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##### FIU ECO2023 Assignment HW10 Chapter 19 spring 14

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Question;1.;award:4.16 out of;4.16 points;Question and Exercise 19-1;Explain how marginal;utility differs from total utility.;Marginal utility is the satisfaction.;Total utility is the satisfaction.;2.;award:4.16 out of;4.16 points;Question and Exercise 19-2;According to the principle of diminishing marginal utility, marginal;utility as more of a;good is consumed and as less of a;good is consumed.;3.;award:4.16 out of;4.16 points;Question and Exercise 19-3;Complete the;following table of Scout?s utility from drinking cans of soda and answer the;questions below.Instructions: If you are;entering any negative numbers be sure to include a negative sign (-) in front;of those numbers.;Cans of Soda;Total Utility;Marginal Utility;0;0;1;10;2;22;12;3;32;4;8;5;4;6;44;7;42;a. At what point does marginal utility begin to fall?;Marginal utility falls with the soda.;b. Will Scout consume the 7th can of soda? Explain your answer..;c. True or false? Scout will be following the utility-maximizing rule by;consuming 2 cans of soda. Explain your answer..;4.;award:1.04 out of;4.16 points;Question and Exercise 19-5;The following table;gives the price and total utility of three goods: A, B, and C.;Total Utility;Good;Price;1;2;3;4;5;6;7;8;A;$10;200;380;530;630;680;700;630;430;B;2;20;34;46;56;64;72;78;82;C;6;50;60;70;80;90;100;90;80;a. As closely as possible, determine how much of the three goods you would buy;with $20. of;good A. of;good B. of;good C.;b. Explain why you chose what you did.;5.;award:0 out of;4.16 points;Question and Exercise 19-6;The following table;gives the marginal utility of John?s consumption of three goods: A, B, and C.;Units of Consumption;MU of A;MU of B;MU of C;0;?;?;?;1;20;25;45;2;18;20;30;3;16;15;24;4;14;10;18;5;12;8;15;6;10;6;12;a. Good A costs $2 per unit, good B costs $1, and good C costs $3. How many;units of each should a consumer with $12 buy to maximize his or her utility? unit(s);of A. unit(s);of B. unit(s);of C.;b. How will the answer change if the price of B rises to $2? unit(s);of A. unit(s);of B. unit(s);of C.;c. How about if the price of C is 50 cents but the other prices are as in a? unit(s);of A. unit(s);of B. unit(s);of C.;6.;award:4.16 out of;4.16 points;Question and Exercise 19-7;The total utility of your consumption of widgets is 40, it changes by 2;with each change in widgets consumed. The total utility of your consumption of;wadgets is also 40 but changes by 3 with each change in wadgets consumed. The price;of widgets is and the price of wadgets;is;Should you change your consumption pattern?;7.;award:4.16 out of;4.16 points;Question and Exercise 19-9;State the law of demand and explain how it relates to the principle of;rational choice.;The law of demand states;The law of demand is related to the principle of rational choice because:.;award:0.84 out of;4.16 points;Question and Exercise 19-10;Suppose a large;cheese pizza costs $10 and a calzone costs $5. You have $40 to spend. The;marginal utility (MU) that you derive from each is as follows;Number;MU of Pizza;MU of Calzone;0;?;?;1;60;30;2;40;28;3;30;24;4;20;20;5;10;10;a. How many of each would you buy? pizza(s). calzone(s).;b. Suppose the price of a calzone rises to $10. How many of each would you buy? pizza(s). calzone(s).;c. Use this to show how the principle of rational choice leads to the law of;demand.;This demonstrates the law of demand because as the price of calzones rises, I;buy a smaller quantity.;9.;award:4.16 out of;4.16 points;MC Qu. 135 Refer to the graphs shown. Which of th...;Refer to the graphs shown. Which of the following combinations of points best;illustrates rational consumer choice assuming the consumer's budget is $60, the;price of X is $3, and the price of Y is $3?;A and D.;B and E.;C and F.;A and F.;The budget and price information reveals which budget line is binding.;Multiple Choice;Difficulty: 3 Hard;Section: Indifference Curve Analysis;MC Qu. 135 Refer to the graphs shown. Which of th...;Learning Objective: 19-A;10.;award:4.16 out of;4.16 points;MC Qu. 136 Refer to the graphs shown. If income i...;Refer to the graphs shown. If income is $60 and the price of Y is $3, a;decrease in the price of X from $3 to $2 would cause a movement;from point A to point B.;from point C to point B.;along the demand curve from point D to point E.;along the demand curve from point E to point F.;When price falls, quantity demanded increases and then there is a;movement along the demand curve.;Multiple Choice;Difficulty: 3 Hard;Section: Indifference Curve Analysis;MC Qu. 136 Refer to the graphs shown. If income i...;Learning Objective: 19-A;11.;award:4.16 out of;4.16 points;MC Qu. 122 Refer to the graph shown. Assuming a c...;Refer to the graph shown. Assuming a consumer has $5 to spend, if a soda costs;$0.25 and a chocolate bar costs $0.50, the consumer will optimally choose to;consume;at point A.;at point B.;0 cans of soda and 10 chocolate bars.;20 cans of soda and 0 chocolate bars.;With $5, the maximum numbers of chocolate bars and cans of soda that can;be bought are 10 and 20, respectively. To maximize utility, find where the;maximum indifference curve is tangent to this budget line.;Multiple Choice;Difficulty: 3 Hard;Section: Indifference Curve Analysis;MC Qu. 122 Refer to the graph shown. Assuming a c...;Learning Objective: 19-A;12.;award:4.16 out of;4.16 points;MC Qu. 123 Refer to the graph shown. Assuming a c...;Refer to the graph shown. Assuming a consumer has $5 to spend, if a soda costs;$0.50 and a chocolate bar costs $0.50, the consumer will optimally choose to;consume;at point A.;at point B.;10 cans of soda and 0 chocolate bars.;0 cans of soda and 10 chocolate bars.;With $5, the maximum number of chocolate bars and cans of soda that can;be bought are 10 and 10, respectively. To maximize utility, find where the;maximum indifference curve is tangent to this budget line.;Multiple Choice;Difficulty: 3 Hard;Section: Indifference Curve Analysis;MC Qu. 123 Refer to the graph shown. Assuming a c...;Learning Objective: 19-A;13.;award:4.16 out of;4.16 points;MC Qu. 124 Refer to the graph shown. A consumer w...;Refer to the graph shown. A consumer would be expected to change consumption;from point A to point B in response to;an increase in the price of soda.;an increase in the price of chocolate bars.;an increase in income.;a decrease in the price of soda.;Only an increase in the price of soda could have caused the budget line;to shift as shown in the graph.;Multiple Choice;Difficulty: 3 Hard;Section: Indifference Curve Analysis;MC Qu. 124 Refer to the graph shown. A consumer w...;Learning Objective: 19-A;14.;award:4.16 out of;4.16 points;MC Qu. 125 Refer to the graph shown. The diagram...;Refer to the graph shown. The diagram demonstrates that an increase in the;price of soda will;raise the quantity demanded of soda.;reduce the quantity demanded of soda.;raise the quantity demanded of chocolate bars.;raise the consumer's available income.;Since the budget line rotated in, fewer sodas were bought as the price;of soda rose. This demonstrates the law of demand. Although the law of demand;is technically based only on the substitution effect, consumer real income;(purchasing power of a dollar) also falls. In this case, reduced consumption;comes about from both the income effect and the substitution effect.;Multiple Choice;Difficulty: 2 Medium;Section: Indifference Curve Analysis;MC Qu. 125 Refer to the graph shown. The diagram...;Learning Objective: 19-A;15.;award:4.16 out of;4.16 points;MC Qu. 126 Refer to the graph shown. Assuming eac...;Refer to the graph shown. Assuming each carnival game costs $1 and each Ferris;wheel ride costs $2, a consumer with $10 to spend will optimally choose to;consume at point;A.;B.;C.;D.;First find the budget constraint by determining the endpoints. They are;10 carnival games and 5 Ferris wheel rides. Then find the indifference curve;tangent to the budget constraint. The point where the indifference curve is;tangent to the budget constraint is the right combination of carnival games and;Ferris wheel rides.;Multiple Choice;Difficulty: 3 Hard;Section: Indifference Curve Analysis;MC Qu. 126 Refer to the graph shown. Assuming eac...;Learning Objective: 19-A;MC Qu. 109 A rational consumer maximizes his or her;A rational consumer maximizes his or her;marginal utility.;wealth.;total utility.;profit.;Consumers maximize total utility because the ultimate goal is to;maximize total satisfaction or pleasure.;Multiple Choice;Difficulty: 2 Medium;Section: Utility Maximization;MC Qu. 109 A rational consumer maximizes his or her;Learning Objective: 19-04 Name three assumptions of the theory of;choice and discuss why they may not reflect reality.;MC Qu. 114 As a consumer moves along a budget constraint;As a consumer moves along a budget constraint;prices are held constant, but income changes.;income is held constant, but prices change.;prices and income are held constant, but quantities change.;total utility is held constant, but prices and income change.;A budget constraint shows the various combinations of goods an;individual can buy with a given income. Prices and income are held constant.;Multiple Choice;Difficulty: 2 Medium;Section: Indifference Curve Analysis;MC Qu. 114 As a consumer moves along a budget constraint;Learning Objective: 19-A;18.;award:4.16 out of;4.16 points;MC Qu. 116 Refer to the graph shown. Given this b...;Refer to the graph shown. Given this budget constraint, if bagels cost $1.80;each, croissants must cost;$0.90 each.;$1.80 each.;$3.60 each.;It is impossible to know from the information given.;Since the slope of the budget line is -1, indicating one bagel can be;exchanged for one croissant, the price of croissants is the same as the price;of bagels.;19.;award:4.16 out of;4.16 points;MC Qu. 056 A Big Mac meal costs $3.00 and gives you