Exam 3: A Consumers Constrained Choice

Lisa consumes only pizzas and burritos.In equilibrium,her marginal utility of pizza is 20 and her marginal utility of a burrito is 10.The price of a pizza is $4.What is the price of a burrito?

Convexity of indifference curves imply that consumers are willing to

If both prices increases by 50%,

If two bundles are on the same indifference curve,then

Which of the following is an example of the endowment effect?

If the utility function (U)between food (F)and clothing (C)can be represented as U = ,the marginal rate of substitution of clothing for food equals

Suppose Paul's utility depends on the amount of time spent playing on the Internet (x)and the amount of time playing video games (y),and his utility function is U(x,y)= 3x⁰.² y⁰.⁸ He has 15 hours of free time to spend on these two activities each week,and his goal is to maximize his utility. a.Set up the Lagrangian for this constrained maximization problem. b.What are the necessary conditions for the optimum from the Lagrangian? c.What is the optimal amount of time spent surfing the Internet and playing video games each week?

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.Which of the following bundles are in Max's opportunity set?

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.If the price of burger increases,

Joe subscribes to an Internet provider that charges $2 per hour.He has $100 per month to spend and is at equilibrium by buying 10 hours of Internet access and $80 worth of other goods.Draw the indifference curve and budget line.If the company switches to a $20 monthly fee for unlimited Internet access,is Joe better off?

Blutarsky is throwing a party at his Fraternity and is trying to choose what booze to buy.A bottle of vodka has four times the alcohol as a six-pack of beer.If Blutarsky only cares about the total amount of alcohol in his basket,what is his marginal rate of substitution of bottles of vodka for six-packs of beer? Devise a utility function to represent these preferences.

Lisa views pizzas and burritos as goods.If she prefers a bundle of four burritos and four pizzas to a bundle of four burritos and five pizzas,which property of consumer preference is violated? What change in the assumptions could lead a rational consumer to prefer the first bundle?

The principle that "More is better" results in indifference curves

By selecting a bundle where MRS = MRT,the consumer is saying

A consumer's budget line for food (F)and shelter (S)is represented as F = 250 - 5S.If this consumer's income increases by $10 and consumption of shelter remains unchanged,how many more units of shelter can be purchased at most?

All of the following utility functions rank bundles (q₁,q₂)in the same order except for which one?

Diminishing marginal rate of substitution can be seen when indifference curves

If the utility function (U)between food (F)and clothing (C)can be represented as U = ,holding the consumption of clothing fixed,the utility will

-Max has allocated $100 toward meats for his barbecue.His budget line and indifference map are shown in the above figure.If Max is currently at point e,

-Max has allocated $100 toward meats for his barbecue.His budget line and an indifference map are shown in the above figure.What is the price of chicken?