You have determined that the following utility values can be obtained by reading your Economics book. \[\begin{array} { | c | c | c | } \hline \text { Number of Chapters } & \text { Total Utility } & \text { Marginal Utility } \\ \hline 0 & 0 & \\ \hline 1 & 2 & \\ \hline 2 & 4 & \\ \hline 3 & 6 & \\ \hline 4 & 8 & \\ \hline 5 & 10 & \\ \hline 6 & 12 & \\ \hline \end{array}\] (a)Compute marginal utility. (b)Does the example illustrate the principle of diminishing marginal utility? Explain.

(a)The completed table: \[\begin{array}

If the price of Alpo increases from $0.50 to $1, Mr. Tightwad, a utility-maximizing consumer, would spend his $4 on which of the following? \[\begin{array} { c } \text { Alpo } \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { McBurgers }\\ \begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Cans } \\ \text { Consumed } \\ \text { per Day } \end{array} & \begin{array} { c } \text { Total utility (Units } \\ \text { uf utility) } \end{array} & \begin{array} { c } \text { McBur gers Consumed } \\ \text { per Day } \end{array} & \begin{array} { c } \text { Total utility (Units } \\ \text { d utility) } \end{array} \\ \hline 0 & 0 & 0 & 0 \\ \hline 1 & 7 & 1 & 16 \\ \hline 2 & 13 & 2 & 28 \\ \hline 3 & 16 & 3 & 36 \\ \hline 4 & 17 & 4 & 40 \\ \hline \end{array}\end{array}\]

A) 4 McBurgers B) 3 McBurgers and 1 can of Alpo C) 2 McBurgers and 2 cans of Alpo D) 1 McBurger and 3 cans of Alpo A) 4 McBurgers B) 3 McBurgers and 1 can of Alpo C) 2 McBurgers and 2 cans of Alpo D) 1 McBurger and 3 cans of Alpo

The following table lists the utility that Gwen receives from consuming bananas at $0.25 apiece. What is the total utility of consuming three bananas? $\begin{array}{|c|c|} \hline \text { Number of bananas } & \text { Total utility } \\ \hline 0 & 0 \\ \hline 1 & 10 \\ \hline 2 & 22 \\ \hline 3 & 32 \\ \hline 4 & 40 \\ \hline 5 & 46 \\ \hline \end{array}$

A) 46 B) 30 C) 8 D) 2 A) 46 B) 30 C) 8 D) 2

Exam 19: The Logic of Individual Choice: the Foundation of Supply and Demand

You have determined that the following utility values can be obtained by reading your Economics book. Number of Chapters Total Utility Marginal Utility 0 0 1 2 2 4 3 6 4 8 5 10 6 12 (a)Compute marginal utility. (b)Does the example illustrate the principle of diminishing marginal utility? Explain.

(Essay)

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Question 141

If the price of Alpo increases from $0.50 to $1, Mr. Tightwad, a utility-maximizing consumer, would spend his $4 on which of the following? Alpo McBurgers Cans Consumed per Day Total utility (Units uf utility) McBur gers Consumed per Day Total utility (Units d utility) 0 0 0 0 1 7 1 16 2 13 2 28 3 16 3 36 4 17 4 40

(Multiple Choice)

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Question 142

The following table lists the utility that Gwen receives from consuming bananas at $0.25 apiece. What is the total utility of consuming three bananas? Number of bananas Total utility 0 0 1 10 2 22 3 32 4 40 5 46

(Multiple Choice)

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Question 143

What is the principle of rational choice?

(Essay)

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Question 144

An assumption of economists' standard theory of choice is that:

(Multiple Choice)

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Question 145

Describe how the principle of diminishing marginal utility underlies the law of demand.

(Essay)

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Question 146

Refer to the graphs shown, which show indifference curve analysis with the associated demand curves. The best explanation for a movement from point D to point F is:

(Multiple Choice)

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Question 147

Suppose Jack purchases four rolls of brown paper for which he receives 100 units of total utility and two quarts of vinegar for which he receives 50 units of total utility. Assuming Jack maximizes utility, if the price of brown paper is $2 a roll, the cost of two quarts of vinegar must be:

(Multiple Choice)

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Question 148

Refer to the graphs shown, which show indifference curve analysis with the associated demand curves. The best explanation for a movement from point D to point E is:

(Multiple Choice)

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Question 149

What does rational behavior mean to an economist?

(Essay)

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Question 150

Refer to the graphs shown, which show indifference curve analysis with the associated demand curves. If a consumer is able to move from point B to point C, she is also able to move from point:

(Multiple Choice)

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Question 151

Refer to the graphs shown. Which of the following combinations of points best illustrates rational consumer choice assuming the consumer's budget is $60, the price of X is $3, and the price of Y is $3?

(Multiple Choice)

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Question 152

If marginal utility is declining but still positive, total utility is increasing.

(True/False)

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Question 153

The principle of diminishing marginal utility states that people don't enjoy consuming more of a good.

(True/False)

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Question 154

What is the principle of rational choice?

(Essay)

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Question 155

What two assumptions underlie economists' theory of rational choice?

(Essay)

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Question 156

What is the law of diminishing marginal rate of substitution? (Appendix)

(Essay)

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Question 157

What is the utility maximizing rule?

(Essay)

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Question 158

Using the indifference curve model, a demand for X curve is derived by allowing:

(Multiple Choice)

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Question 159

According to the principle of rational choice, a consumer should spend money on those goods which provide the most marginal utility per dollar.

(True/False)

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Question 160

Exam 19: The Logic of Individual Choice: the Foundation of Supply and Demand

You have determined that the following utility values can be obtained by reading your Economics book. Number of Chapters Total Utility Marginal Utility 0 0 1 2 2 4 3 6 4 8 5 10 6 12 (a)Compute marginal utility. (b)Does the example illustrate the principle of diminishing marginal utility? Explain.

The following table lists the utility that Gwen receives from consuming bananas at $0.25 apiece. What is the total utility of consuming three bananas? Number of bananas Total utility 0 0 1 10 2 22 3 32 4 40 5 46

What is the principle of rational choice?

An assumption of economists' standard theory of choice is that:

Describe how the principle of diminishing marginal utility underlies the law of demand.

Refer to the graphs shown, which show indifference curve analysis with the associated demand curves. The best explanation for a movement from point D to point F is:

Suppose Jack purchases four rolls of brown paper for which he receives 100 units of total utility and two quarts of vinegar for which he receives 50 units of total utility. Assuming Jack maximizes utility, if the price of brown paper is $2 a roll, the cost of two quarts of vinegar must be:

Refer to the graphs shown, which show indifference curve analysis with the associated demand curves. The best explanation for a movement from point D to point E is:

What does rational behavior mean to an economist?

Refer to the graphs shown, which show indifference curve analysis with the associated demand curves. If a consumer is able to move from point B to point C, she is also able to move from point:

Refer to the graphs shown. Which of the following combinations of points best illustrates rational consumer choice assuming the consumer's budget is $60, the price of X is $3, and the price of Y is $3?

If marginal utility is declining but still positive, total utility is increasing.

The principle of diminishing marginal utility states that people don't enjoy consuming more of a good.

What is the principle of rational choice?

What two assumptions underlie economists' theory of rational choice?

What is the law of diminishing marginal rate of substitution? (Appendix)

What is the utility maximizing rule?

Using the indifference curve model, a demand for X curve is derived by allowing:

According to the principle of rational choice, a consumer should spend money on those goods which provide the most marginal utility per dollar.

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