Exam 3: A Consumers Constrained Choice

For the following, please answer "True" or "False" and explain why -The fact that most consumers are unable to describe their preferences in terms of a utility function implies that not all consumer preferences can be represented with utility functions.

A consumer buys food (F)and shelter (S).If the consumer's income rises and there is no change in the prices of F or S,the marginal rate of transformation of F for S will

Johnny has $100 to spend on books and all other goods.Books cost $20 each and Johnny is at equilibrium consuming 3 books and $40 worth of other goods.Johnny's grandmom wants to give Johnny either a book or $20 for his birthday.Which gift does Johnny prefer? Explain using an indifference map and budget lines.

Suppose Joe's utility for lobster (L)and soda (S)can be represented as U = L⁰.⁵ S⁰.⁵.Joe walks into a restaurant with $72.Lobsters cost $18 each and sodas cost $2 each.How much lobster and soda will Joe consume if he intends to spend all his money? (There are no tax and no tips.)

A consumer is given the chance to buy a concert ticket for $50 and refuses.Later,that same consumer wins a free ticket to the concert.When asked to sell that ticket for $50,the consumer refuses,indicating that he would rather use the ticket himself.This is an example of

-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 best describes Max's preferences?

The marginal rate of transformation of y for x represents

Ed has the utility function U(F,M)= ,where C = number of comic books per month and M=number of movies per month.Gloria has the utility function V(F,M)= 15 + .Do Ed and Gloria have the same preference ordering of comics and movies? How can you tell?

Joe consumes crawfish and shrimp.His utility function exhibits diminishing marginal utility of crawfish but the marginal utility of shrimp is constant.Will Joe's indifference curves be convex?

If the price of one good increases while the price of the other good and the consumer's income remain unchanged,what will happen to the budget line?

For the following, please answer "True" or "False" and explain why. -Indifference curves cannot ever be concave for two goods.

If two indifference curves were to intersect at a point,this would violate the assumption of

If Fred's marginal utility of pizza equals 10 and his marginal utility of salad equals 2,then

Sarah has the utility function U(X,Y)=X.⁵Y.²⁵.When Sarah consumes X = 2 and Y = 6 she has a marginal rate of substitution of

Indifference curves that are thick violate

If both prices decreases by 50%,

Joe's income is $500,the price of food (F)is $2,and the price of shelter (S)is $100.Which of the following bundles is in Joe's opportunity set?

For the following, please answer "True" or "False" and explain why -An increase in a consumer's income will increase the Marginal Rate of Transformation.

Which of the following utility functions has the same MRS as U(q₁,q₂)= q₁ q₂?

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