Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Chapter 10, Problem 10P
To determine
The behaviour assumed in the
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Students have asked these similar questions
Q43
Laurie spends all of her money buying bread and cheese. The marginal utility she receives from the last loaf of bread is 60 and from the last block of cheese is 30. The price of bread is $3 and the price of cheese is $2. Laurie...
a.
Should buy more cheese and less bread to maximise her utility.
b.
Should buy more bread and more cheese in order to maximise her utility.
c.
Spends too much money on bread and cheese.
d.
Should buy more bread and less cheese in order to maximise her utility.
e.
Is buying currently the utility-maximising amount of bread and cheese.
Q30
The marginal rate of substitution is the...
a.
Rate of substitution between the marginal values of any two goods.
b.
Rate of substitution between the total utility of any two goods.
c.
Substitution of one good for another as we move along the budget line.
d.
Amount of one good the consumer is willing to give up in exchange for another to keep total expenditure unchanged.
e.
Amount of one good the consumer is willing to give up in exchange for another to remain indifferent.
A consumer is in equilibrium at point A in the accompanying figure. The price of good X is $5.
At point A, how many units of good X does the consumer purchase?
Suppose the budget line changes so that the consumer achieves a new equilibrium at point B. What change in the economic environment led to this new equilibrium? Is the consumer positively or negatively affected by the price change?
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Similar questions
- What is the relation between positional and non-positional goods? Group of answer choices (a) Both are dependent on consumers’ subjective preferences. (b) Both reflect the rational decisions of consumers. (c) Positional goods are purchased for their function and use, while non-positional goods are purchased for their social importance relative to others. (d) Positional goods are purchased for their social importance relative to others, while non-positional goods are purchased for their function and use.arrow_forwardSienna gets a total of 20 utils per week from her consumption of pizza and a total of 40 utils per week from her consumption of yogurt. The price of pizza is $1 per slice, the price of yogurt is $1 per cup, and she consumes 10 slices of pizza and 20 cups of yogurt each week. Which of the following statements is correct regarding Sienna's current consumption of pizza and yogurt? Sienna should eat more yogurt and less pizza, as she is getting more utils from the $20 spent on yogurt than from the $10 spent on pizza. Sienna should eat more pizza and less yogurt, as she is getting more utils from her last dollar spent on pizza than her last dollar spent on yogurt. We cannot determine if Sienna is maximizing her total utility with the information provided. Sienna should eat more yogurt and less pizza, as she is getting more utils from her last dollar spent on yogurt than her last dollar spent on pizza.arrow_forwardThe utility function of a certain consumer is U =(x1,x2)= x11/3 x22/3 , x 1and x 2 is the consumption of two kinds of goods, and the consumer's income is 100. The current prices of the two kinds of goods are P 1 =1 and P 2=2 respectively, ask: 1. If the price of the first commodity increases from 1 to 2, and other factors remain unchanged, what is the total effect of the price increase on the consumption of the first commodity? According to the Slutsky decomposition principle, what are the income effect and substitution effect? 2. Calculate the amount of income compensation that changes the price of the first commodity from 1 to 2, keeping the original effect unchangedarrow_forward
- Considering the following Diagram of consumer equilibrium, answer the following questions. If consumer has $100 to spend on X and Y at Budget line DE, what are the prices of X and Y products. What combination of X & Y maximizes the consumer’s total utility at Budget line DE? Why a consumer has moved to point B on Budget line DE1 from Point A of Budget line DE? Derive the demand curve of X product. What is relationship between X and Y productsarrow_forwardExplain how economic forces such as employment, income, prices, interest rates, and consumer confidence influence the purchasing decisions you make as a consumer.arrow_forward
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