget of $150. a. What Lagrangian equation can be used to solve Ken's utility maximization problem? b. Derive the first-order conditions for the maximization problem. c. What is the solution to Ken's maximization problem?Free

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Q 92Q 92

David's utility is U = 10S + T, where S is rounds of sporting clays and T is rounds of trap (sporting clays and trap are both shotgun sports).
a. Graph David's indifference curve for U = 10.
b. What type of goods are sporting clays and trap?

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Q 93Q 93

Ines considers Titleist (T) and Callaway (C) golf balls perfect substitutes. Her utility function is U = 10T + 8C. A sleeve of Titleist is priced at $12, compared to $10 for Callaway balls. What is Ines's utility-maximizing bundle of golf balls? Assume that Ines can spend $120.

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Q 94Q 94

Nikolai consumes sandwiches in a combination of one unit of meat and two slices of cheese. Draw the Nikolai's indifference curves.

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Q 95Q 95

A consumer's utility function is U(X,Y) = min(2X,3Y). Will the Lagrangian approach be relevant for solving for the consumer's optimal bundle? Why or why not?

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Q 96Q 96

Alice's utility function over toys (T) and games (G) can be expressed as U(T,G) = 2TG.
a. What is her marginal utility of toys?
b. What is her marginal utility of games?
c. What is her marginal rate of substitution MRS

_{TG}?Free

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Q 97Q 97

(Figure: Utility Functions I) What, if any, property of utility functions is violated if:
a. the indifference curve goes through points A, C, and D?
b. the indifference curve goes through points B and E?
c. the indifference curve goes through points A, B, and D?

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Essay

Q 98Q 98

The utility function for a consumer is U = min{X, Y}. If the price of X is $10, the price of Y is $15, and the consumer has $200, this consumer will purchase _____units of X and _____units of Y in equilibrium.

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Essay

Q 99Q 99

Mark's utility function over football tickets (F) and baseball tickets (B) can be expressed as U(F,B) = F + 5B.
a. What is his marginal utility of football tickets?
b. What is his marginal utility of baseball tickets?
c. What is his marginal rate of substitution MRS

_{FB}?Free

Essay

Q 100Q 100

Darius's utility function is U = 6XY, where the MU

_{X}= 6Y and MU_{Y}= 6X. The prices of good X and good Y are $12 and $15, respectively. Suppose that Darius's indifference curve is tangent to his budget constraint, where he is consuming 20 units of good X. How many units of good Y must Darius be consuming?Free

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Q 101Q 101

(Figure: Concert Tickets and Movie Tickets I) Use the graph to answer the following questions.
a. What is the marginal rate of substitution at 3 concert tickets and 8 movie tickets?
b. If the consumer's income decreases by 10% and the price of both goods decreases by 10%, how many concert and movie tickets will the consumer purchase?
c. If the price of movie tickets doubles, what does the marginal rate of substitution equal at the new utility-maximizing point?

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Essay

Q 102Q 102

Hong's utility function over toys (T) and games (G) can be expressed as U(T,G) = 2TG. Can Hong's preferences also be represented by U(T,G) = 2T

^{2}G^{2}?Free

Essay

Q 103Q 103

Melissa has the utility function U = TC for bundles of tea (T) and coffee (C), with MU

_{T}= C and MU_{C}= T. (Assume tea will be on the vertical axis.) She has $120, with the price of tea being $8 and the price of coffee being $4. Melissa will buy _____cups of tea and _____cups of coffee in equilibrium.Free

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Q 104Q 104

The ideal pheasant shell requires that lead shot (L) and gunpowder (G) be used in the following fixed proportion: 1 ounce of lead shot to 18 grains of gunpowder. Graph an indifference curve for 25 shells.

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Q 105Q 105

Graph Sherman's indifference curve for beer and wine, assuming he has a strong preference for wine. Graph Rodger's indifference curve for beer and wine, assuming he has a very strong preference for beer.

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Q 106Q 106

Ezra's utility function is U = XY, where MU

_{X}= Y and MU_{Y}= X. In Lancaster, Pennsylvania, Ezra's income would equal $500, and the prices of good X and good Y are $5 and $5, respectively. In Washington, D.C., Ezra's income would equal $800, and the prices of good X and good Y are $8 and $10, respectively. Where should Ezra live? Show your work.Free

Essay

Q 107Q 107

Mickey loves cheese and crackers, consuming 2 ounces of cheese with every cracker he eats. Draw Mickey's indifference curve, using a well-labeled diagram.

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Essay

Q 108Q 108

Suppose that U = XY

^{0.5}. Which of the following bundles lie on the same indifference curve? bundle A: (X = 10, Y = 9) bundle B: (X = 9, Y = 16) bundle C: (X = 12, Y = 9) bundle D: (X = 3, Y = 100) bundle E: (X = 6, Y = 25) bundle F: (X = 6, Y = 36)Free

Essay

Q 109Q 109

Suppose that the marginal utility of good X and good Y is given by the following equations:
MU

_{X}= 1/(X + 10) MU_{Y}= 1/Y a. As more units of good X are consumed, what happens to utility and marginal utility of good X? b. What is the value of MRS_{XY}?Free

Essay

Q 110Q 110

Suppose that Malaki cares only about beef (B) and fish (F). His utility function is U = B

^{0.4}F^{0.6}. The price of beef is $5, and the price of fish is $10. Malaki has a budget of $100. a. What Lagrangian equation can be used to solve Malaki's utility maximization problem? b. Derive the first-order conditions for the maximization problem. c. What is the solution to Bruce's maximization problem?Free

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Q 111Q 111

Draw an indifference curve for the utility function U = 0.5XY when utility equals 5. Identify four consumption bundles on the indifference curve along with their respective values of X and Y.

