The current price of chicken is $5 per pound and the current price of beef is $10 per pound. Raúl’s MU of chicken is 10 and his MU of beef is 15. Raúl could increase his utility by consuming more chicken and less beef.
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True/False/Uncertain and Explain
The current price of chicken is $5 per pound and the current price of beef is $10 per pound. Raúl’s MU of chicken is 10 and his MU of beef is 15. Raúl could increase his utility by consuming more chicken and less beef.
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- Take Jeremys total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremys utility.Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either call her on the land-line phone for five cents per minute or he can drive to see her, at a round—trip cost of 2 in gasoline money. He has a total of 10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses a handy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values in Table 6.6, figure out the points 011 Jeremys consumption choice budget constraint (it may be helpful to do a sketch) and identify his utility-maximizing point.Ari intends to purchase a new car and has narrowed it down to a Dodge Ram truck or a Toyota Camry. A Dodge Ram truck costs $55000 while a Toyota Camry costs $20000. The utility that Ari will get from Dodge Ram truck is 12500 while Toyota Camry will generate a utility of 2500. Note: A purchase generating utility tells us the marginal utility of the good. What is the Marginal Utility per Dollar for Dodge Ram truck? What is the Marginal Utility per Dollar for Toyota Camry? Will Ari be better off buying a Dodge Ram truck or a Toyota Camry? ODodge Ram truck OToyota Camry A
- Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either callher on the land-line phone for five cents per minute or he can drive to see her, at a round-trip cost of $2 in gasolinemoney. He has a total of $10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses ahandy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values inTable 6.6, figure out the points on Jeremy’s consumption choice budget constraint (it may be helpful to do a sketch)and identify his utility-maximizing pointStyles 15. Damian Matthews is busy. He allocates his free time between watching movies and working out at the gym. The table below shows his utility from the number of times per week he watches a movie or goes to the gym. Damien has 14 hours a week to spend on movies or the gym (think of hours like $ of income here). Each movie takes 2 hours. Each gym trip takes 2 hours. Q of Gym Total Q of Movie Total Utility visits Utility from visits from Gym Visits movies 100 1 60 180 110 3 240 3 150 4 280 4 180 310 190 330 195 340 7 197 a) What bundles of gym visits and movies can Damien consume if he spends 1) all his time in the gym or 2) all his time watching movies? b) Calculate the marginal utility of each gym visit'and movie. Then calculate the Marginal Utility per hour of each activity. c) How should he allocate his time to maximize his utility? 125. Max has $35 a day to spend on windsurfing and snorkeling and he can spend as much time as he likes doing them. The price of renting equipment for windsurfing is $10 an hour and for snorkeling is $5 an hour. The table shows the total utility Max gets from each activity. a Calculate Max's marginal utility from windsurfing at each number of hours per day. Does Max's marginal utility from windsurfing obey the principle of Hours per day 1 2 3 4 C. 5 6 Total utility from windsurfing 120 220 300 360 396 412 422 Total utility from snorkeling 40 76 106 128 140 150 158 diminishing marginal utility? b. Calculate Max's marginal utility from snorkeling at each number of hours per day. Does Max's marginal utility from snorkeling obey the principle of diminishing marginal utility? Which does Max enjoy more: his 6th hour of windsurfing or his 6th hour of snorkeling?
- Suppose the marginal utility for a $5 submarine sandwich is 100. In addition, the marginal utility for a $10 pizza is 250. Which of the following best explains what Jessica should do if she can afford to buy both but only wants one thing for dinner? O Buy the pizza, which has a higher marginal utility. Buy the pizza since the marginal utility per dollar spent is higher than that of the sub. Buy the submarine sandwich, which is cheaper. Buy the submarine sandwich since the marginal utility per dollar spent is less than that of the pizza.Max enjoys windsurfing and snorkeling. Max has $35 a day to spend, and he can spend as much time as he likes on his leisure pursuits. The price of renting equipment for windsurfing is $10 an hour and for snorkeling is $5 an hour. The table shows the total utility Max gets from each activity. Total Total Hours utility from utility from per day windsurfing snorkeling 1 120 40 2 220 76 3 300 106 4 360 128 5 396 140 6 412 150 7 422 158 Calculate Max’s marginal utility from windsurfing at each number of hours per day. Does Max’s marginal utility from windsurfing obey the principle of diminishing marginal utility? How many hours does…Take Jeremy’s total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremy’s utility. 6.1Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either callher on the land-line phone for five cents per minute or he can drive to see her, at a round-trip cost of $2 in gasolinemoney. He has a total of $10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses ahandy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values inTable 6.6, figure out the points on Jeremy’s consumption choice budget constraint (it may be helpful to do a sketch)and identify his utility-maximizing point.
- Kim has $24 per week in her entertainment budget. She splits her time between going to the movies and yoga classes. Each movie costs $8 while each yoga class costs $3. The total utility from each of these activities is set out in the table below. What is Kim's total utility maximizing point? Movies Total Utility Yoga Classes Total Utility 0 2 3 درا 4 5 0 40 75 105 130 160 0 1 2 3 4 1 6 7 8 Ruona classes 0 30 55 76 92 106 114 116 117Becky needs to decide how many cups of coffee and pieces of cake she will buy for a meeting with an office mate. She estimates her total utility for different quantities of coffee and cakes below. A cup of coffee is $1.00, and each piece of cake is $0.50. Becky has a total of $3 to spend. What is Becky's total utility if she buys 1 cup of coffee and 4 pieces of cake? Cups of Coffee 1 2 3 4 5 6 Utility from Consumption Pieces of Cake 1 2 3 4 5 6 A B C D Total Utility from Cups of Coffee 33 56 79 Total Utility from Pieces of Cake 15 32 48 63 77 90 Total Utility of Different Consumption Bundles Consumption Bundle Cups of Coffee Pieces of Cake Total Utility 3 0 2 2 1 4 0 6John likes Coca-Cola. After consuming one Coke, John has a total utility of 10 utils. After two Cokes, he has a total utility of 25 utils. After three Cokes, he has a total utility of 50 utils. Does John show diminishing marginal utility for Coke or does he show increasing marginal utility for Coke? Suppose that John has $3 in his pocket. If Cokes cost $1 each and John is willing to spend one of his dollars on purchasing a first can of Coke, would he spend his second dollar on a Coke, too? What about the third dollar? If John’s marginal utility for Coke keeps on increasing no matter how many Cokes he drinks, would it be fair to say that he is addicted to Coke? *use tables and/or graphs if possible, please original work
