ECON EXAM 3

Suppose that the price of each apple is $1, and the marginal utility Adam can earn from one more apple is 8 util. Meanwhile the unit price of banana is $2, and the marginal utility Adam earns from one more banana is 10 util. To raise his total utility, Adam who is spending all his money income should buy:

HINT: If MUA/PA > MUB/PB, a rational consumer will choose to buy one more unit of product A.

• one more orange only if its price rises.

• one more orange.

• one more apple.

• one more apple only if its price rises.

Refer to the data above. The value for X is:

• 10

• 15

• 5

• 55

Tags

CCSS.HSA.SSE.A.1

CCSS.HSA.CED.A.1

CCSS.HSA.REI.B.3

If total utility is increasing, marginal utility:

will be increasing at an increasing rate.

is positive, but decreasing.

must also be increasing.

may be either positive or negative.

• will be increasing at an increasing rate.

• is positive, but decreasing.

• must also be increasing.

• may be either positive or negative.

Tags

CCSS.HSF.IF.B.4

CCSS.HSF.IF.B.6

CCSS.HSF.IF.C.7

Todd is a cattle rancher. In June and July he spent his clothing budget on jeans and cowboy hats. Each pair of jeans cost $50 and each hat cost $100. At Todd's utility-maximizing choice, his marginal utility from the last pair of jeans purchased is 200 util. This means that his marginal utility from the last cowboy hat purchased is:

HINT: Consumer equilibrium: MU of jeans / price of jeans = MU of hat / price of hat

• 550 util

• 500 util

• 450 util

• 400 util

Tags

CCSS.HSA.SSE.A.1

CCSS.HSA.CED.A.2

Refer to the data above. The value for Y is:

• 30

• 25

• 40

• 45

Tags

CCSS.HSA.SSE.A.1

CCSS.HSA.CED.A.1

If a rational consumer is in his/her equilibrium, which of the following conditions will hold true?

• The marginal utility of the last dollar spent on each good purchased will be the same.

• The total utility obtained from each good purchased will be the same.

• The marginal utility of each good purchased will be zero.

• MU_a = MU_b = MU_c = ... = MU_n.

Marginal utility can _______.

• be positive or negative, but not zero

• increase positively, but not negatively

• decrease, but not become negative

• be positive, negative, or zero

The term _________________ refers to the additional utility provided by one additional unit of consumption.

• added utility

• utility

• Giffen utility

• marginal utility

Bob budgets $40 a week for entertainment. He splits his time between going to the movies and going to the gym. Each movie costs $8 and each session at the gym also costs $4. The total utility from each of these activities is shown in the table below. Bob's utility maximizing point is:

• 5 movies; 5 gym workout sessions

• 3 movies; 4 gym workout sessions

• 1 movie; 3 gym workout sessions

• 7 movies; 6 gym workout sessions

Tags

CCSS.HSA.SSE.A.1

CCSS.HSA.CED.A.1

CCSS.HSA.CED.A.2

CCSS.HSA.CED.A.3

CCSS.HSA.REI.D.10

Refer to the data above. The value for Z is:

• 30

• 20

• -5

• 25

Tags

CCSS.HSA.SSE.A.1

CCSS.HSA.CED.A.1