Suppose utility can be measured by "utils" and that Jane is consuming both lemons and cookies. The marginal utility from the last lemon consumed was 8 utils whereas the marginal utility from the last cookie consumed was 16 utils. Is it possible that Jane is maximizing total utility given the current combination of lemons and cookies consumed? Describe in detail what relationship would have to hold between the prices of lemons and cookies in order for Jane to be currently maximizing total utility.

Define the law of diminishing marginal utility. Given an individual’s income and the prices of two or more goods, explain and demonstrate how an individual chooses between the two or more goods in order to maximize total utility. Define the equimarginal principle and explain the logic behind it. Explain how the equimarginal principle can be used to determine the optimal amount of security guards versus helicopters to employ to prevent illegal border crossings.

Suppose Jeff has a perfect substitute preferences for watching movies (M) and TV (T) shows. Jeff's MRSTM is such that he is always indifferent between watching one movie and five TV shows independent of the amount of goods consumed. Which of the following statements is true? If Jeff had a choice between 1 movie and 1 TV show before bed, he would choose to watch the movie. If Jeff has already watched 3 movies and no TV shows, then he would prefer to watch a TV show next. He is indifferent between watching 1 TV show or 1 movie before bed. Jeff would prefer watching 2 TV shows and no movies over watching 2 Movies and no TV shows.

Utility maximization with a budget constraint. A hypothetical consumer spends all tgheir income on ramen noodles (N) and wild rice (W). N is the quantity of noodles; W is the quantity of wild rice. Their income is $1,600 per month. the price of noodles is $2 per package and the price of wild rice is $20 per pound. The utility function is U=sqrt(N*W).   the MRS = -N/W.   The budget constraint is: 1,600 = 2*N + 20*W   Graph Qty of noodles (N) on vertical axis and Qty of wild rice (W) on horizontal axis.   SOLVE: a. Graph the budget constraint. label all points. What is the slope of the budget constraint? b. Find the optimal quantities of noodles(# of packages) and the wild rice (# of pounds) given the budget constraint. graph these optimal quantities. draw your indifference curve on the same graph. c. Show on your graph what happens when the price of wild rice increases to $40 per pound. Find your new optimal quantities of noodles and wild rice. label all points on graph. label the…