an additi...;A Big Mac meal costs $3.00 and gives you an additional 5 units of;utility, a meal at the Four Seasons Hotel costs $27.00 and gives you an;additional 45 units of utility. Based only on the information you have, using;the theory of rational choice, you most likely would;choose to eat the Big Mac meal.;choose to eat at the Four Seasons Hotel.;be indifferent between eating the Big Mac and eating at the Four;Seasons Hotel.;decide that eating at the Four Season's Hotel is preferable because;though the marginal utilities of both meals are the same, the total utility;is greater in the case of the meal at the Four Seasons Hotel.;Since the marginal utility per dollar spent on the Big Mac meal (5/3);and the marginal utility per dollar spent on the meal at the Four Seasons Hotel;(45/27 = 5/3) are equal, you would be indifferent.;Multiple Choice;Difficulty: 2 Medium;Section: Utility Maximization;MC Qu. 056 A Big Mac meal costs $3.00 and give;20.;award:4.16 out of;4.16 points;MC Qu. 057 To choose, based on the principle of rational choi...;To choose, based on the principle of rational choice, among combinations;of goods with a cost in money, one must know the;total utility of the combination of goods and their price.;total utility only.;marginal utility of each additional good and its price.;marginal utility only.;The principle of rational choice states that you should spend your money;on those goods which give you the most marginal utility per dollar. Thus, one;must know price and marginal utility.;Multiple Choice;Difficulty: 2 Medium;Section: Utility Maximization;MC Qu. 057 To choose, based on the principle of rational choi...;Learning Objective: 19-01 Discuss the principle of diminishing;marginal utility and the principle of rational choice.;21.;award:4.16 out of;4.16 points;MC Qu. 058 You're maximizing utility when;You're maximizing utility when;(MU of X)/(P of X) > (MU of Y)/(P of Y).;(MU of X)/(P of X) < (MU of Y)/(P of Y).;(MU of X)/(P of X) = (MU of Y)/(P of Y).;(MU of X)/(P of Y) = (MU of Y)/(P of X).;If the ratios of the marginal utilities to the respective prices are;equal, you are maximizing utility given the amount you are spending. Divide;units of utility by cost to find the maximum marginal utility per dollar.;Multiple Choice;Difficulty: 2 Medium;Section: Utility Maximization;MC Qu. 058 You're maximizing utility when;22.;award:4.16 out of;4.16 points;MC Qu. 059 Given a fixed level of spending, you will maximize...;Given a fixed level of spending, you will maximize utility when;the total satisfaction from both goods is maximized regardless of;cost.;the marginal satisfactions are maximized.;the ratios of the total utilities to their prices are equal.;the ratios of the marginal utilities to their prices are equal.;If the ratios of the marginal utilities to their own prices are equal;you are maximizing utility. This is the principle of rational choice.;Multiple Choice;Difficulty: 2 Medium;Section: Utility Maximization;MC Qu. 059 Given a fixed level of spending, you will maximize...;Learning Objective: 19-01 Discuss the principle of diminishing;marginal utility and the principle of rational choice.;23.;award:4.16 out of;4.16 points;MC Qu. 060 Given that price is constant, the lower the margin...;Given that price is constant, the lower the marginal utility of a good;the less you are willing to buy of it.;the more you are willing to buy of it.;the lower the total utility of that good.;the more substitutes there are.;Since one equilibrates marginal utilities per dollar, if the MU falls;one will buy less of it so that its MU/P will rise to equal the MU/P of some;alternative good.;Multiple Choice;Difficulty: 2 Medium;Section: Utility Maximization;MC Qu. 060 Given that price is constant, the lower the margin...;Learning Objective: 19-01 Discuss the principle of diminishing;marginal utility and the principle of rational choice.;24.;award:4.32 out of;4.32 points;MC Qu. 061 Given a set amount of money, goods A and B both gi...;Given a set amount of money, goods A and B both give the same marginal;utility but good A costs twice as much as good B. You should;consume more of good A and less of good B.;consume more of good B and less of good A.;keep consuming the current amounts of both good A and good B.;realize that you don't have enough information to answer the question.;Because both goods give the same marginal utility but good A costs twice;as much, one should consume more of good B and less of good A. This will reduce;the marginal utility of good B and increase the marginal utility of good A. We;should alter consumption in this direction until the ratio of marginal utility;to prices of the goods is equal.;Multiple Choice;Difficulty: 2 Medium;Section: Utility Maximization;MC Qu. 061 Given a set amount of money, goods A and B both gi...;Learning Objective: 19-01 Discuss the principle of diminishing;marginal utility and the principle of rational choice.

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