Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 6, Problem 6MC
To determine
The factors of the decision to purchase an additional unit of a good.
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Students have asked these similar questions
Abby's marginal utility per dollar spent on bananas is 15 and her marginal utility per dollar spent on oranges is 10,
how should she spend her income?
She should purchase fewer oranges and more bananas.
She should purchase an equal amount of oranges and bananas.
She should purchase more oranges 'and fewer bananas.
She should purchase more bananas and oranges.
Which of the following defines marginal utility?
a.
the maximum amount of satisfaction from consuming a product
b.
the change in total utility divided by the price of a product
c.
the total satisfaction received from consuming as much of the product that is available for consumption
d.
the additional satisfaction received from consuming one more unit of a product
(9)
What determines the utility an individual receives from consuming a good?
Select one:
a. The individual’s own preferences.
b. The demand and supply curves for that good.
c. The producers conducting customer feedback surveys of that good and the feedback provided.
(10)
Denzel bought headphones two months ago, Solo2 Beats by Dre, for $130. He gives them to his little brother and goes online to buy another for himself but they are now $160. What is the percentage change in the headphone’s price?
Select one:
a. 23%
b. 30%
c. 21%
Chapter 6 Solutions
Managerial Economics: A Problem Solving Approach
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- Explain how changes in income (budget constraint) and prices affect consumer consumption choices. Think back to a purchase that you made recently. How did you evaluate whether or not you would be purchasing the item?arrow_forwardA consumer who has spent all of her income on clothes and food and finds that her marginal-utility for clothes is 16 and marginal-utility for food is 20. If the price of clothes and food are both $4 . What should the consumer do for purchases to maximize total utility A. purchasing more clothes and less food B. purchasing more of both commodities C. purchasing less of both commodities D. purchasing more food and less clothesarrow_forward3) Now suppose you have $500 to spend. You can buy computer software, which costs $50 or go on a ski trip for $100. Draw the budget set, labeling the end points. Just a pick a point on the budget set and tell how much of each good you bought. Suppose you now have $700 to spend. Draw the new budget set and pick a point for this budget set. Are you buying more or less software and ski trips after the income change?arrow_forward
- Sue has $200 to buy supplies for her computer. The two items that she needs are printer ink and computer paper. Paper costs $10 for 1000 sheets, and printer ink costs $5 and must be replenished after 2000 sheets of paper. The budget line is shown for Sue. What is the value of A?(Unit of Y is 1000 Sheets paper) рaper www A Ink Type your numeric answer and submitarrow_forwardSuppose you have a budget of 30 to spend on two goods: pizzas and burgers. Each pizza is $5 while each burger is $10. Suppose you already purchased 6 pizzas. What is the maximum number of burgers that you can buy with the remaining funds in your budget?arrow_forwardMarie has a weekly budget of $24. Pie's are $12. Magazine's are $4. What is the maximum number of pies Marie can buy in a week? What is the maximum number of magazines Marie can buy in a week?arrow_forward
- Problem 2: Cleo's rides Cleo has a fixed weekly budget for bike and taxi rides, and the more the rides she makes, the happier she is. When the price of each bike ride was 3 yuan, she used to take the bike four times per week. Now the price of each bike ride went down to 1 yuan, but she has to pay a weekly subscription fee of 9 yuan to ride bikes. Her new choice is to make three rides per week. Is Cleo better off, worse off, or indifferent compared to before?arrow_forwardPrice for good A is $6 and good b is $8. Budget is $36. Good A Good B Quantity Total Utility Quantity Total Utility 1 18 1 32 2 30 2 56 3 38 3 72 4 42 4 80 5 44 5 84 6 3 6 2 7 2 7 1 How many units of the two products will the consumer buy?arrow_forwardSuppose you have a budget of $12 and cost of a cola is $2 and sandwich is $4. Using this information form the table, how many sandwiches and cola would you buy at the optimum?arrow_forward
- 5. Marie has a weekly budget of $42, which she likes to spend on magazines and pies. a. If the price of a magazine is $7 each, what is the maximum number of magazines she could buy in a week? maximum of magazine = 6 magazines a week b. If the price of a pie is $21, what is the maximum number of pies she could buy in a week? maximum of pies = 2 Pies a week c. What is Marie's opportunity cost of purchasing a pie (in terms of magazines)? d. At the start of the week, Marie decides to buy a pie. Does this imply that the utility she receives from this pie is greater than or less than her opportunity cost of purchasing the pie? e. Marie is thinking about purchasing a second pie. Do we expect the marginal utility she receives from the second pie to be greater than, less than, or equal to the marginal utility she receives from the first pie? Explain your answer.arrow_forwardWhy do people buy more goods and services when their budget increases?arrow_forwardExplain utility and its connection to consumer behaviorarrow_forward
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