Question 1

If income falls,then in the new consumer equilibrium

Accepted Answer

The answer of If income falls,then in the new consumer...

Question 2

Ron starts out in consumer equilibrium,consuming two goods,X and Y.The price of Y rises.Immediately after the rise in price

Accepted Answer

When the price of Y rises, the marginal utility per dollar spent on Y (MUY/PY) decreases, making MUX/PX > MUY/PY. To restore equilibrium, Ron will decrease his consumption of Y.

Question 3

Use the table below to answer the following questions.
Table 8.2.1
Windsurfing equipment rents for $10 per hour, snorkeling equipment for $5 per hour.
 
-Consider Devon's total utility from snorkeling and windsurfing in Table 8.2.1.Suppose Devon's total income is $35.If the price of windsurfing rises to $20 per hour,what is Devon's cross elasticity of demand of snorkeling with respect to the price of windsurfing?

Accepted Answer

The answer of Use the table below to answer the...

Question 4

If the price of a good rises,then in the new consumer equilibrium all of the following are true except

Accepted Answer

The answer of If the price of a good rises,then...

Question 5

Use the table below to answer the following questions.
Table 8.2.1
Windsurfing equipment rents for $10 per hour, snorkeling equipment for $5 per hour.
 
-Consider Devon's utility from snorkeling and windsurfing in Table 8.2.1.Devon has $55 to spend.What are Devon's choices for time spent on the two activities?

Accepted Answer

The answer of Use the table below to answer the...

Question 6

If income rises,then in the new consumer equilibrium

Accepted Answer

When income rises, consumers can afford to buy more normal goods, which leads to a decrease in the marginal utility from those goods due to the law of diminishing marginal utility. For inferior goods, as income increases, consumers tend to buy less of these, which can increase their marginal utility since they are consumed less frequently.

Question 7

Bikes and roller blades are substitutes.Marginal utility theory predicts that when the price of a bike rises,the quantity of bikes demanded

Accepted Answer

Since bikes and roller blades are substitutes, an increase in the price of bikes would lead to a decrease in the quantity of bikes demanded and an increase in the demand for roller blades, shifting the demand curve for roller blades rightward.

Question 8

As a consumer's income decreases,marginal utility theory predicts that

Accepted Answer

Marginal utility theory predicts that as a consumer's income decreases, the demand for normal goods decreases because the consumer has less disposable income to spend on these goods. Therefore, the consumer will either choose to purchase less of the normal goods or switch to substitute goods that are cheaper.

Question 9

Chuck and Barry have identical total utility schedules but Chuck has a much higher income.If each is maximizing his total utility,then

Accepted Answer

The answer of Chuck and Barry have identical total utility...

Question 10

Utility is similar to temperature because

Accepted Answer

Both utility and temperature have units of measurement that are arbitrary, meaning they are assigned values based on a chosen reference point or scale. For example, temperature can be measured in Celsius or Fahrenheit, and utility can be measured in units such as utils or dollars. The specific units for each are not inherent to the concept itself but rather defined by convention.

Question 11

Ron starts out in consumer equilibrium,consuming two goods,X and Y.The price of X rises.Immediately after the rise in price

Accepted Answer

When the price of X rises, the marginal utility per dollar spent on X decreases (MUX/PX), while the marginal utility per dollar spent on Y remains the same (MUY/PY). Therefore, it is optimal for Ron to consume less of X and more of Y, leading to a decrease in his consumption of X. This is indicated by choice D, where MUX/PX < MUY/PY and Ron decreases his consumption of X.

Question 12

Ron starts out in consumer equilibrium,consuming two goods,X and Y.Ron's income rises.At this point,we can definitely conclude that

Accepted Answer

The answer of Ron starts out in consumer equilibrium,consuming two...

Question 13

Use the table below to answer the following questions.
Table 8.2.1
Windsurfing equipment rents for $10 per hour, snorkeling equipment for $5 per hour.
 
-Consider Devon's total utility from snorkeling and windsurfing in Table 8.2.1.Suppose Devon's total income is $35.If the price of windsurfing rises to $20 per hour,how long does Devon choose to windsurf and to snorkel?

Accepted Answer

The answer of Use the table below to answer the...

Question 14

Beverly is currently in consumer equilibrium.An increase in her income

Accepted Answer

The answer of Beverly is currently in consumer equilibrium.An increase...

Question 15

Use the table below to answer the following questions.
Table 8.2.1
Windsurfing equipment rents for $10 per hour, snorkeling equipment for $5 per hour.
 
-Consider Devon's total utility from snorkeling and windsurfing in Table 8.2.1.Suppose Devon's total income is $35.If the price of windsurfing rises to $20 per hour,what is Devon's elasticity of demand for windsurfing?

Accepted Answer

The answer of Use the table below to answer the...

Question 16

Billy likes candy bars and popcorn.Candy bars sell for $0.50 each and popcorn sells for $1 per bag.Currently he is in consumer equilibrium.Then the price of a candy bar rises to $1.Which statement is true in the new consumer equilibrium?

Accepted Answer

In consumer equilibrium, the marginal utility per dollar spent on each good is equal. When the price of candy bars increases, Billy will adjust his consumption until the marginal utility per dollar spent on candy bars equals that of popcorn again.

Question 17

Harold can consume apples and oranges.He likes them equally well and currently is in consumer equilibrium.Then the price of oranges rises,while his income remains the same.What will happen to his consumption?

Accepted Answer

The price of oranges has increased, making them relatively more expensive compared to apples. As a result, Harold will substitute away from oranges and consume more apples.

Question 18

Use the table below to answer the following questions.
Table 8.2.1
Windsurfing equipment rents for $10 per hour, snorkeling equipment for $5 per hour.
 
-Consider Devon's total utility from snorkeling and windsurfing in Table 8.2.1.Suppose that Devon's total income rises from $35 to $55,ceteris paribus.Given that Devon changes his choice of windsurfing and snorkeling,what is his income elasticity for windsurfing?

Accepted Answer

The answer of Use the table below to answer the...

Question 19

Use the table below to answer the following questions.
Table 8.2.1
Windsurfing equipment rents for $10 per hour, snorkeling equipment for $5 per hour.
 
-Devon enjoys windsurfing and snorkeling.His total utility from each activity is summarized in Table 8.2.1.Devon has $35 to spend.How long will Devon choose to windsurf and to snorkel?

Accepted Answer

The answer of Use the table below to answer the...

Question 20

If the price of a good falls,then in the new consumer equilibrium

Accepted Answer

The answer of If the price of a good falls,then...

Quiz 8: Utility and Demand

If income falls,then in the new consumer equilibrium

Ron starts out in consumer equilibrium,consuming two goods,X and Y.The price of Y rises.Immediately after the rise in price

If the price of a good rises,then in the new consumer equilibrium all of the following are true except

If income rises,then in the new consumer equilibrium

Bikes and roller blades are substitutes.Marginal utility theory predicts that when the price of a bike rises,the quantity of bikes demanded

As a consumer's income decreases,marginal utility theory predicts that

Chuck and Barry have identical total utility schedules but Chuck has a much higher income.If each is maximizing his total utility,then

Utility is similar to temperature because

Ron starts out in consumer equilibrium,consuming two goods,X and Y.The price of X rises.Immediately after the rise in price

Ron starts out in consumer equilibrium,consuming two goods,X and Y.Ron's income rises.At this point,we can definitely conclude that

Beverly is currently in consumer equilibrium.An increase in her income

Billy likes candy bars and popcorn.Candy bars sell for $0.50 each and popcorn sells for $1 per bag.Currently he is in consumer equilibrium.Then the price of a candy bar rises to $1.Which statement is true in the new consumer equilibrium?

Harold can consume apples and oranges.He likes them equally well and currently is in consumer equilibrium.Then the price of oranges rises,while his income remains the same.What will happen to his consumption?

If the price of a good falls,then in the new consumer equilibrium