Exam 4: The Theory of Individual Behavior

Mitchell's money income is $150,the price of X is $2,and the price of Y is $2.Given these prices and income,Mitchell buys 50 units of X and 25 units of Y.Call this combination of X and Y bundle J.At bundle J,Mitchell's MRS is 2.Given these prices and income,what is Mitchell's equilibrium consumption of X?

The budget set defines the combinations of good X and Y that:

Suppose a worker is offered a wage of $8 per hour,plus a fixed payment of $100 per day,and he can use 24 hours per day.What is the minimum the worker can earn in a day?

Suppose earnings are given by E = $60 + $7(24 − L),where E is earnings and L is the hours of leisure.The fixed payment for this worker is:

Suppose a worker is paid according to the following pay scheme: For every unit produced,the worker gets $8.Assume a worker can produce three units per hour. a.Express the worker's earnings as a function of hours worked. b.Graph the equation for earnings. c.Graphically depict equilibrium,and show the earnings and hours worked by the employee. d.Do you think that from the firm's point of view,this scheme is better,worse,or the same as paying the worker a wage of $24 per hour? Explain carefully.

What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and P_x = $10,P_y = $15,X = 30,and M = 600?

Ann's money income is $250,the price of X is $3,and the price of Y is $2.Given these prices and income,Ann buys 60 units of X and 35 units of Y.Call this combination of X and Y bundle J.At bundle J Ann's MRS is 2.Given these prices and income,what is Ann's equilibrium consumption of X?

A situation where a consumer says he does not know his preference ordering for bundles X and Y would violate the property of:

The maximum quantity of good X that is affordable is:

A price increase causes a consumer's "real" income to:

When the price of one good decreases,the associated substitution effect is represented by a:

Natalie is always willing to give up 10 ounces of licorice for 1 ounce of chocolate.Mitchell,on the other hand,will always give up 10 ounces of chocolate for 1 ounce of licorice.Based on this information,answer the following questions: a.Do Natalie's preferences exhibit a diminishing marginal rate of substitution between chocolate and licorice? Why or why not? b.Assuming that Natalie and Mitchell have the same amount of money to spend on chocolate and licorice,who will purchase the most licorice? Why?

If the price of a good falls,then the equilibrium consumption of that good:

What is the horizontal intercept of the budget line,given that M = $1,000,P_X = $50,and P_Y = $40?

The equilibrium consumption bundle is:

Suppose the utility function for a firm manager is U =  + bQ,where Q is output, is profit,and b is a positive constant.How would the firm's output compare with what it would be if the manager's objective was to maximize profit?

An in-kind gift causes the budget line to:

Which of the following is true?

A firm manager with vertical indifference curves (output on the horizontal axis,profit on the vertical axis)views:

Joe prefers a three-pack of soda to a six-pack.What properties does this preference violate?