James enjoys having either a peanut butter sandwich or a bologna sandwich for his lunch. A drop in the price of peanut butter increases the marginal utility per dollar of peanut butter and causes James to buy more peanut butter and less bologna to restore maximum utility. This best illustrates the: a. substitution effect b. law of increasing total utility c. law of diminishing marginal utility d. income effect

Question 2 Horatio consumes 20 fries and 12 shakes per week. The price of fries is $3 each and shakes are $5 each. 2.1 What is the amount of income allocated to shakes and fries consumption? 2.2 What is the price ratio (the price of shakes relative to the price of fries)? 2.3 If Horatio maximizes utility, what is the ratio of the marginal utility of shakes to the marginal utility of fries? (Hint: Start with the rule that you know and then use a bit of algebra.) 2.4 If the price of fries falls, will Horatio consume more fries, fewer fries, or the same amount of fries? Explain your answer using the rule of equal marginal utility per dollar, and include a rationale.

Bob consumes food and housing. Suppose his marginal utility from an additional unit of food is 20 and his marginal utility from an additional unit of housing is 180. Furthermore, suppose the price of a unit of food is $1.00 and the price of a unit of housing is $2.00. Can Bob increase his utility without changing his total expenditures on food and housing? Holding expenditures constant, A. Bob can increase utility by spending more on food and less on housing. B. Bob can increase utility by spending more on food and the same amount on housing. C. Bob can increase utility by spending less on food and more on housing. D. Bob cannot increase his utility. E. Bob can increase utility by spending more on food and more on housing.

The following table reflects the utility one receives from consuming a given product.      Units Consumed   Total Utility (TU)       Marginal Utility (MU)           0                                     0                              -------           1                                    60                              60           2                                  ____                            50           3                                  150                              ____           4                                  175                              ____           5                                  ____                            20           6                                  210                              ____   Complete the table solving for the missing total utility or marginal utility values in each           row. Total utility increases throughout the table. What rate does total utility increase?  In other       words, is it rising at an increasing rate, a…

Which of the following statement is TRUE Group of answer choices As the consumption of a good increases, marginal utility rises, but total utility falls. As the consumption of a good increases, total utility falls and marginal utility falls. As the consumption of a good increases, total utility rises, but marginal utility falls.

The marginal utility for shoes and coffee is given below for five individuals. A pair of shoes costs $2, and a cup of coffee costs $1. Which of these consumers are optimizing over their choices? Explain  For those who are not, how should they adjust their spending? Explain  “Pasta is Miguel’s favorite meal therefore the law of diminishing marginal utility does not apply”. Do you agree with this statement?  It is known that the indifference curve is convex. What does this tell you about the relationship between the goods?  The income effect and the substitution effect work in the same direction for a normal good. Explain how this differs for an inferior good.

Larry and Teri allocate their consumption between two goods: hats and bats. The price of hats is €5 each, and the price of bats is €10 each. For Larry, the marginal utility of the last hat consumed was 8, and the marginal utility of the last bat was 24. For Teri, the marginal utility of the last hat was 6, and the marginal utility of the last bat was 12. Which consumer is not maximizing his/her utility? How can you tell? How should he/she change their allocation?

Please answer fast

Use the following information to answer the question below. Cloe is given $4 of pocket money to be spent on either hard candies or chocolates. Chocolates cost 40 cents each and hard candies cost 80 cents each. The marginal utilities derived from the consumption of each product are as shown in the following table.   Number of Items Marginal Utility of Chocolates Marginal Utility of Hard Candies 1 60 150 2 50 140 3 40 120 4 30 100 5 20  80 6 10  70 7   5  50 8   0  20   What is Cloe’s total utility at her utility maximizing bundle?   Multiple Choice   870 utils   620 utils   80 utils   150 utils