Question 1

This graph shows three different budget constraints: A,B,andC.

If Bert has budget constraint A in the graph shown,what is his opportunity cost of three gallons of milk?

Accepted Answer

The opportunity cost of three gallons of milk is the amount of soda that Bert would have to give up to have the milk. With budget constraint A, Bert can either buy 6 cases of soda or 3 gallons of milk. Therefore, the opportunity cost of 3 gallons of milk is 6-3=3 cases of soda. This means that Bert would have to give up 4 cases of soda to have 3 gallons of milk, which is the best choice available.

Question 2

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. 
Considering the information in the table shown,if Jack consumes 3 popsicles and 1 ice cream cone,then:

Accepted Answer

The answer of This table shows the different combinations of...

Question 3

Zachary plays the piano for a half hour and gains utility of 7.He then watches TV for a half hour,then goes back to playing the piano again.Using the concept of utility to explain his choices,we can say:

Accepted Answer

Zachary gained utility of 7 from playing the piano for a half hour, and he went back to playing the piano after watching TV for a half hour. This indicates that he enjoys playing the piano more than watching TV, and that the utility gained from watching TV was not greater than playing the piano for a second half hour.

Question 4

This graph shows three different budget constraints: A,B,andC.

If Gary has budget constraint A,and the price of milk is $3 a gallon,what is Gary's income?

Accepted Answer

The answer of This graph shows three different budget constraints:...

Question 5

Dave and Buster play two games of tennis,then decide to go have lunch.Using the concept of utility to explain their choices,we can conclude that:

Accepted Answer

The concept of utility suggests that people make choices based on their personal satisfaction or happiness, which is maximized when they allocate their limited resources (such as time or money) to the option that provides them with the highest marginal utility (the additional satisfaction gained from consuming one more unit of a good or service). In this case, Dave and Buster already played two games of tennis, which means that the marginal utility of playing a third game is likely to be lower than the utility they would get from having lunch (since they would be hungry at this point). Therefore, they would choose to have lunch instead of playing another game of tennis. We cannot conclude whether they each won one game of tennis based on this information.

Question 6

A budget constraint is:

Accepted Answer

A budget constraint shows the various combinations of goods and services that a consumer can purchase with a given income level. It is a line that represents the maximum amount of goods and services that can be purchased with a limited amount of income, given the prices of those goods and services.

Question 7

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. 
Considering the information in the table shown,Jack's total utility from consuming bundle D would be:

Accepted Answer

Bundle D has a combination of 8 units of product X and 6 units of product Y, which gives a total utility of (8^0.5)(6^0.5) = 20. However, the price of this bundle is $10, which means that all other bundles are either more expensive or have a lower total utility. Therefore, Bundle D is the best choice for Jack.

Question 8

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. 
Considering the information in the table shown,if we assume Jack is a rational utility maximizer,then we can predict he will buy which bundle with his $10?

Accepted Answer

In order to determine the best choice for Jack, we need to look for the bundle that maximizes his utility given his budget constraint. Since Jack's income is $10 and the prices of the two goods are equal, his budget constraint is represented by a straight line with a slope of -1 passing through the two intercepts for each good.

To find the point of utility maximization, we look for the bundle that lies on the highest possible indifference curve and also is on or below the budget constraint. In this case, the highest indifference curve that is on or below the budget constraint is IC2, which corresponds to bundle C. Therefore, bundle C is the best choice for Jack.

Question 9

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. 
Considering the information in the table shown,if Jack decides to consume bundle D,we can conclude that Jack:

Accepted Answer

The answer of This table shows the different combinations of...

Question 10

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. 
Considering the information in the table shown,if Jack's income to spend on these two items were to increase to $16:

Accepted Answer

The answer of This table shows the different combinations of...

Question 11

This graph shows three different budget constraints: A,B,andC.

If Larry has budget constraint B in the graph shown,what is his opportunity cost of one gallon of milk?

Accepted Answer

The answer of This graph shows three different budget constraints:...

Question 12

Courtney goes for an hour bike ride and gains utility of 8.She stops and gets an ice cream cone,then rides for another hour.Using the concept of utility to explain her choice,we can say:

Accepted Answer

Since Courtney decided to get an ice cream cone after only an hour of bike riding, it indicates that the utility gained from the ice cream must be higher than the utility gained from an additional hour of bike riding. Hence, the utility gained from the ice cream was more than the second hour of bike riding, making choice D the correct answer.

Question 13

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. 
Considering the information in the table shown,the price of ice cream is:

Accepted Answer

The answer of This table shows the different combinations of...

Question 14

When someone is served pizza and soda for dinner,it is typical behavior to eat some pizza,then drink some soda,then eat more pizza,and so on,until the person stops consuming both.How can this behavior be explained using economic concepts?

Accepted Answer

The behavior can be explained using the concept of marginal utility, which states that individuals consume goods up to the point where the marginal utility gained from the last unit of consumption is equal to the price of the good. In this case, the individual eats pizza until the marginal utility gained from the last slice of pizza is lower than it is for soda, and then switches to drinking soda. This ensures that they are maximizing their utility by consuming both goods up to the point where the marginal utility is equal to the price.

