Question 1

Bob values the utility of a single scoop of Baskin-Robbins ice cream at $1.50.A double scoop gives total utility of $2.25, while a triple scoop yields $2.60.Baskin-Robbins charges $1.35 for a single, $1.95 for a double, and $2.35 for a triple.How many scoops will Bob buy?

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Question 2

Use the law of diminishing marginal utility to explain why Domino's and Pizza Hut allow the purchase of a second pizza for only $4 when one pays full price (around $10) for the first pizza.Why not simply charge $7 a pizza instead?

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Question 3

Why is it that the consumer can maximize total net utility only if the purchase quantity brings marginal utility as close as possible to equality with price?

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Question 4

Are there ever exceptions to the law of demand?

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Question 5

If I use 1,000 gallons of water a month at a price of $.01 a gallon, is my consumer surplus likely to be large or small? Explain.

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Question 6

If marginal net utility is positive, the consumer must be buying too small a quantity to maximize total net utility.Why?

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Question 7

Draw the point of consumer equilibrium from an indifference map and budget line.Explain why this is the point of optimization.Be sure your diagram is fully and correctly labeled.

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Question 8

Draw individual demands for caviar for Al, Barbara, Chuck, and Denise where Al's demand is relatively inelastic, Barbara's is elastic, Chuck's is upward sloping, and Denise refuses to eat caviar at any price.Then draw the corresponding market demand.

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Question 9

The authors state that mutual gains must exist from trade.Explain their reasoning.

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Question 10

Use consumer indifference curves and budget lines to show the optimal consumption curves for a normal good and for an inferior good.(Use two graphs.) Be sure your graphs are completely and correctly labeled.

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Question 11

Table 5-3
 $\begin{array}{cc}
\underline { \text { Ice Cream Cones }}&\underline { \text { Total Utility }}\
1 & 50 \
2 & 80 \
3 & 95 \
4 & 95
\end{array}$
-Using Table 5-3, graph the marginal utility curve.

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 \(\begin{array}{cc}
\underline { \text { Ice...

Question 12

Use consumer indifference curves and budget lines to illustrate the effects of an increase in income for a normal good and an inferior good (use two graphs).Be sure your diagrams are fully and correctly labeled.

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Question 13

Suppose the price of butter falls because milk price supports are removed.Will people's tastes shift away from margarine and toward butter?

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Question 14

If you go to a bar tonight and have three beers before going home to study economics, will you likely receive some consumer surplus? Explain why or why not.

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Question 15

What is marginal analysis?

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Question 16

You have five hours left to study for two exams tomorrow.The relationship between hours of study and test scores is as follows:
 $\begin{array}{cccc}
& \text { Economics } &&&&  { \text { Sociology } } \
 \underline {  \text { Hours }}&& \underline { \text { Scare } } &\quad\quad& \underline {  \text { Hours }}&& \underline { \text { Scare } } \
1 && 50 &\quad\quad\quad& 1 && 75 \
2 && 65 &\quad\quad& 2 && 85 \
3 && 75 &\quad\quad& 3 && 90 \
4 && 80 &\quad\quad& 4 && 93 \
5 && 85 &\quad\quad& 5 && 5
\end{array}$ 
Use the rule for determining optimal purchases to allocate your time, where each point is one "util" of utility.

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Question 17

Figure 5-24
 
-Given the demand curve in Figure 5-24, explain how consumer's surplus is calculated.

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-Given the demand curve in...

Question 18

What are the properties of indifference curves?

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Question 19

Alice has $10 to spend on wine and cheese.If wine is $2.50 a glass and cheese $2, draw the corresponding budget line.Then draw three indifference curves, one showing the amount of wine and cheese Alice would choose, one showing less preferred combinations of wine and cheese, and the last showing preferred but unaffordable combinations.

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Question 20

What is the relationship between marginal utility and an individual demand curve?

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Quiz 5: Consumer Choice: Individual and Market Demand