Exam 8: Utility and Demand

Billy Jean loves to read and she has decided that she will buy all of her books at the bookstore at the outlet mall.One day she is in Chapters and sees a book from the Globe and Mail Best Sellers list that she wants to read and she decides to buy it. Buying the book means that she will not be able to take her Mom out for coffee this week. Billy Jean's decision is an example of

Martha and Sarah have the same preferences,face the same prices,and have the same income.Sarah's utility is measured in units while Martha's is measured in units squared.Select the best response.

If a consumer spends all his income and his marginal utility per dollar is equal for all goods,then

Marginal utility theory predicts that a rise in the price of a banana results in

Samir consumes apples and bananas and is in consumer equilibrium.The marginal utility from his last apple is 10 and the marginal utility from his last banana is 5.If the price of an apple is $0.50,then what is the price of a banana?

According to the principle of diminishing marginal utility,as consumption of a good increases,total utility

For a consumer to maximize utility from a given income,

Use the table below to answer the following questions. Table 8.2.3 -Refer to Table 8.2.3.To attain consumer equilibrium,the first $4 of income is used to purchase

Harold can consume apples and oranges.He likes them equally well and currently is in consumer equilibrium.Then the price of oranges rises,while his income remains the same.What will happen to his consumption?

Use the table below to answer the following questions. Table 8.2.1 -Refer to Table 8.2.1.Consider Sam's utility from sailing and skiing.The price of sailing is $10 per hour and the price of skiing is $20 per hour;Sam's income to spend on these activities is $80.In consumer equilibrium,Sam will sail for

You are consuming hot dogs and Cokes and believe you are maximizing utility for your entire budget of $12.The price of a hot dog is $2 and the price of a Coke is $2.Suppose the price of hot dogs rises to $4 and the price of a Coke remains at $2.You adjust your consumption of hot dogs and Cokes and believe you are once again receiving maximum total utility from the meal.Which one of the following can you conclude?

A budget line is drawn with

If a consumer's income increases and if all goods are normal goods,

If income falls,then in the new consumer equilibrium

Ron starts out in consumer equilibrium,consuming two goods,X and Y.The price of Y rises.Immediately after the rise in price

Use the table below to answer the following questions. Table 8.2.2 -Refer to Table 8.2.2.What is the total utility if 3 bags of popcorn and 2 bottles of pop are consumed?

Sarah can consume either pizzas or hamburgers.The price of a hamburger is $1 and the price of a pizza is $5.Let MUh be the marginal utility of hamburgers and MUp be the marginal utility of pizzas.In consumer equilibrium,what must the ratio MUh/MUp equal?

Total utility equals

Use the table below to answer the following questions. Table 8.2.1 Windsurfing equipment rents for $10 per hour, snorkeling equipment for $5 per hour. -Consider Devon's total utility from snorkeling and windsurfing in Table 8.2.1.Suppose Devon's total income is $35.If the price of windsurfing rises to $20 per hour,what is Devon's elasticity of demand for windsurfing?

Use the table below to answer the following question. Table 8.1.2 -Table 8.1.2 gives total utilities for Jim and Sally.Which one of the following statements is true?