Question 1

Mr. Black always consumes coffee and cream in fixed proportions-8 ounces of coffee to 1 ounce of cream. This implies that for Mr. Black:

Accepted Answer

Mr. Black consumes coffee and cream in fixed proportions, indicating they are perfect complements.

Question 2

Cookie Monster always consumes cookies and milk in fixed proportions: 4 cookies to 8 ounces of milk. Which of the following combinations of cookies and milk will give Cookie Monster the highest total utility?

Accepted Answer

Cookie Monster consumes cookies and milk in a fixed ratio of 4:8. Option A provides this ratio (8:16) and doubles the quantity, maximizing total utility while maintaining the preferred proportion.

Question 3

Jake considers fries and onion rings perfect substitutes. The indifference curve between fries and onion rings must be:

Accepted Answer

For perfect substitutes, the indifference curve is a straight line because the consumer is willing to substitute one good for the other at a constant rate.

Question 4

Josh is a house painter who always purchases two paintbrushes for every gallon of paint, regardless of the relative prices. In a graph, these indifference curves would appear as:

Accepted Answer

Josh's purchasing behavior indicates perfect complements, where he always buys two paintbrushes for every gallon of paint. This results in right-angle indifference curves.

Question 5

LaToya sees honey and sugar as perfect substitutes. She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar. If the price of honey is half that of sugar, LaToya will use:

Accepted Answer

Since the price of honey is half that of sugar and LaToya is willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar, she will choose to use only honey as it is cheaper and provides the same utility.

Question 6

Ms. Sweettooth always consumes iced tea and sugar in fixed proportions: 8 ounces of iced tea to 3 teaspoons of sugar. This implies that for Ms. Sweettooth:

Accepted Answer

The answer of Ms. Sweettooth always consumes iced tea and...

Question 7

Mario sees popcorn and pretzels as perfect substitutes. He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels. If the price of a cup of popcorn is $3 and the price of a cup of pretzels is $1, Mario will eat:

Accepted Answer

Mario values 3 cups of popcorn the same as 1 cup of pretzels. Since 3 cups of popcorn cost $9 and 1 cup of pretzels costs $1, pretzels are cheaper for the same utility, so he will choose only pretzels.

Question 8

Mario sees popcorn and pretzels as perfect substitutes. He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels. If Mario consumes only popcorn, then we know that the relative price of popcorn in terms of pretzels is:

Accepted Answer

Mario is willing to substitute 3 cups of popcorn for 1 cup of pretzels, indicating that the relative price of popcorn in terms of pretzels is 1/3 or 0.33. If he consumes only popcorn, the price must be less than 0.33.

Question 9

Mario sees popcorn and pretzels as perfect substitutes. He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels. If the price of a cup of popcorn equals the price of a cup of pretzels, Mario will eat:

Accepted Answer

Since Mario sees popcorn and pretzels as perfect substitutes and is willing to substitute 3 cups of popcorn for 1 cup of pretzels, if the prices are equal, he will choose the option that gives him the most utility per unit, which is pretzels.

Question 10

Mario sees popcorn and pretzels as perfect substitutes. He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels. His indifference curves for popcorn and pretzels are _____, and at the optimal consumption bundle his marginal rate of substitution of popcorn for pretzels is _____.

Accepted Answer

The answer of Mario sees popcorn and pretzels as perfect...

Question 11

LaToya sees honey and sugar as perfect substitutes. She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar. If honey is three times as expensive as sugar, LaToya will use:

Accepted Answer

LaToya sees honey and sugar as perfect substitutes and is willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar. Since honey is three times as expensive as sugar, she will choose only sugar because it is cheaper to achieve the same level of satisfaction.

Question 12

If Coke and Pepsi are perfect substitutes for Lynn, her indifference curves are:

Accepted Answer

For perfect substitutes, indifference curves are downward-sloping straight lines because the consumer is willing to substitute one good for the other at a constant rate.

Question 13

LaToya sees honey and sugar as perfect substitutes. She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar. If honey is twice as expensive as sugar, LaToya will:

Accepted Answer

LaToya will be willing to purchase either sugar or honey because the price of honey is twice that of sugar, and she is willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar. This means that the cost of 1 teaspoon of honey is equal to the cost of 2 teaspoons of sugar. Therefore, LaToya will be indifferent between purchasing honey or sugar.

Question 14

Use the following to answer questions:
Figure: Consumer Equilibrium I
The figure shows three of Owen's indifference curves for pizza and soda per week. Owen has $180 per month to spend on the two goods. The price of a pizza is $20, and the price of a soda is $1.50. 
-(Figure: Consumer Equilibrium I) Look at the figure Consumer Equilibrium I. If in equilibrium Owen receives marginal utility of 10 utils from the last pizza he consumes, his marginal utility from the last soda must be _____ utils.

Accepted Answer

The answer of Use the following to answer questions:
Figure: Consumer...

Question 15

Mario sees popcorn and pretzels as perfect substitutes. He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels. If the price of a cup of popcorn is $4 and the price of a cup of pretzels is $1, Mario will eat:

Accepted Answer

Mario sees popcorn and pretzels as perfect substitutes and is willing to substitute 3 cups of popcorn for 1 cup of pretzels. Since the price of a cup of pretzels ($1) is less than the price of 3 cups of popcorn ($12), he will choose to consume only pretzels to minimize his cost.

Question 16

Use the following to answer questions:
Figure: Consumer Equilibrium I
The figure shows three of Owen's indifference curves for pizza and soda per week. Owen has $180 per month to spend on the two goods. The price of a pizza is $20, and the price of a soda is $1.50. 
-(Figure: Consumer Equilibrium I) Look at the figure Consumer Equilibrium I. If Owen consumes 1.5 pizzas and 100 sodas, which of the following describes the relationship between his marginal rate of substitution of pizza for soda and the price of pizza in terms of soda?

Accepted Answer

The answer of Use the following to answer questions:
Figure: Consumer...

Question 17

Ms. Sweettooth always consumes iced tea and sugar in fixed proportions: 8 ounces of iced tea to 3 teaspoons of sugar. Which of the following combinations of iced tea and sugar will give Ms. Sweettooth the highest total utility?

Accepted Answer

Ms. Sweettooth always consumes iced tea and sugar in fixed proportions: 8 ounces of iced tea to 3 teaspoons of sugar. So, all of the combinations noted give the same total utility.

Question 18

Alison is a traveling salesperson who drives many miles each day to visit her clients. She gets utility from the purchase of gasoline, but she doesn't care which brand of gasoline she consumes. Suppose she has a daily budget of $100 for gasoline and can purchase from two companies, PB and Noxxe. Today she notices that the price of a gallon of gas at PB is $2.50 and the price of a gallon of gas at Noxxe is $3.33. What is her optimal purchase of gas?

Accepted Answer

Alison should purchase all her gasoline from PB because it offers the lowest price per gallon, allowing her to maximize the number of gallons she can buy with her $100 budget.

Question 19

Ms. Sweettooth always consumes iced tea and sugar in fixed proportions: 8 ounces of iced tea to 3 teaspoons of sugar. This implies that for Ms. Sweettooth the marginal rate of substitution of iced tea for sugar is:

Accepted Answer

Since Ms. Sweettooth consumes iced tea and sugar in fixed proportions, the marginal rate of substitution is undefined because she does not substitute one for the other; they are consumed in a fixed ratio.

Question 20

Use the following to answer questions:
Figure: Consumer Equilibrium I
The figure shows three of Owen's indifference curves for pizza and soda per week. Owen has $180 per month to spend on the two goods. The price of a pizza is $20, and the price of a soda is $1.50. 
-(Figure: Consumer Equilibrium I) Look at the figure Consumer Equilibrium I. What is Owen's marginal rate of substitution of pizza for soda when he is consuming his optimal consumption bundle?

Accepted Answer

The answer of Use the following to answer questions:
Figure: Consumer...

Quiz 10: The Rational Consumer

Mr. Black always consumes coffee and cream in fixed proportions-8 ounces of coffee to 1 ounce of cream. This implies that for Mr. Black:

Cookie Monster always consumes cookies and milk in fixed proportions: 4 cookies to 8 ounces of milk. Which of the following combinations of cookies and milk will give Cookie Monster the highest total utility?

Jake considers fries and onion rings perfect substitutes. The indifference curve between fries and onion rings must be:

Josh is a house painter who always purchases two paintbrushes for every gallon of paint, regardless of the relative prices. In a graph, these indifference curves would appear as:

LaToya sees honey and sugar as perfect substitutes. She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar. If the price of honey is half that of sugar, LaToya will use:

Ms. Sweettooth always consumes iced tea and sugar in fixed proportions: 8 ounces of iced tea to 3 teaspoons of sugar. This implies that for Ms. Sweettooth:

Mario sees popcorn and pretzels as perfect substitutes. He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels. If the price of a cup of popcorn is $3 and the price of a cup of pretzels is $1, Mario will eat:

Mario sees popcorn and pretzels as perfect substitutes. He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels. If Mario consumes only popcorn, then we know that the relative price of popcorn in terms of pretzels is:

Mario sees popcorn and pretzels as perfect substitutes. He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels. If the price of a cup of popcorn equals the price of a cup of pretzels, Mario will eat:

Mario sees popcorn and pretzels as perfect substitutes. He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels. His indifference curves for popcorn and pretzels are _, and at the optimal consumption bundle his marginal rate of substitution of popcorn for pretzels is _.

LaToya sees honey and sugar as perfect substitutes. She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar. If honey is three times as expensive as sugar, LaToya will use:

If Coke and Pepsi are perfect substitutes for Lynn, her indifference curves are:

LaToya sees honey and sugar as perfect substitutes. She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar. If honey is twice as expensive as sugar, LaToya will:

Mario sees popcorn and pretzels as perfect substitutes. He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels. If the price of a cup of popcorn is $4 and the price of a cup of pretzels is $1, Mario will eat:

Ms. Sweettooth always consumes iced tea and sugar in fixed proportions: 8 ounces of iced tea to 3 teaspoons of sugar. Which of the following combinations of iced tea and sugar will give Ms. Sweettooth the highest total utility?

Ms. Sweettooth always consumes iced tea and sugar in fixed proportions: 8 ounces of iced tea to 3 teaspoons of sugar. This implies that for Ms. Sweettooth the marginal rate of substitution of iced tea for sugar is: