Exam 5: Theory of Consumer Behavior

F Mary is consuming 3 hot dogs and 2 Cokes at the Bucs game. The marginal utility of the third hot dog is 60 utils and the marginal utility of the second Coke is 180 utils. The price of a hot dog is $1 and the price of a Coke is $4. From the information given, we can see that Mary consumed too many ________________ (hot dogs, Cokes) and too few ________________ (hot dogs, Cokes).

The marginal rate of substitution of X for Y is 3, the price of X is $4, and the price of Y is $2. -Is the consumer making the utility maximizing choice? ______. If not, the consumer should purchase more ______ and less ______.

Demand curves slope downward because

If the total utility of five units of X is 45 units of utility and the marginal utility of the fifth unit is 3, then

Sally consumes only two goods, A and B. The prices are P_A = $10 and P_B = $15. For the last units of each good the marginal utilities are MU_A = 30 and MU_B = 40. Sally should consume more ______ and less ______ because ____________ is greater than ____________. When Sally reaches equilibrium her MRS will be ______.

Use the following graph showing a consumer's budget line and some indifference curves to answer the following questions. The consumer's income is $600. -The price of Y is $______ and the price of X is $______. The consumer should buy _____ unit of X and ______ units of Y. In equilibrium the marginal rate of substitution is _____.

Use the following graph showing two budget lines, LR and LZ to answer the following questions. The consumer's income is $720. -For budget line LM the price of Y is $______ and the price of X is $______. The equation for budget line LM is _____________________.

An individual's demand curve for X

refer to the following figure that shows the effect of an INCREASE in the price of X. -The income effect of the price change is the change in the consumption of X from

refer to the following figure: The consumer's income is $2,600. -The total effect of the increase in the price of X is

Fill-in-the-Blank -The rate at which a consumer can substitute one good for another in the market is given by the ______ of the budget line and is equal to the __________ratio of the two goods.

The following figure shows a portion of a consumer's indifference map and budget lines. The price of good Y is $7 and the consumer's income is $700. Let the consumer begin in utility maximizing equilibrium at point A on indifference curve I. Next the price of good X changes so that the consumer moves to a new utility maximizing equilibrium at point B on indifference curve II. -Good X is a(an) ______ good.