HW4_anskeys - HW4 (Chapter 8) Part I. Multiple Choice...

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HW4 (Chapter 8) Part I. Multiple Choice Questions – Choose the best answer. (40%) 1. B. 2. B. 3. A. 4. B. 5. D. 6. A. Part II. Short Answer Questions (60%) 1. Textbook page 199, Q6. a. How many oranges a day can the school afford to serve if it serves no grapes? Ans: If the school serves no grapes, it can afford to serve 100 oranges. b. How many servings of grapes can the school afford each day if it serves no oranges? Ans: If the school serves no oranges, it can afford to serve to serve 56 servings of grapes. c. If the school provides 50 oranges a day and maximizes utility, how many servings of grapes does it provide? Ans: If the school maximizes utility, it will spend all of its budget. If the school is providing 50 oranges, it is spending $7 on oranges, leaving it $7 to spend on grapes. With $7 to spend on grapes, the school buys 28 servings of grapes. d. If the marginal utility from an orange is 14 units of utility, what is the marginal utility from a serving of grapes? Ans: The (MU O /P O ) = (MU G /P G ). Rearranging gives (MU O /P O ) × P G = MU G , so (14 units of utility/14 cents) × 25 cents = MU G , so the marginal utility of a serving of grapes is 25 units of utility. 2. Textbook page 201, Q11.
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a. Make a table that shows the various combinations of hours spent playing golf and tennis that Cindy can afford. b. In your table, add two columns and list Cindy’s marginal utility per dollar from golf and from tennis. Hours per month Marginal utility from golf Marginal utility from tennis 1 80 40 2 60 36 3 40 30 4 30 10 5 20 5 6 10 2 7 6 1 Hours playing golf Marginal utility per dollar from golf Hours playing tennis Marginal utility per dollar from tennis 7 0.6 0 6 1.0 2 7.2 5 2.0 4 2.0 4 3.0 6 0.4 3 4.0 8 2 6.0 10 1 8.0 12 0 14
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c. How long does Cindy spend playing golf and how long does she spend playing tennis to
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HW4_anskeys - HW4 (Chapter 8) Part I. Multiple Choice...

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