4 - 1 Suppose the utility function for a firm manager is U...

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1. Suppose the utility function for a firm manager is U = + bQ, where Q is output, is profit, and b is a positive constant. How would the firm's output compare with what it would be if the manager's objective was to maximize profit? A. It would be greater than the profit-maximizing output. B. It would be less than the profit-maximizing output. C. It would be the same as the profit-maximizing output. D. None of the statements associated with this question are correct. 2. Suppose a consumer with an income of \$100 who is faced with P x = 1 and P y = 1/2. What is the market rate of substitution between good X (horizontal axis) and good Y (vertical axis)? 3. The difference between a price decrease and an increase in income is that 4. Joe prefers a three pack of soda to a six-pack. What properties does this preference violate? 5. Which of the following is true? A. Indifference curves may intersect. B. At a point of consumer equilibrium, the MRS equals 1. C. If income increases, a consumer will always consume more of a good. D. None of the statements associated with this question are correct. 6. If the price of good X is \$10 and the price of good Y is \$5, how much of good X would the consumer purchase if her income is \$15? 7. Individuals who purchase services and goods for the purpose of consumption are:

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8. What is/are the important things that must be developed when characterizing consumer behavior? 9. The possible goods and services a consumer can afford to consume represents the: A. consumer behavior. B. consumer preferences. C. consumer status. D. consumer opportunities.
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