Suppose that Kat likes arrows and food. Kat's potential indifference curves for these two goods are shown. Some of these curves are drawn in a way that is inconsistent with assumptions usually made about utility. For each of the accompanying graphs, determine which indifference curve assumption is violated if . any. 12 А. В. II Food Food 12 12 D. С. Food Food Arrows
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- 26. Danny has $12 to spend on two goods: pies and soda. The price of a pie is $4, and the price of a can of soda is $2. To maximize his utility, Danny buys A) the combination that gives him equal total utility from pies and soda B) 2 pies and 2 cans of soda C) oniy sodas because they are iess expensive D) the combination that gives him the same marginai utility per doillar spent on pies as on soda7. Bob receives utility from days spent traveling on vacation domestically (D) and daysspent traveling in a foreign country (F) as given by the utilityU(D; F) = DFThe price of a day spent traveling domestically is 160 pounds and in a foreigncountry 200 pounds. Bobís annual budget for traveling is 8000 pounds. (a) Find Bobís utility maximising choice of days traveling domestically and of daystravelling in a foreign country. Find also his utility level from consuming thatbundle. Suppose that the price of domestic traveling increases to 250 pounds per day.Denoting his budget for traveling x, (suppose by now that it is unknown) findthe demand for D and F under the new prices as a function of x.8 of 15 Izzy who consumes only grilled chicken sandwiches and salads with low-fat dressing, has a weekly income of $50. She is currently consuming 5 grilled chicken sandwiches per week, at a price of $6 each, and 2 salads per week, at a price of $10 each. If the last sandwich and the last salad both added 15 units to Izzy's total utility: O A. She is making the utility-maximising choice OB. She should buy more salads and fewer sandwiches OC. She should buy more sandwiches and fewer salads O D. She obtains more additional utility per dollar from salads than from sandwiches Both B and D. O No answer.
- Mylie’s total utility from singing the same song over and over is 50 utils after one repetition, 90 utils after two repetitions, 120 utils after three repetitions, 80 utils after four repetitions, 20 utils after five repetitions, and -60 utils after six repetitions, as shown in the table below. a. Write down her marginal utility for each repetition. Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Repetitions Total Utility Marginal Utility 0 0 — 1 50 2 90 3 120 4 80 5 20 6 -60Economics As one moves (to the right) along a demand curve: total utility rises, but marginal utility falls OA. В. total utility falls but marginal utility rises С. total utility rises and marginal utility rises total utility falls and marginal utility falls D.Take Jeremys total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremys utility.
- Mylie's total utility from singing the same song over and over is 70 utils after one repetition, 110 utils after two repetitions, 140 utils after three repetitions, 160 utils after four repetitions, 120 utils after five repetitions, and 60 utils after six repetitions, as shown in the table below. a. Write down her marginal utility for each repetition. Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Repetitions 0 1 2 3 4 5 6 Total Utility Marginal Utility 0 70 110 140 160 120 60 b. Once Mylie's total utility begins to decrease, does each additional singing of the song hurt more than the previous song or less than the previous song? O More than the previous song O Less than the previous song| 3.9. Preferences and indifference curves. Assume that a con- sumer purchases only two goods, x and y. Based on the information 3.3. THE MARGINAL RULE 124 in each of the following questions, sketch a plausible set of indiffer- ence curves (that is, draw at least two curves, and indicate the direc- tion of higher utility). (a) Nomis enjoys muffins (x) and chai latte (y) if they are consumed together. (b) Tra likes chocolate (x) but he hates broccoli (y). (c) Aras likes steaks (x) but she doesn't care one way or the other about apples (y). (d) Fernando always buys five Polo-shirts (x) with every pair of jeans (y).A consumer is making purchases of products Alpha and Beta such that the marginal utility of product Alpha is 63 and the marginal utility of product Beta is 40. The price of product Alpha is $9, and the price of product Beta is $5. The utility-maximizing rule suggests that, to stay within a given budget constraint, this consumer should Multiple Choice O O O increase consumption of product Beta and increase consumption of product Alpha. make no change in the consumption of Alpha or Beta. increase consumption of product Beta and decrease consumption of product Alpha. increase consumption of product Alpha and decrease consumption of product Beta.
- 6 Rebecca consumes both iced tea and coffee. Iced tea is priced at $1.50 per bottle and coffee at $2.00 per 16-ounce cup. Which of the following marginal utility pairs is consistent with Rebecca's consumer equilibrium at these prices? a. MU of iced tea = 1; MU of coffee - 1 b. MU of iced tea -1; MU of coffee-2 c. MU of iced tea -2; MU of coffee = 3 d. MU of iced tea = 3; MU of coffee = 4 e. MU of iced tea = 4; MU of coffee = 5A consumer’s preferences between goods x and y are representedby the utility function u(x, y) = 2min{x, y}+10. Suppose this consumer hasincome of $16, the price of good x is $3 and the price of good y is $1. Suppose the price of good x increases to $7 while the price of good y andthe consumer’s income stay constant. Calculate the magnitudes of the compensating and the equivalent variations. Explain what each measures.Currently, Paula is maximizing utility by purchasing five TV dinners (T) and four LeanCuisine Meals (L) each week. Suppose both T and L cost $5 each.a. Graph Paula’s initial utility-maximizing choice.b. Suppose the price of T falls by $1 and the price of L rises by $1.25. Can Paula stillafford to buy her initial consumption choices? What do you know about her new budgetconstraint?c. Make a new graph to show why Paula will choose to consume more T and less Lgiven her new budget constraint to maximize utility. Is her utility increased, decreased,or unchanged given the price change? [Hint: try to make the graph as big as possible tosee how the utility is tangent/intersects with the lines more easily] d. In part (b), suppose another scenario where the price of T rises by $1 and the priceof L falls by $1.25. Is Paula’s utility increased, decreased, or unchanged given the pricechange?