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Essay

Q 112Q 112

A consumer is consuming a bundle of goods in which her MRS

_{XY}is greater than P_{X}/P_{Y}. a. In a well-labeled diagram, show this situation using a budget constraint and indifference curve. b. Is the consumer maximizing utility? If not, what should she do to maximize utility?Free

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Q 113Q 113

Missy's utility increases with the size of her apartment. However, Missy is willing to sacrifice some apartment space if she can live closer to the beach. Draw Missy's indifference curves.

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Q 114Q 114

Freddy's utility function for pizza (P) and tacos (T) is U = PT. Graph Freddy's indifference curve, using a well-labeled diagram.

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Q 115Q 115

The utility function for a consumer is U = min{0.25X, Y}. What would be the marginal rate of substitution for this consumer in equilibrium?

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Essay

Q 116Q 116

The utility function for a consumer is U = XY/(X + Y), where the MU

_{X}= Y^{2}/(X + Y)^{2}and MU_{Y}= X^{2}/(X + Y)^{2}. a. What is the slope of the indifference curve when X = 3.75 and Y = 3.75? b. What is the marginal rate of substitution when X = 4 and Y = 16?Free

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Q 117Q 117

Belle likes to wear either sandals or Crocs, but she always receives 3 times as much marginal utility from an additional pair of Crocs as from an additional pair of sandals. Draw Belle's indifference curve, using a well-labeled diagram.

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Essay

Q 118Q 118

Bucky has $20 to spend on bowling and billiards. The prices of bowling and billiards are $4 and $1 per game, respectively. Graph Bucky's budget constraint, assuming he has a coupon for two free games of bowling. Place bowling on the x-axis and billiards on the y-axis.

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Q 120Q 120

A consumer has U = X

^{0.5}Y^{0.5}for a utility function, with MU_{x}= 0.5 X^{-0.5}Y^{0.5}and MU_{y}= 0.5 X^{0.5}Y^{-0.5}. If she has income of $100, the price of X is $5, and the price of Y is $10, this consumer will use _____units of X and _____units of Y in equilibrium.Free

Essay

Q 121Q 121

Justin buys water (W) at $2 per gallon and food (F) at $10 per unit. Justin has an income of $50. Suppose that the government imposes a tax on water of $1 for each gallon consumed beyond 10 gallons. Graph Justin's budget constraint with water on the y-axis and food on the x-axis.

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Essay

Q 122Q 122

Suppose that U = min{2X, Y}, where X is units of good X and Y is units of good Y. The price of good X is $4, and the price of good Y is $7. What is the minimum expenditure necessary to achieve a utility level of 100?

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Essay

Q 123Q 123

Suppose that Jana cares only about apples and lettuce. Her utility function is U = A

^{0.5}L^{0.5}, where A is the number of apples and L is the number of heads of lettuce that she consumes. The price of apples is $1, and the price of lettuce is $4. Suppose that Jana must have 100 units of utility and wants to achieve this level of utility with the lowest possible expenditure. a. How can Jana's expenditure minimization problem be expressed as a Lagrangian equation? b. Derive the first-order conditions for Jana's minimization problem. c. What is the solution to Jana's minimization problem? d. How much does this optimal solution cost?Free

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Q 124Q 124

Saja's utility function over toys (T) and games (G) can be expressed as U(T,G) = 2TG. Use calculus to determine whether Saja's indifference curves are convex.

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Essay

Q 125Q 125

Hira likes to shop at Beach Books, where a book is priced at $10. She also likes to shop at Busy Beans, where a latte is priced at $5. Hira has an income of $60.
a. Graph Hira's budget constraint, placing books on the x-axis and lattes on the y-axis.
b. Suppose that Hira's grandmother gives her a cash gift of $20. Graph Hira's budget constraint.
c. Now, suppose that in lieu of the cash gift of $20, Hira's grandmother gives her a $20 gift card to Busy Beans. Graph Hira's budget constraint.

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Essay

Q 126Q 126

Bertha's utility function for soccer balls (S) and tennis balls (T) is U = ST + 5S. Find five consumption bundles that give Bertha exactly 100 units of utility.

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Q 127Q 127

A consumer buys coffee (C) for $3 each and bagels (B) for $1.50 each. She has income of $40. If the coffee shop limits the number of bagels that a customer may purchase to 6, what is the equation of her budget constraint?

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Q 128Q 128

Pedro loves leather belts but neither likes nor dislikes additional silk ties. Draw Pedro's indifference curve, using a well-labeled diagram.

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Q 129Q 129

Suppose that Defne's MU

_{X}= Y^{2}and MU_{Y}= 2XY. The price of good X is $10 and the price of good Y is $2. If Defne is consuming 8 units of good X and 16 units of good Y, is she maximizing utility? Explain your answer.Free

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Q 130Q 130

A consumer is using two goods (X and Y) so that her MRS is 4/3 and her relative price ratio is 7/8. Is the consumer maximizing her utility? If so, why? If not, what must she do to move her consumption toward equilibrium?

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