ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 6, Problem 1.3P
To determine
The circumstances under which MU is negative and TU is positive.
Concept Introduction:
Law of Diminishing
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2. Gorgeousleny purchased a combination of 15 breads and 5 juices with her income of P150 and price of bread is P6 and price of juice is P12. She proudly showed this to her mom, and to her dismay her mom said that she likes more juices than bread since its summer season. While on her way home she lost the receipt, but fortunately she can still receive store credit based from the total value of products. While approaching the customer service representative , she thought of this what if she sticks with her original plan of buying bread alone with no juice and vice versa. At the moment all juices in the store is 50% off. Draw the graph showing the budget constraints arise from endowments.
a. ) Measure the qty. of bread on the vertical axis and the qty. of juice on the horizontal axis. Label both graph with its corresponding points, pt. A for bread and point B for juice. the combination of bread and juice label it as point C.
b.) For both graph, What is the slope from point C…
____ 31. Total utility can be thought of as the
a. total satisfaction derived from a bundle of goods.
b. minimum amount of money a consumer is willing to spend on a bundle of goods.
c. additional satisfaction a consumer receives from the marginal unit of a good.
d. willingness to pay for the marginal unit of a good.
Using graph, explain when consumer maximize his utility? - Draw the graph Explanation
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24. What is the difference between total utility and marginal utility? Explain.
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14) An Indifference curve slope down towards right since more of one commodity and less of another result in which of the following?
A) Decreasing expenditure
B) Maximum satisfaction
C) Greater satisfaction
D) Same satisfaction
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05- Income and Substitution Effects
Question 1
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Question1:
a-Using an example with graph, explain when consumer is in equilibrium?
b- Draw the graph (curves)
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Question 28
The marginal rate of substitution measures the: extra utility that a consumer derives from successive units of a product. consumer's willingness to substitute one product for another so that total utility will remain constant. magnitude of the substitution effect. total utility received by a consumer when equilibrium is achieved.
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27. If you have Marginal utility of 2
with a Total utility equals to 56,
then when marginal utility is
reduce to zero while Total utility
remains the same, what does it
mean?
a. at 56 utils of MU equals zero, utility
begins to gain momentum
b. at 56 utils of MU equals zero, utility
begins to diminish
c. at 56 utils of MU equals zero. utility
begins to increase
d. at 56 utils of MU equals zero, utility
begins to upswing
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Question 26
Any combination of goods lying outside of the budget line: implies that the consumer is not spending all his income. yields less utility than any point on the budget line. is unobtainable, given the consumer's income. yields less utility than any point inside the budget line.
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Exercise 1: Identifying the determinants of demand. In worksheet 5B, you have seen have how an increase in demand is depicted on a graph by a shift in the demand curve.
• When the demand curve shifts upward and to the right, this is indicative of an increase in demand.
• When the demand curve shifts to the left, this is indicative of a decrease in demand.
• Factors that result in a change in demand are the determinants of demand.
Working as a part of a team of three or four, complete the table below. For each determinant of demand:
• indicate whether demand will increase or decrease;
• provide an explanation as to why.
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Question 3a. Is it possible for total utility to increase while marginal utility diminishes?Explain.
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#7
can you explain what the correct answer is and why?
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Question 34 Stephanos spends all of his $500 allowance on slices of pizza and gas for his pickup truck. He spends eighty percent of this on pizza and the rest on gas. Because of a shortage of gas, the price of gas increases by 40%. This makes his consumption of gas (measured in gallons) fall by 20%. If he keeps spending all his money on pizza and gas, what is the percentage change in his consumption of pizza (measured in slices)?
does not change
2% increase
3% decrease
4% increase
1% decrease
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26. If you have Marginal utility of 2
with a Total utility equals to 56,
then when marginal utility is
reduce to zero while Total utility
remains the same, what does it
mean?
a. satisfaction diminishes
b. TU is maximum
c. Quantity diminishes
d. Marginal utility is maximum
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