The assumption of completeness of preferences states that _____. a. more of a good is always better b. consumers have consistent preferences c. consumers are rational when making choices d. a consumer can rank all possible consumption bundles

The rate at which a consumer is able to substitute one good for another is determined by the A.indifference map.  B.consumer's preferences. C. ratio of the prices of the goods. D. non of the above

Shannon is allergic to chocolate and refuse to eat it making the statement that the marginal utility of chocolate is:  a. zero b. negative c. less than the total utility.  d. positive, but decreasing.

b. Explain the relationship between the budget constraint and indifference curve at consumer optimum.

Question 5     Andrew is currently spending all his income on 2 goods, burgers and Pepsi. He buys burgers at 4 L.E. a unit, with a total utility of 1000 and a marginal utility of 24. He buys Pepsi at 1 L.E a unit with a total utility of 800 and a marginal utility of 18. In order of reach consumer equilibrium, he should consume:            The same amount of burgers and Pepsi.            More Pepsi but the same amount of burgers.            More Pepsi and less burgers.            More burgers but the same amount of Pepsi.            More burgers and less Pepsi.

1. Carefully explain how consumers maximize utility of all the products they could possibly purchase.

Consumer Theory Daniel spends all his money on only two goods: chocolates (good 1) and milkshakes (good 2). We have information about his purchases, income and prices for 4 weeks: A, B, C and D. For each week, the budget line and the goods bought are shown on the graph below. a)  Suppose that Daniel’s preferences are transitive and satisfy "more is better". Shade all the bundles that you are certain are worse for Daniel than bundle A in one colour, and all the bundles that you are certain are better for Daniel than bundle A in a different colour. (You can use different patterns instead of colours.) Indicate which is which. Explain.

A consumer currently spends a given budget on two goods, X and Y, in such quantities that the marginal utility of X is 15 and the marginal utility of Y is 8. The unit price of X is $3 and the unit price of Y is $2. The utility-maximizing rule suggests that this consumer should Multiple Choice a. decrease consumption of product X and increase consumption of product Y. b. increase consumption of product X and increase consumption of product Y. c. decrease consumption of product Y and increase consumption of product X. d. stick with the current consumption mix because it yields maximum utility.