Question

In: Economics

For a consumer to maximize utility, he will choose the a. point where the slope of...

For a consumer to maximize utility, he will choose the

a. point where the slope of the budget line equals the slope of the indifference curve.

b. any point where the budget line and indifference curve intersect.

c. point where he gets the most of the good he prefers most.

d. point where the marginal rate of substitution is greatest.

e. the point where marginal utility is zero for both goods

____ 37. At $6 per steak, consumers are willing to buy two steaks. At a price of $2, consumers are willing to buy six steaks. The elasticity of the market demand curve between P = $6 and P = $2 (dropping all minus signs) is

a. 0.33.

b. 1.

c. 2.

d. 4.

____ 38. All of the following observations concerning the elasticity formula are true except

a. the changes with which it deals is measured as a percentage change.

b. each of the percentage changes is calculated in terms of the average values.

c. the calculation considers both positive and negative signs.

d. each percentage change is taken as an "absolute value."

Figure 6-5

____ 39. In Figure 6-5, if price falls from point A to point B along the unit-elastic demand curve,

a. total expenditure remains unchanged.

b. total expenditure increases.

c. total expenditure decreases.

d. total expenditure first increases and then declines.

____ 40. The price elasticity of a vertical demand curve is always

a. infinitely large.

b. zero.

c. one.

d. increasing as price increases.

____ 41. Along a perfectly elastic demand curve,

a. the slope is always zero.

b. the price elasticity of demand is 1.

c. consumer purchases will not respond at all to a change in price.

d. All of the above are true.

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Modern microeconomics, specifically consumer theory, is based on utility theory—consumers maximize their utility. Where does our...

Modern microeconomics, specifically consumer theory, is based on utility theory—consumers maximize their utility. Where does our modern conception of utility theory come from? (Hint: there are multiple sources.) What is the empirical basis for utility theory? Can utility theory be considered scientific according to Karl Popper’s conception of science? How about Kuhn or Lakatos? What are the criticisms of utility theory and how would its supporters (e.g., Gary Becker) respond? Are there any alternative paradigms? What are the flaws/limitations in...

1. All feasible bundles will maximize consumer utility: True False 2. The point to the right...

1. All feasible bundles will maximize consumer utility: True False 2. The point to the right of the budget constraint is infeasible. True False 3. For a budget constraint involving 2 goods, good X is on the x-axis and good Y on the y-axis. If the price of good X increases, A.the slope of the budget constraint becomes steeper and the x-intercept of the budget constraint slides in along the x-axis. B.the slope of the budget constraint becomes flatter and...

What is the condition on consumer utility that is met when consumers maximize utility

Problem 1 What is the condition on consumer utility that is met when consumers maximize utility (hint: it is a formula). Describe the behavior of the consumer that this formula represents (what are they doing and why is it an optimum). Problem 2 What is the goal of the firm? What is the condition that is met when firms achieve this goal? Describe in words why this condition leads to an optimum for the firm.

For a consumer to maximize utility? A Price equals marginal cost B Marginal Utility equals marginal...

For a consumer to maximize utility? A Price equals marginal cost B Marginal Utility equals marginal benefit C Marginal benefit equals total utility D Price equals marginal benefit

2. Why is it that the consumer can maximize total net utility only if the purchase...

2. Why is it that the consumer can maximize total net utility only if the purchase quantity brings marginal utility as close as possible to equality with price? 3. Use the law of diminishing marginal utility to explain why Domino's and Pizza Hut allow the purchase of a second pizza for only $5 when one pays full price (around $10) for the first pizza. Why not simply charge $7 a pizza instead? Explain why the long-run average cost is typically...

Consumer choices. How do consumers behave and how they maximize their utility? How do internet and...

Consumer choices. How do consumers behave and how they maximize their utility? How do internet and e-commerce affect consumer’s choices of certain products, (you can use specific products, specific online businesses in Qatar and other countries etc.). You need to use a relevant model that explains this relationship and draw your conclusion based on key findings from existing research. You can use real online business examples from Qatar or another country of your choice to explain the impact of internet...

The state legislators recognize that consumer demand is determine by the Utility Maximizing point, but are...

The state legislators recognize that consumer demand is determine by the Utility Maximizing point, but are unsure of how the Utility Maximizing point is found. Explain the relationship between the budget line and an indifference curve at the Utility Maximizing point and how tangency between two curves factors into this.

The state legislators recognize that consumer demand is determine by the Utility Maximizing point, but are...

Financially speaking, what is a breakeven point? A. The point where consumer demand and inventory are...

Financially speaking, what is a breakeven point? A. The point where consumer demand and inventory are exactly even B. The point where you are neither making nor losing money C. The point where employees have reached minimum levels of training and can no become productive. D. The point where you get revenge on your competitors by getting even. E. None of the above represent the definition of a breakeven point.

A full page answer Modern microeconomics, specifically consumer theory, is based on utility theory—consumers maximize their...

A full page answer Modern microeconomics, specifically consumer theory, is based on utility theory—consumers maximize their utility. Are there any alternative paradigms? What are the flaws/limitations in these approaches?

Subjects