Exam 7: Utility Maximization

The first Pepsi yields Craig 18 units of utility and the second yields him an additional 12 units of utility. His total utility from threecans of Pepsi is 38 units of utility. The marginal utility of the third Pepsi is

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

The table shows the marginal-utility schedules for goods A and B for a hypothetical consumer. The price of good A is $1, and the price of good B is $2. The income of the consumer is $8. If the price of B falls to $1, while the price of A and the consumer's income stay the same, what would be the utility-maximizing combination of goods A and B?

Total utility may be determined by

The substitution effect of a price decrease for a good causes an increase in the consumption of the good, regardless of whether the good is normal or inferior.

Which of the following statements about utility is true?

If total utility is increasing, then marginal utility

An indifference map implies that

All of the following would reduce property crime by increasing its "price," except

When a consumer shifts purchases from product X to product Y, the marginal utility of

The table below shows the utility schedule for a consumer of candy bars. Marginal utility becomes negative with the consumption of the

Suppose that Ms. Thomson is currently exhausting her money income by purchasing 10 units of A and 8 units of B at prices of $2 and $4, respectively. The marginal utility of the last units of A and B are 16 and 24, respectively. These data suggest that Ms. Thomson

"Consumer equilibrium" refers to the situation when the consumer is getting

In drawing a particular budget line, money income and the prices of the two products are fixed.

The substitution effect

The table shows a consumer's utility schedule. Marginal utility begins to diminish with the consumption of the

How can the utility-maximizing rule be used to explain the substitution and income effect?

Indifference curves are convex to the origin due to diminishing marginal rates of substitution.

Indifference curves and budget lines can be used to derive an individual's demand curve for a product.

Given the indifference curve and budget line above, this individual