practiceexam2 - ECON 251 Practice Exam#2 Spring 2007...

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ECON 251 Practice Exam #2 Spring 2007 Quantity of pens Total utility from pens Quantity of pencils Total utility from pencils 0 0 0 0 1 90 1 70 2 155 2 120 3 200 3 150 4 225 4 165 5 240 5 174 6 246 6 176 1. The table above gives the utility from pens and pencils. If pens and pencils both cost $5 each and the consumer has an income of $45, which of the following combinations maximizes the consumer’s utility (consumer equilibrium)? a. 3 pens and 6 pencils. b. 4 pens and 5 pencils. c. 5 pens and 4 pencils. d. 6 pens and 3 pencils. 2. The table below contains different combinations of pizza and burgers that Jayson can afford in a given week. His income is $100 per week. What are the prices of pizzas and burgers? Basket Pizzas Burgers A 0 25 B 4 17 C 8 9 D 12.5 0
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5 1 2 3 4 smoofers B 1 b 6 7 8 IC 1 widgets 3. If movie tickets cost $10, and sodas cost $2, and your income is $30, what would the equation of your budget line be? (M = quantity of movie tickets and S = quantity of sodas) 4. At point ‘ b ’ on the following graph, which of the following is true? The budget line is labeled “B 1 ”. 5. Refer to the previous graph. What is the consumer’s marginal rate of substitution at point ‘b’? a. 5 widgets per smoofer b. 5 smoofers per widget c. 3.5 widgets per smoofer d. 3.5 smoofers per widget
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6. Refer to the last graph. What is the marginal rate of substitution at the point where the consumer maximizes his utility, given the budget line B 1 ? 7. If two goods are perfect substitutes, then the shapes of the indifference curves are 8. Suppose the price of a pair of shoes 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 shoes is 100 units and the marginal utility of a T-shirt is 75 units, the consumer is
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