Practice Questions
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If a consumer has a budget of $50 and prefers to buy two goods, A and B, how can they maximize their satisfaction given that good A costs $10 and good B costs $5?
Buying one A for $10 uses part of the budget and leaves $40 for B, which costs only $5 each. Other options are incorrect because This plan spends only...
If a consumer is at equilibrium while consuming two goods, X and Y, where an indifference curve intersects their budget line, which of the following conditions must hold true for maximizing utility?
At equilibrium the consumer chooses a bundle where the willingness to trade one good for another equals the market trade needed. Other options are inc...
In a scenario where a consumer faces a budget constraint of $60 to spend on goods X and Y, with good X priced at $12 and good Y at $4, how would an increase in the price of good X to $15 affect the consumer's optimal consumption choices, assuming their preferences are represented by indifference curves?
When the price of good X rises from $12 to $15, the consumer can buy less X for the same $60. Other options are incorrect because Some think the amoun...
If a consumer has a budget of $40 to spend on goods C and D, where good C is priced at $8 and good D at $4, which combination of goods would best optimize their utility?
The pair of 2 C and 5 D costs $36, which fits under the $40 budget. Other options are incorrect because Buying 3 C and 2 D uses less money than it cou...
Consider a consumer with a monthly budget of $80 who wants to purchase two goods, X and Y. If good X costs $16 and good Y costs $8, which combination of these goods would yield the highest level of satisfaction while adhering to the budget constraint?
The budget is $80. Other options are incorrect because Buying 4 X uses $64 and ignores Y entirely; Buying 10 Y spends the entire $80 but uses only one...
If a consumer is maximizing utility with a budget of $20, which combination of apples and oranges maximizes total utility given the marginal utilities and prices?
Buying 4 apples and 4 oranges uses all $20 and gives the same utility per dollar for apples and oranges. Other options are incorrect because Choosing ...
If a consumer is maximizing their total utility by purchasing four apples and four oranges, what underlying reason explains this optimal purchase combination?
Buying four apples and four oranges gives the best overall happiness because the extra satisfaction you get from each dollar spent on both fruits is t...
When considering optimal purchase combinations, which of the following statements are true regarding consumer choices and utility maximization? Select all that apply.
People buy the mix of goods that makes the money they spend give the same extra happiness, or marginal utility, for each dollar spent. Other options a...
Arrange the following steps to determine the optimal purchase combination for maximizing utility: 1) Calculate the marginal utility per dollar for each good, 2) Determine the consumer's budget constraint, 3) Compare the marginal utility per dollar across goods, 4) Choose the combination of goods that maximizes total utility within the budget.
First you must know how much money you have, so the budget step comes first. Other options are incorrect because This order puts the calculation of ma...
To achieve the highest total utility, a consumer should compare the __________ of different goods to their prices.
A consumer looks at how much extra satisfaction each dollar gives for a good. Other options are incorrect because Total utility is the overall happine...
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