Exercises on Utility_Optimization_with_Sol0

Exercises on Utility_Optimization_with_Sol0 - Maximization...

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Maximization of utility (Answers at the end) 1The goal of a consumer is to a. acquire the largest possible quantity of goods. b. acquire the largest possible variety of goods. c. maximize utility. d. save money. 2If a consumer has allocated his budget and found the combination of goods where all marginal utilities divided by price are equal, what would happen if the consumer were forced to consume some other combination of goods? The consumer a. might be better-off with a higher level of total utility. b. will have lower total utility. c. will not experience any change in total utility. d. None of the above answers is correct. 3The table above gives Sam’s total utility from consuming bottles of soda and slices of pizza. The price of pizza is \$2 per slice and the price of soda is \$1 per bottle. His marginal utility from the 4 th slice of pizza is a. 7. b. 3.50. c. 34. 1

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4 The table above gives Sam’s total utility from consuming bottles of soda and slices of pizza. The price of pizza is \$2 per slice and the price of soda is \$1 per bottle. Sam has \$9 in his budget. When Sam maximizes his utility he buys ____ bottles of soda and ____ slices of pizza. a. 3; 3 b. 6; 4 c. 2; 6 d. None of the above answers is correct. 5In a month, Samantha consumes the quantity of lobster dinners so that her marginal utility from a lobster dinner is 500 units. The price of a lobster dinner is \$25. She also is consuming the quantity of spaghetti dinners so that its marginal utility is 300 units, while its price is \$15. Samantha is allocating her entire budget. What should she do to maximize her total utility? a. consume more lobster dinners and fewer spaghetti dinners b. consume more spaghetti dinners and fewer lobster dinners c. consume the current combination of lobster and spaghetti dinners d. Not enough information is given to answer the question. 6 Suppose the price of a pair of jeans is \$25 and the price of a T-shirt is \$15. The consumer’s budget is entirely allocated. If the marginal utility of a pair of jeans is 100 units and the marginal utility of a Tshirt is 75 units, the consumer is a. in equilibrium because his or her utility is maximized. b. not in equilibrium and should purchase fewer jeans and more T-shirts. c. not in equilibrium and should purchase fewer T-shirts and more jeans. d. not in equilibrium, but should maintain the current level of purchases.
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Exercises on Utility_Optimization_with_Sol0 - Maximization...

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