Exam 10: The Rational Consumer

Faced with two goods to buy,diamonds and silver,a utility-maximizing individual will buy according to which rule?

If Joe drinks iced tea while he is mowing his yard,he will probably derive a lower marginal utility from his sixth glass of iced tea than from his first glass.

The amount by which total utility changes when an additional unit of a good is consumed is called _____ utility.

Economists describe the satisfaction consumers receive from consuming goods and services as:

The optimal consumption bundle is the combination of goods that lies above the budget constraint.

Joe's budget line reflects the _____ available to Joe if he spends _____ of his income.

Gehrig's utility from the consumption of mangoes is measured by the level of satisfaction he gets from only the first mango he buys and eats.

The principle of diminishing marginal utility means that,when Sarah eats pizza,her satisfaction from the second slice of pizza is probably _____ that from the first.

Jie consumes three heads of broccoli and six bowls of rice each week,using up her weekly budget for these two items.The price of a head of broccoli is $2,and the price of rice is $4 per bowl.Jie's marginal utility from the last head of broccoli consumed is 4 utils,and her marginal utility from her last bowl of rice is 8 utils.If Jie wants to maximize her utility,she should:

Smedley,a careful utility maximizer,consumes peanut butter and ice cream.Assume that both peanut butter and ice cream are normal goods.Right after he achieves the utility-maximizing level of consumption of the two goods,the price of ice cream increases.To adjust to this event,he consumes _____ peanut butter and _____ ice cream.

Steven consumes staples and paper clips.He is maximizing his utility in consumption of both goods.The price of staples rises.After the change in price,Steven should consume _____ staples and _____ paper clips.

Suppose Sirach knows that the price of doughnuts is $3 and the price of cupcakes is $4.He also knows that the next doughnut he consumes will increase his total utility by 6 utils and the next cupcake will increase his total utility by 10 utils.Assuming he has enough money to buy either,Sirach should buy a doughnut next.

Use the following to answer question: -(Table: Marginal Utility per Dollar)Use Table: Marginal Utility per Dollar.If Damian has $9 to spend on potatoes and clams,then the utility-maximizing combination is _____ pound(s)of clams and _____ pound(s)of potatoes.

Use the following to answer question: -(Table: Consumer Equilibrium)Use Table: Consumer Equilibrium.Assume that the price of good X is $1 per unit and the price of good Y is $2 per unit,that you consume 4 units of good X and 2 units of good Y,and that you are spending all of your income.To maximize utility,assuming that the goods are divisible,you would consume _____ of X and _____ of Y.

Use the following to answer question: -(Figure: Budget Lines for Tea and Scones)Use Figure: Budget Lines for Tea and Scones.For months now,Agnes has had $20 per month to spend on tea and scones.The price of each cup of tea and each scone has been $1.Which chart shows what will happen to her budget line if the price of a scone rises to $2?

Utility is the:

Use the following to answer question: -(Figure and Table: The Budget Line)Use Figure and Table: The Budget Line.An increase in income would:

Use the following to answer question: -(Table: Alaina's Utility from Consuming Cups of Coffee)Use Table: Alaina's Utility from Consuming Cups of Coffee.Given the information in the table,Alaina's total utility from drinking coffee:

The assumption that a rational consumer seeks to maximize his or her utility implies that utility is measurable according to some objective scale.

At the optimal consumption bundle,the marginal utility derived from the last unit of each good purchased is always the same.