Microeconomics Study Set 46

(Figure: Mushrooms and Spinach I) The consumer maximizes utility by consuming:

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?

The equation for the marginal rate of substitution of good X for good Y (that is, MRS_XY) is given by:

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)?

(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.

(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.

Rohan is maximizing utility subject to his limited income. As a result, which of the following statements is TRUE?

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.

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?

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?

If a consumer's budget constraint has a slope that is less than -1:

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.

Suppose that MU_Y = 15, MU_X = 10, P_Y = $2, and P_X = $1. Which of the following statements is TRUE?

Suppose that MRS_XY = Y/X. As X increases:

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?

For the utility function U(X,Y) = 10X + 4Y, the marginal utility of X is:

(Figure: Tomatoes and Carrots III) This figure violates the assumption:

(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?

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

Randy likes baseball more than football, football more than basketball, and basketball more than baseball. Which assumption about consumer preferences does this violate?