ECO 3101 MIDTERM exam with correct answers
the marginal rate of substitution of one good for another - **🔰 VERIFIED ANSWERS🔰
✔✔The slope of an indifference curve reveals
the assumption of diminishing marginal rate of substitution - **🔰 VERIFIED
ANSWERS🔰 ✔✔indifference curves are convex at the origin because
horizontal lines - **🔰 VERIFIED ANSWERS🔰 ✔✔Envision a graph with meat on the
horizontal axis and vegetables on the vertical axis. A strict vegetarian would have
indifference curves that are:
transitivity - **🔰 VERIFIED ANSWERS🔰 ✔✔If a consumer prefers basket A to basket B
and basket B to basket C, then the consumer also prefers A to C. This assumption is called:
completeness - **🔰 VERIFIED ANSWERS🔰 ✔✔you have an opinion about any
possibility combination
monotonicity - **🔰 VERIFIED ANSWERS🔰 ✔✔you are no worse off with more
convexity - **🔰 VERIFIED ANSWERS🔰 ✔✔prefer mixture over extremes
there will be no effect on the budget line - **🔰 VERIFIED ANSWERS🔰 ✔✔If prices and
income in a two-good society double, what will happen to the budget line?
-7/15 - **🔰 VERIFIED ANSWERS🔰 ✔✔A consumer has $100 per day to spend on
product A, which has a unit price of $7, and product B, which has a unit price of $15. What
is the slope of the budget line if good A is on the horizontal axis and good B is on the vertical
axis?
, 6 hot dogs 6 buns - **🔰 VERIFIED ANSWERS🔰 ✔✔Sue views hot dogs and hot dog buns
as perfect complements in her consumption, and the corners of her indifference curves
follow the 45-degree line. Suppose the price of hot dogs is $5 per package (8 hot dogs), the
price of buns is $3 per package (8 hot dog buns), and Sue's budget is $48 per month. What is
her optimal choice under this scenario?
marginal benefit equals marginal cost - **🔰 VERIFIED ANSWERS🔰 ✔✔satisfaction for
consumption is maximized
120 - **🔰 VERIFIED ANSWERS🔰 ✔✔Monica consumes only goods A and B. Suppose
that her marginal utility from consuming good A is equal to 1/Qa, and her marginal utility
from consuming good B is 1/Qb. If the price of A is $0.50, the price of B is $4.00, and the
Monica's income is $120.00, how much of good A will she purchase?
increase pepsi reduce burger - **🔰 VERIFIED ANSWERS🔰 ✔✔Bill currently uses his
entire budget to purchase 5 cans of Pepsi and 3 hamburgers per week. The price of Pepsi is
$1 per can, the price of a hamburger is $2, Bill's marginal utility from Pepsi is 4, and his
marginal utility from hamburgers is 6. Bill could increase his utility by:
..... - **🔰 VERIFIED ANSWERS🔰 ✔✔An individual consumes products X and Y and
spends $25 per time period. The prices of the two goods are $3 per unit for X and $2 per unit
for Y. The consumer in this case has a utility function expressed as:
U(X,Y) = .5XY
a. Express the budget equation mathematically.
b. Determine the values of X and Y that will maximize utility in the consumption of X and
Y.
c. Determine the total utility that will be generated per unit of time for this individual.
8 units - **🔰 VERIFIED ANSWERS🔰 ✔✔Suppose your utility function for food (F) and
clothing (C) is u(F,C) = F + 4C. If you reduce your clothing consumption by 2 units, how
the marginal rate of substitution of one good for another - **🔰 VERIFIED ANSWERS🔰
✔✔The slope of an indifference curve reveals
the assumption of diminishing marginal rate of substitution - **🔰 VERIFIED
ANSWERS🔰 ✔✔indifference curves are convex at the origin because
horizontal lines - **🔰 VERIFIED ANSWERS🔰 ✔✔Envision a graph with meat on the
horizontal axis and vegetables on the vertical axis. A strict vegetarian would have
indifference curves that are:
transitivity - **🔰 VERIFIED ANSWERS🔰 ✔✔If a consumer prefers basket A to basket B
and basket B to basket C, then the consumer also prefers A to C. This assumption is called:
completeness - **🔰 VERIFIED ANSWERS🔰 ✔✔you have an opinion about any
possibility combination
monotonicity - **🔰 VERIFIED ANSWERS🔰 ✔✔you are no worse off with more
convexity - **🔰 VERIFIED ANSWERS🔰 ✔✔prefer mixture over extremes
there will be no effect on the budget line - **🔰 VERIFIED ANSWERS🔰 ✔✔If prices and
income in a two-good society double, what will happen to the budget line?
-7/15 - **🔰 VERIFIED ANSWERS🔰 ✔✔A consumer has $100 per day to spend on
product A, which has a unit price of $7, and product B, which has a unit price of $15. What
is the slope of the budget line if good A is on the horizontal axis and good B is on the vertical
axis?
, 6 hot dogs 6 buns - **🔰 VERIFIED ANSWERS🔰 ✔✔Sue views hot dogs and hot dog buns
as perfect complements in her consumption, and the corners of her indifference curves
follow the 45-degree line. Suppose the price of hot dogs is $5 per package (8 hot dogs), the
price of buns is $3 per package (8 hot dog buns), and Sue's budget is $48 per month. What is
her optimal choice under this scenario?
marginal benefit equals marginal cost - **🔰 VERIFIED ANSWERS🔰 ✔✔satisfaction for
consumption is maximized
120 - **🔰 VERIFIED ANSWERS🔰 ✔✔Monica consumes only goods A and B. Suppose
that her marginal utility from consuming good A is equal to 1/Qa, and her marginal utility
from consuming good B is 1/Qb. If the price of A is $0.50, the price of B is $4.00, and the
Monica's income is $120.00, how much of good A will she purchase?
increase pepsi reduce burger - **🔰 VERIFIED ANSWERS🔰 ✔✔Bill currently uses his
entire budget to purchase 5 cans of Pepsi and 3 hamburgers per week. The price of Pepsi is
$1 per can, the price of a hamburger is $2, Bill's marginal utility from Pepsi is 4, and his
marginal utility from hamburgers is 6. Bill could increase his utility by:
..... - **🔰 VERIFIED ANSWERS🔰 ✔✔An individual consumes products X and Y and
spends $25 per time period. The prices of the two goods are $3 per unit for X and $2 per unit
for Y. The consumer in this case has a utility function expressed as:
U(X,Y) = .5XY
a. Express the budget equation mathematically.
b. Determine the values of X and Y that will maximize utility in the consumption of X and
Y.
c. Determine the total utility that will be generated per unit of time for this individual.
8 units - **🔰 VERIFIED ANSWERS🔰 ✔✔Suppose your utility function for food (F) and
clothing (C) is u(F,C) = F + 4C. If you reduce your clothing consumption by 2 units, how
