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A b c d e the marginal utility of oranges will be

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Unformatted text preview: tility of oranges will be equal to the marginal utility of grapes The marginal utility of oranges will be greater than the marginal utility of grapes The marginal utility of grapes will be greater than the marginal utility of oranges Both b) and c) are possible None of the above Solution: a) The marginal utility of oranges will be equal to the marginal utility of grapes MU orange MU grape MU grape Pgrape 2.5 Consumer equilibrium = = = =1 Porange Pgrape MU orange Porange 2.5 MU grape = MU orange Page 14 of 33 ©Prep101 www.prep101.com/freestuff Suppose there are three consumers in the market. Use the following charts to answer question 23: P P P Demand (Steve) 4 4 2 Demand (Jan) Demand (George) 2 1 2 3 4 Quantity 4 2 1 2 3 4 Quantity 1 2 3 4 5 6 Quantity Q23. What will happen to the quantity demanded in the market if the price increases from 2 to 4? a) b) c) d) e) The quantity demanded in the market will increase by 4 The quantity demanded in the market will decrease by 2 The quantity demanded in the market will increase by 2 The quantity demanded in the market will decrease by 4 The quantity demanded in the market will not change Solution: d) The quantity demanded in the market will decrease by 4 When P=2, Steve demands 4 units, George demands 2 units, and Jan demands 6 units total quantity demanded in the market= 4 + 2 + 6=12 When P=4, Steve demands 3 units, George demands 1 unit, and Jan demands 4 units total quantity demanded in the market= 3 + 1 + 4=8 The quantity demand...
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