18) Which of the following will keep a consumer on the same indifference curve even if he wishes to move to a higher one? An increase in the consumer's income b. An increase in the relative price of one good the consumer purchases, other prices remaining unchanged c. A decrease in the relative price of one good the consumer purchases, other prices remaining unchanged d. A doubling of the consumer's income and a halving of the prices of all the goods the consumer purchases

5) Below is John's indifference map for juice and snacks. Also shown are three budget lines resulting from different snack prices and assuming he has $20 to spend on these goods. (Hint: Be aware that we put price of product (snacks) on the Y-axis to draw demand curve.) Juice 20 15. 134 10- 5710 20 40 Snacks Which of the following points are on John's demand curve for snacks? a) p = 2, q=10 b) p=2, q=13 c) p = 2,q=5 d) p = 1, q=20

1. What is the Total Utility of the second unit? 2. What is the Marginal utility of the third, fourth and the fifth unit? 3. Explain the relationship between Total Utility and Marginal Utility. 4. At which rate is total utility increasing: a constant rate, a decreasing rate, or an increasing rate? How do you know? 5. “It is possible that a rational consumer will not purchase any units of the product represented by these data.” Do you agree? Explain why or why not. 6. In the last decade or so there has been a dramatic expansion of small retail convenience stores (such as 7 Eleven, Kwik Shop, and Circle K), although their prices are generally much higher than prices in large supermarkets. What explains the success of the convenience stores?

1. A consumer has an income of $3024 to spend each day. The only two goods the consumer is interested in purchasing are goods A and B. The marginal-utility schedules for these two goods are shown in the table below. The price of B does not change and is $378. The marginal utility per dollar from B is also shown in the table. But the price of A varies as shown in the table. The marginal utility per dollar from A when the price of A is $1512 and $756 is shown in the following table. Good A Good B Quantity MU MU/$1512 MU/$756 MU MU/$378 1 24 2 15 3 12 4 8 5 6 6 4 48 32 24 16 8 4 ||||| ||||| |||