What is consumer surplus? Consumer surplus is the of a good in excess of A. price; its marginal benefit B. price; its value C. marginal benefit; the price paid for it OD. value; its marginal benefit summed over the quantity bought.
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- Draw Maries budget constraint with pies on the horizontal axis and magazines on the vertical axis. What is the slope of me budget constraint?As a college student you work at a part-time job, but your parents also send you a monthly allowance. Suppose one month your parents forgot to send the check. Show graphically how your budget constraint is affected. Assuming you only buy normal goods, what would happen to your purchases of goods?The rules of politics are not always the same as the rules of economics. In discussions of setting budgets for government agencies, there is a strategy called closing the Washington Monument. When an agency faces the unwelcome prospect of a budget cut, it may decide to close a high-visibility attraction enjoyed by many people (like the Washington Monument). Explain in terms of diminishing marginal utility why the Washington Monument strategy is So misleading. Hint: If you are really trying to make the best of a budget cut, should you cut the items in your budget with tile highest marginal utility or line lowest marginal utility? Does the Washington Monument strategy cut the items with the highest marginal utility or line lowest marginal utility?
- Praxilla, who lived in ancient Greece, derives utility from reading poems and from eating cucumbers. Praxilla gets 30 units of marginal utility from her first poem 27 units of marginal utility from her second poem 24 units of marginal utility from her third poem, and so on, with marginal utility declining by three units for each additional poem. Praxilla gets six units of marginal utility for each of her next three cucumbers consumed, five units of marginal utility for each of her next three cucumbers consumed, four units of marginal utility for each of the following three cucumbers consumed, and so on, with marginal utility declining by one for every three cucumber consumed. A poem costs three bronze coins hut a cucumber costs only one bronze coin. Praxilla has 18 bronze coins. Sketch Praxillas budget set between poems and cucumbers, placing poems on the vertical axis and cucumbers on the horizontal axis. Start off with the choice of zero poems and 18 cucumbers, and calculate the changes in marginal utility of moving along the budget line to the next choice of one poem and 15 cucumbers. Using this step-by-step process based on marginal utility, create a table and identify Praxillas utility—maximizing choice. Compare the marginal utility of the two goods and the relative prices at the optimal choice to see if the expected relationship holds. Hint: Label the table columns: 1) Choice, 2} Marginal Gain from More Poems, 3) Marginal Loss from Fewer Cucumbers, 4) Overall Gain or Loss, 5) Is the previous choice Optimal? Label the table rows: 1) 0 Poems and 18 Cucumbers, 2) 1 Poem and 15 cucumbers, 3) 2 Poems and 12 cucumbers, 4) 3 Poems and 9 Cucumbers, 5) 4 Poems and 6 cucumbers 6) 5 Poems and 3 Cucumbers, 7) 6 Poems and 0 Cucumbers.Would you expect total utility to rise or fall with additional consumption of a good? Why?Homework (Ch 07) The following graph shows Kyoko's weekly demand for cheesecake, represented by the blue line. Point A represents a point along her weekly demand curve. The market price of cheesecake is $3.00 per slice, as shown by the horizontal black line. ? Kyoko's Weekly Demand 7.50 6.75 + 6.00 5.25 Demand 4.50 3.75 Price 3.00 2.25 + 1.50 + 0.75 + 0 0 4 6 8 10 12 14 16 18 QUANTITY (Slices of cheesecake) F3 F4 69 °F anny F1 PRICE (Dollars per slice) F2 2 0- 0+ F5 20 COL F6 F7 4- F8 J+ F9 F10 -O: F11 F12 Fn Lock X 9:49 A 6/3/20 Insert Prt Sc
- stion 51 The following marginal utility data is for products X and Y. Assume that the prices of x and Y are 54 and $2 respectively and that the consumer's income is $18 wet ered d out of Units Marginal Units Marginal utility, Y of X utility, X of Y ove fiag 20 16 2 16 2. 14 3 12 3 12 4 8. 4 10 5. 8. 6 4. 6 Which of the following shows the price and quantity demanded of X? (A) (B) (C) (D) Qd P Qd Qd Qd P. $4 $4 2 $4 3 $4 3. 2 5. 2. 4 2 9. Select one: O a. column (B) O b. column (A) O c. column (C) O d. column (D)15. Consurmer sumlus is: 2. The quantity of a good consumers get but did not have to pay for b. the amount a consumer has to pay less the amount the consume: was willing to pay O e amount the coORJIMa waswillingay leid ho'amouns thconsumer paid d. the total value of a good to a consumc.Define a budget line d.Given that Tebogo's income is P1800 price of food is P30 and price of entertainment is P40, Draw tebogos budget line. e.Using a diagram, show waht would happen to Tebogo,s budget line if income increases from P1800 to P2100 while prices remain P330 for food and P40 for entrtainment. f.Using a diagram, show what would happen to Tebogo's budget line if income increases from P1800 to P2100 while prices remain P30 for food and P40 for entertainment.
- Units of the Good 0 1 5678AWN2 3 4 Total Utility Total Utility of X of Y 0 0 620 1740 1120 3030 1500 3960 1820 4710 2080 5280 2300 5730 2460 6060 2580 6300 For the next 3 questions, assume that an individual consumes two goods X and Y. The total utility (assumed measurable) of each good is independent of the rate of consumption of other goods. The prices of X and Y are, respectively, $20 and $30. If the consumer buys the fourth unit of X the Marginal Utility per Dollar Spent on X is 16 I If the consumer has $210 to spend on X and Y, the utility-maximizing bundle is The minimum budget necessary to move to a higher equilibrium consumption of X and Y is $ unit(s) of X and unit(s) of Y.If we observe that a consumerâ s budget constraint has shifted inward, we can assume that the consumer will buy O fewer normal goods and fewer inferior goods O more normal goods and more inferior goods O fewer normal goods and more inferior goods more normal goods and fewer inferior goodsTable 6.2 Units Consumed Total Utility 1 30 65 85 4 89 88 Refer to Table 6.2, which shows the total utility derived from the consumption of a good. The first column of the table shows the number of units of the good consumed in a day, and the second column of the table shows the total utility derived from that consumption. What is the marginal utility of consuming the third unit? Oa 65 O b. 20 OC. 35 Od. 0 O e. 30