Exam 4: Consumer Behavior

(Figure: Pineapples and Oranges I) This figure shows the level of happiness that Sam receives when consuming pineapples and oranges. Sam's grandmother, who is visiting from Florida, gives Sam 10 oranges and 1 pineapple. According to his levels of happiness in consuming pineapples and oranges, Sam will be willing to:

Ezra's utility function is U = XY, where MU_X = Y and MU_Y = X. In Lancaster, Pennsylvania, Ezra's income would equal $500, and the prices of good X and good Y are $5 and $5, respectively. In Washington, D.C., Ezra's income would equal $800, and the prices of good X and good Y are $8 and $10, respectively. Where should Ezra live? Show your work.

(Figure: Tomatoes and Carrots II) Which of the following statements is FALSE given the two goods tomatoes and carrots?

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?

The utility function for a consumer is U = min{X, Y}. If the price of X is $10, the price of Y is $15, and the consumer has $200, this consumer will purchase _____units of X and _____units of Y in equilibrium.

The utility function for a consumer is U = min{0.25X, Y}. What would be the marginal rate of substitution for this consumer in equilibrium?

A consumer is consuming a bundle of goods in which her MRS_XY is greater than P_X /P_Y. a. In a well-labeled diagram, show this situation using a budget constraint and indifference curve. b. Is the consumer maximizing utility? If not, what should she do to maximize utility?

Maggie prefers cheese to crayons, and she prefers crayons to coconuts. To satisfy the assumption of _____, Maggie must also prefer _____.

Suppose that U = min{2X, 0.5Y}, where X is units of good X and Y is units of good Y. The price of good X is $1 and the price of good Y is $2. What is the minimum expenditure necessary to achieve a utility level of 100?

Freddy's utility function for pizza (P) and tacos (T) is U = PT. Graph Freddy's indifference curve, using a well-labeled diagram.

Mickey loves cheese and crackers, consuming 2 ounces of cheese with every cracker he eats. Draw Mickey's indifference curve, using a well-labeled diagram.

Sarinda consumes crab cakes and tuna. Sarinda's utility increases with the consumption of crab cakes, but her utility neither increases nor decreases with the consumption of tuna. Assuming tuna is on the x-axis and crab cake is on the y-axis, what do Sarinda's indifference curves look like?

Suppose that the marginal utility of good Y = 2X² and the marginal utility of good X = 4XY. What is the slope of the indifference curve when Y = 7 and X = 2? Assume that good X is on the horizontal axis and good Y is on the vertical axis.

Suppose a consumer spends all income on goods X and Y. Suppose the price of good X increases and the consumer's income increases. Which of the following must be true?

(Figure: Tomatoes and Carrots I) Joanne's utility function is U = TC, where T is baskets of tomatoes and C is bags of carrots. One of Joanne's indifference curves will go through points:

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

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

(Figure: Good Y and Good X I) Which of the following statements is TRUE? I. The consumer prefers any point on indifference curve U₂ to any point on indifference curve U₁. II) The consumer receives 20% more satisfaction from consuming along indifference curve U₂ than along indifference curve U₁. III) This consumer is not willing to give up units of good X for more units of good Y.

Ahmed spends all of his money on movie tickets and groceries. Suppose Ahmed 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 assuming Ahmed is indifferent between the two options?

The additional utility obtained from consuming an extra unit of a good is called: