Question 1

Use the following to answer questions:
Figure: Oreos and Apples 
-(Figure: Oreos and Apples) Look at the figure Oreos and Apples, which provides an indifference curve map for Diego. Diego prefers:

Accepted Answer

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

Question 2

Use the following to answer questions: 
-(Table: Madeline's Preferences for T-Shirts and Coffee) Look at the table Madeline's Preferences for T-Shirts and Coffee. Assume each consumption bundle provides the same level of utility. Suppose Madeline is consuming bundle A but then changes her consumption and slowly moves along her indifference curve to bundles B, C, D, and finally E. As she moves toward bundle E, she gives up:

Accepted Answer

As Madeline moves along her indifference curve from bundle A to E, she gives up a decreasing number of T-shirts to obtain another cup of coffee, reflecting the diminishing marginal rate of substitution.

Question 3

Since indifference curves depend on the _____ for individuals, this means that two consumers with the same income _____.

Accepted Answer

Indifference curves depend on the consumer's utility function, which can vary between individuals. Therefore, two consumers with the same income may have different preferences and therefore consume different amounts of the two goods. Choice A is incorrect because it implies that the consumers have no choice in their consumption patterns, which is not true. Choice C is incorrect because the optimal utility rule refers to how consumers allocate their income between two goods, not how much they consume of each. Choice D is incorrect because marginal utility does not determine overall consumption patterns.

Question 4

Diminishing marginal utility is the reason most indifference curves:

Accepted Answer

Diminishing marginal utility means that as a person consumes more of a good or service, the additional satisfaction (or utility) they receive from each additional unit decreases. This results in a downward sloping indifference curve, as consumers are willing to give up less and less of one good in exchange for more and more of the other good.

Question 5

Use the following to answer questions:
Scenario: Music Downloads and Streamed Movies
Phillip has an income of $300 per month, which he uses to purchase music downloads (MD) and streamed movies (SM). Each music download costs $1 and each streamed movie costs $5.
-(Scenario: Music Downloads and Streamed Movies) Read the scenario Music Downloads and Streamed Movies. Which of the following equations expresses Phillip's budget line?

Accepted Answer

The budget line equation is 300 = 1MD + 5SM, which means that Phillip has a total of $300 to spend on music downloads and streamed movies, and that each music download costs $1 and each streamed movie costs $5.

Question 6

Use the following to answer questions: 
-(Table: Madeline's Preferences for T-Shirts and Coffee) Look at the table Madeline's Preferences for T-Shirts and Coffee. Assume each consumption bundle provides the same level of utility. As Madeline moves from bundle A to bundle E, her total utility:

Accepted Answer

Since each consumption bundle provides the same level of utility, Madeline's total utility stays the same as she moves from bundle A to bundle E.

Question 7

Jennifer has $10 to spend on tomatoes and cheese. The price of a pound of tomatoes is $2 and the price of a pound of cheese is $4. She has found her utility-maximizing bundle at 2 pounds of tomatoes and 1.5 pounds of cheese. Suppose Jennifer's income falls to $8 and the price of tomatoes falls to $1. The price of cheese remains the same. Jennifer is considering a bundle of no tomatoes and 2 units of cheese. What is your advice?

Accepted Answer

The answer of Jennifer has $10 to spend on tomatoes...

Question 8

A typical indifference curve is _____, and its slope is the _____ of the good on the horizontal axis divided by the marginal utility of the good on the vertical axis.

Accepted Answer

A typical indifference curve is downward-sloping, indicating that as you consume more of one good, you are willing to give up less of the other good to maintain satisfaction. Its slope is the negative of the marginal utility of the good on the vertical axis divided by the marginal utility of the good on the horizontal axis. This is because the slope represents the rate at which the consumer is willing to substitute one good for the other to maintain a constant level of satisfaction or utility, and this rate is determined by the relative levels of marginal utility of the two goods.

Question 9

Use the following to answer questions:
Figure: Oreos and Apples 
-(Figure: Oreos and Apples) Look at the figure Oreos and Apples, which provides an indifference curve map for Diego. The consumption bundle that provides the highest level of utility is bundle:

Accepted Answer

The highest level of utility is represented by the highest indifference curve. Bundles E or F lie on the highest indifference curve in the map, indicating they provide the highest utility.

Question 10

The ratio of the prices of two goods is equal to the ratio of the marginal utilities of the two goods at:

Accepted Answer

The optimal consumption bundle is where the consumer maximizes their utility given their budget constraint. At this point, the marginal utility per dollar spent on each good is equal. Therefore, the ratio of the marginal utilities will be equal to the ratio of the prices of the goods.

Question 11

Kelli likes to bake cookies and doesn't care whether she uses corn oil or safflower oil in her recipes. To her, they provide the same function and the same taste. What do Kelli's indifference curves look like for corn oil and safflower oil? What is her tangency condition when it comes to finding the utility-maximizing bundle?

Accepted Answer

The answer of Kelli likes to bake cookies and doesn't...

Question 12

To find her optimal consumption bundle, Vanessa would have to:

Accepted Answer

The answer of To find her optimal consumption bundle, Vanessa...

Question 13

Ellen consumes goods X and Y. As she consumes less X, she must be compensated with additional units of Y, and her marginal rate of substitution of X for Y decreases as she consumes more Y. This means that goods X and Y are:

Accepted Answer

Goods X and Y are ordinary because the diminishing marginal rate of substitution indicates a typical consumer behavior of deriving less satisfaction from each additional unit of a good as they consume more of it, which is characteristic of ordinary goods.

Question 14

Use the following to answer questions: 
-(Table: Madeline's Preferences for T-Shirts and Coffee) Look at the table Madeline's Preferences for T-Shirts and Coffee. Assume each consumption bundle provides the same level of utility for Madeline. Suppose Madeline is consuming bundle C. If she changes her purchases to bundle D, this means that she:

Accepted Answer

Madeline moves from bundle C to bundle D by giving up 2 T-shirts to obtain 1 more cup of coffee.

Question 15

Use the following to answer questions:
Figure: Oreos and Apples 
-(Figure: Oreos and Apples) Look at the figure Oreos and Apples, which provides an indifference curve map for Diego. As Diego moves along an indifference curve from point F to point E, he buys _____ Oreos to obtain _____ apples.

Accepted Answer

As Diego moves along an indifference curve from point F to point E, he buys fewer Oreos to obtain more apples, maintaining the same level of overall satisfaction.

Question 16

Use the following to answer questions:
Scenario: Music Downloads and Streamed Movies
Phillip has an income of $300 per month, which he uses to purchase music downloads (MD) and streamed movies (SM). Each music download costs $1 and each streamed movie costs $5.
-(Scenario: Music Downloads and Streamed Movies) Read the scenario Music Downloads and Streamed Movies. Phillip's optimal consumption bundle will be one whose:

Accepted Answer

Phillip's optimal consumption bundle is where his budget line is tangent to his highest indifference curve, indicating the highest level of satisfaction he can achieve given his budget constraint.

Question 17

Use the following to answer questions:
Scenario: Music Downloads and Streamed Movies
Phillip has an income of $300 per month, which he uses to purchase music downloads (MD) and streamed movies (SM). Each music download costs $1 and each streamed movie costs $5.
-(Scenario: Music Downloads and Streamed Movies) Read the scenario Music Downloads and Streamed Movies. Suppose Phillip's income falls by half, and the prices for both music downloads and streamed movies also fall by half. As a result of this, Phillip:

Accepted Answer

Phillip's income and the prices of both goods have fallen by half, meaning his purchasing power remains unchanged. Therefore, his budget line does not change.

Question 18

The assumption that more is preferred to less explains why indifference curves:

Accepted Answer

Indifference curves represent combinations of goods that give the consumer the same level of satisfaction or utility. The assumption that more is preferred to less means that the consumer prefers higher levels of consumption of a good to lower levels. Therefore, indifference curves that lie farther from the origin represent higher levels of utility as they represent greater consumption of both goods depicted on the graph.

Question 19

When an individual's consumption of an additional unit of a good generates a smaller increase in total utility than the previous unit consumed, then this person's indifference curve will be:

Accepted Answer

This phenomenon is described by the law of diminishing marginal utility, which states that as a person consumes more units of a good, the additional satisfaction (utility) gained from consuming each additional unit decreases. Indifference curves, which represent combinations of goods that provide the same level of utility to the consumer, are typically convex (bowed toward the origin) to reflect this diminishing marginal utility.

Question 20

An indifference curve map illustrates _____ levels of utility, while each indifference curve in the map indicates consumption bundles that yield _____ level of utility for an individual.

Accepted Answer

An indifference curve map shows various levels of utility through different curves, where each curve represents combinations of goods or services that provide the same level of utility to the consumer.

Quiz 10: The Rational Consumer

Use the following to answer questions: Figure: Oreos and Apples -(Figure: Oreos and Apples) Look at the figure Oreos and Apples, which provides an indifference curve map for Diego. Diego prefers:

Since indifference curves depend on the _ for individuals, this means that two consumers with the same income _.

Diminishing marginal utility is the reason most indifference curves:

Use the following to answer questions: -(Table: Madeline's Preferences for T-Shirts and Coffee) Look at the table Madeline's Preferences for T-Shirts and Coffee. Assume each consumption bundle provides the same level of utility. As Madeline moves from bundle A to bundle E, her total utility:

A typical indifference curve is _, and its slope is the _ of the good on the horizontal axis divided by the marginal utility of the good on the vertical axis.

Use the following to answer questions: Figure: Oreos and Apples -(Figure: Oreos and Apples) Look at the figure Oreos and Apples, which provides an indifference curve map for Diego. The consumption bundle that provides the highest level of utility is bundle:

The ratio of the prices of two goods is equal to the ratio of the marginal utilities of the two goods at:

To find her optimal consumption bundle, Vanessa would have to:

Ellen consumes goods X and Y. As she consumes less X, she must be compensated with additional units of Y, and her marginal rate of substitution of X for Y decreases as she consumes more Y. This means that goods X and Y are:

Use the following to answer questions: Figure: Oreos and Apples -(Figure: Oreos and Apples) Look at the figure Oreos and Apples, which provides an indifference curve map for Diego. As Diego moves along an indifference curve from point F to point E, he buys _ Oreos to obtain _ apples.

The assumption that more is preferred to less explains why indifference curves:

When an individual's consumption of an additional unit of a good generates a smaller increase in total utility than the previous unit consumed, then this person's indifference curve will be:

An indifference curve map illustrates _ levels of utility, while each indifference curve in the map indicates consumption bundles that yield _ level of utility for an individual.

Quiz 10: The Rational Consumer

Use the following to answer questions: Figure: Oreos and Apples -(Figure: Oreos and Apples) Look at the figure Oreos and Apples, which provides an indifference curve map for Diego. Diego prefers:

Since indifference curves depend on the _____ for individuals, this means that two consumers with the same income _____.

Diminishing marginal utility is the reason most indifference curves:

Use the following to answer questions: -(Table: Madeline's Preferences for T-Shirts and Coffee) Look at the table Madeline's Preferences for T-Shirts and Coffee. Assume each consumption bundle provides the same level of utility. As Madeline moves from bundle A to bundle E, her total utility:

A typical indifference curve is _____, and its slope is the _____ of the good on the horizontal axis divided by the marginal utility of the good on the vertical axis.

Use the following to answer questions: Figure: Oreos and Apples -(Figure: Oreos and Apples) Look at the figure Oreos and Apples, which provides an indifference curve map for Diego. The consumption bundle that provides the highest level of utility is bundle:

The ratio of the prices of two goods is equal to the ratio of the marginal utilities of the two goods at:

To find her optimal consumption bundle, Vanessa would have to:

Ellen consumes goods X and Y. As she consumes less X, she must be compensated with additional units of Y, and her marginal rate of substitution of X for Y decreases as she consumes more Y. This means that goods X and Y are:

Use the following to answer questions: Figure: Oreos and Apples -(Figure: Oreos and Apples) Look at the figure Oreos and Apples, which provides an indifference curve map for Diego. As Diego moves along an indifference curve from point F to point E, he buys _____ Oreos to obtain _____ apples.

The assumption that more is preferred to less explains why indifference curves:

When an individual's consumption of an additional unit of a good generates a smaller increase in total utility than the previous unit consumed, then this person's indifference curve will be:

An indifference curve map illustrates _____ levels of utility, while each indifference curve in the map indicates consumption bundles that yield _____ level of utility for an individual.

Since indifference curves depend on the _ for individuals, this means that two consumers with the same income _.

A typical indifference curve is _, and its slope is the _ of the good on the horizontal axis divided by the marginal utility of the good on the vertical axis.

Use the following to answer questions: Figure: Oreos and Apples -(Figure: Oreos and Apples) Look at the figure Oreos and Apples, which provides an indifference curve map for Diego. As Diego moves along an indifference curve from point F to point E, he buys _ Oreos to obtain _ apples.

An indifference curve map illustrates _ levels of utility, while each indifference curve in the map indicates consumption bundles that yield _ level of utility for an individual.