Question 15

A budget constraint:

Accepted Answer

A budget constraint is the same across all individuals with the same income constraints as it represents the limit of what an individual can buy given their income level. However, each individual may have different preferences and therefore may choose to allocate their budget differently.

Question 16

This graph shows three different budget constraints: A,B,andC.

If Don has budget constraint C in the graph shown,what is the trade-off he faces in terms of the two goods?

Accepted Answer

The answer of This graph shows three different budget constraints:...

Question 17

A budget constraint:

Accepted Answer

A budget constraint shows the different combinations of goods and services that can be purchased with a given amount of income. Choice B accurately describes a budget constraint because it shows a constant dollar amount (income) spent on different combinations of goods, and each bundle brings a different amount of utility. Choices A and C are incorrect because they do not account for changes in utility or cost as different bundles are consumed. Choice D is incorrect because one of the options (B) is true.

Question 18

This graph shows three different budget constraints: A,B,andC.

If Joe has budget constraint C in the graph shown,what is the relative price of three gallons of milk?

Accepted Answer

Given that Joe has budget constraint C, we can see that the relative price of milk (the slope of the budget line) is equal to the negative of the ratio of the prices of soda and milk. By examining the slope of the budget line, we can see that the relative price of milk is 2/3, since the slope is -3/2.

To determine the best choice(s), we need to find the point on the budget line that maximizes Joe's utility. We don't have any information about Joe's preferences, so we can't say for certain what option he would choose.

However, we can identify the affordable bundles of goods that are available to Joe. At point A, Joe can buy 8 gallons of milk and no soda. At point B, Joe can buy 6 gallons of milk and 2 cases of soda. At point C, Joe can buy 4 gallons of milk and 4 cases of soda. At point D, Joe can buy 2 gallons of milk and 6 cases of soda.

To identify the best choice(s), we would need to know more about Joe's preferences, but we can say that any bundle on the budget line is affordable and any bundle inside the budget line is not affordable.

Question 19

A budget constraint:

Accepted Answer

A budget constraint shows different combinations of goods that a consumer can purchase with a given income level, where the total cost of each combination is the same. Therefore, option B, which indicates that a budget constraint shows different bundles of goods that all cost the same amount, is the correct answer. Option A is incorrect because a budget constraint does not reflect total utility but rather the affordability of different combinations of goods. Option C is also incorrect because a budget constraint does not necessarily reflect utility maximization. Option D is incorrect because a budget constraint does not provide information on maximizing total utility but rather on the affordability of different combinations of goods within a given income level.

Question 20

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. 
Considering the information in the table shown,if Jack consumes 2 popsicles and 2 ice cream cones:

Accepted Answer

The answer of This table shows the different combinations of...

Quiz 7: Consumer Behavior

This graph shows three different budget constraints: A,B,andC. If Bert has budget constraint A in the graph shown,what is his opportunity cost of three gallons of milk?

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. Considering the information in the table shown,if Jack consumes 3 popsicles and 1 ice cream cone,then:

Zachary plays the piano for a half hour and gains utility of 7.He then watches TV for a half hour,then goes back to playing the piano again.Using the concept of utility to explain his choices,we can say:

This graph shows three different budget constraints: A,B,andC. If Gary has budget constraint A,and the price of milk is $3 a gallon,what is Gary's income?

Dave and Buster play two games of tennis,then decide to go have lunch.Using the concept of utility to explain their choices,we can conclude that:

A budget constraint is:

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. Considering the information in the table shown,Jack's total utility from consuming bundle D would be:

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. Considering the information in the table shown,if we assume Jack is a rational utility maximizer,then we can predict he will buy which bundle with his $10?

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. Considering the information in the table shown,if Jack decides to consume bundle D,we can conclude that Jack:

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. Considering the information in the table shown,if Jack's income to spend on these two items were to increase to $16:

This graph shows three different budget constraints: A,B,andC. If Larry has budget constraint B in the graph shown,what is his opportunity cost of one gallon of milk?

Courtney goes for an hour bike ride and gains utility of 8.She stops and gets an ice cream cone,then rides for another hour.Using the concept of utility to explain her choice,we can say:

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. Considering the information in the table shown,the price of ice cream is:

When someone is served pizza and soda for dinner,it is typical behavior to eat some pizza,then drink some soda,then eat more pizza,and so on,until the person stops consuming both.How can this behavior be explained using economic concepts?

A budget constraint:

This graph shows three different budget constraints: A,B,andC. If Don has budget constraint C in the graph shown,what is the trade-off he faces in terms of the two goods?

A budget constraint:

This graph shows three different budget constraints: A,B,andC. If Joe has budget constraint C in the graph shown,what is the relative price of three gallons of milk?

A budget constraint:

This table shows the different combinations of goods that Jack can consume,given that his income to spend on these two items is $10. Considering the information in the table shown,if Jack consumes 2 popsicles and 2 ice cream cones: