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Introduction to agricultural economics

John B. Penson, Jr&Oral Capps, Jr.&C. Parr Rosson III&Richard T. Woodward

Chapter 3

Theory of Consumer Behavior - all with Video Answers

Educators

Chapter Questions

01:42

Problem 1

Based on the following table, graph the total utility curve of Robbin Denison for buffalo wings. Then, calculate the marginal utility between each point and plot the corresponding graph. Why is the slope of the MU curve negative?
TABLE CANT COPY

Carson Merrill
Carson Merrill
Numerade Educator
02:29

Problem 2

2. Robbin likes a beverage (Coca-Cola, of course) with her wings. There is only one place to buy this combination, Wings ' $n$ ' Suds. Using the following graph, let the number of Coca-Colas be on the vertical axis and the number of wings be on the horizontal axis. Label the graph.
a. Robbin has her choice of getting 12 bottles of Coca-Cola and 3 wings or 3 bottles of CocaCola and 12 wings, free of charge. Which bundle will she choose? Why?
b. Which would Robbin choose if she could have either 12 bottles of Coca-Cola and 6 wings or 6 bottles of Coca-Cola and 9 wings?
c. Calculate the MRS between points $A$ and $E$.
figure cant copy

Jennifer Stoner
Jennifer Stoner
Numerade Educator
18:37

Problem 3

After careful scrutiny, Robbin budgets $$\$ 12 /$$ week for Wings ' $n$ ' Suds. Consider the following:
a. Graph and label the axes to show how much of each good Robbin is able to buy, if the price of a buffalo wing is $$\$ 0.50$$, while the price of Coca-Cola is $$\$ 1.50$$.
b. In order to attract more customers to Wings ' $n$ ' Suds, management decides to lower the price of Coca-Cola to a buck. Show what happens to Robbin's budget line compared to (a).
c. Instead of (b), assume there is a sudden shortage of buffalo wings available. Now, Wings ' $n$ ' Suds has to raise the price of a wing to $$\$ 3$$. Show how this event changes Robbin's budget line relative to (a).
d. Robbin, after winning $$\$ 1,000$$ in the Texas lottery, decides that she can now spend $$\$ 40 /$$ week at Wings ' $n$ ' Suds. Show how this event changes Robbin's budget line relative to (a).
e. What combination of wings and Coca-Colas should Robbin buy in (a), (b), (c), and (d)?

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
03:12

Problem 4

Given the following set of indifference curves, calculate the marginal rate of substitution between the following:
a. Points $A$ and $B$.
b. Interpret this measure.
c. Which combination yields the highest level of sarisfaction? Circle the correct answer(s).
i. 7 tacos, 1 hamburger
ii. 2 tacos, 5 hamburgers
iii. 5 tacos, 7 hamburgers
iv. 7 tacos, 5 hamburgers
FIGURE CANT COPY

Akash M
Akash M
Numerade Educator
01:38

Problem 5

Given the following changes in a consumer's budget constraint, please indicate in writing to the right of each graph what caused the budget constraints to change.
FIGURE CANT COPY

Xiaomin Bian
Xiaomin Bian
Numerade Educator
08:01

Problem 6

Assume you have interest in only two goods: food and environmental quality. 'That is, these goods are the only ones that provide utility to you. Consider the following graph:
FIGURE CANT COPY
Let point $A$ correspond to 80 units of food and 20 units of environmental quality.
Let point $B$ correspond to 50 units of food and 30 units of environmental quality.
a. Label the axes. What is the technical name of the curve mentioned earlier?
b. Calculate how many units of food you are willing to give up in order to obtain one more unit of environmental quality so as to maintain the same level of satisfaction.

Narayan Hari
Narayan Hari
Numerade Educator
13:27

Problem 7

Suppose Glenn Gibbs (a native of Manchester, England) has an income of $$\$ 30$$. He derives satisfaction from the consumption of tea and biscuits. The price of tea is $$\$ 3.00$$ per cup and the price of biscuits is $$\$ 0.50 /$$ unit.
a. Graphically construct the budget line for this situation. Label your axes carefully.
b. Now, suppose the price of tea increases to $$\$ 5.00$$ per cup and Glenn's income remains at $$\$ 30$$. Assuming the price of biscuits remains at $$\$ 0.50 /$$ unit, redraw the budget line to reflect this situation.
FIGURE CANT COPY

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
04:08

Problem 8

Given the following data
$$
\begin{array}{ccc}
\begin{array}{c}
\text { Quantity of } \\
\text { Sodas }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \\
\hline 1 & 20 & - \\
2 & 25 & ?(\mathrm{a}) \\
6 & 37 & ?(\mathrm{~b}) \\
\hline
\end{array}
$$
a. MU between 1 and 2 is__________
b. MU between 2 and 6 is___________

Vaidik Stats
Vaidik Stats
Numerade Educator
View

Problem 9

What caused the budget constraint to change? Circle the correct answer.
FIGURE CANT COPY
a. The price of steak rose.
b. The price of steak fell.
c. The expenditure on steak and pork rose.
d. The price of pork fell.

Rashmi Sinha
Rashmi Sinha
Numerade Educator
02:31

Problem 10

In question 9, if expenditure on steak and pork equals $$\$ 100$$, what is the price per pound of pork?____________

Lynn Larson
Lynn Larson
Numerade Educator

Problem 11

A rational consumer maximizes his or her satisfaction or_______

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02:10

Problem 12

The marginal utility of a good (e.g., ice cream) declines with increases in the consumption of that good. This phenomenon is referred to as the____________

Jennifer Stoner
Jennifer Stoner
Numerade Educator
01:08

Problem 13

a. For a representative consumer, 4 wings and 3 bottles of Dr. Pepper generate the same utility as 6 wings and 2 bottles of Dr. Pepper. How many wings must the consumer give up in order to get one more bottle of Dr. Pepper?____________
b. What is the technical name associated with the trade-off in (a)?

Carson Merrill
Carson Merrill
Numerade Educator
01:53

Problem 14

What is the name associated with the following graph?_____________
FIGURE CANT COPY

Brian Lovejoy
Brian Lovejoy
Numerade Educator
00:30

Problem 15

What is the name associated with the following diagram?___________
FIGURE CANT COPY
b. What happened to shift the curve above?___________

Julie Silva
Julie Silva
Numerade Educator
01:11

Problem 16

Suppose that a college student can spend $$\$ 50$$ on entertainment. This student derives satisfaction only from watching movies and playing video games. The price of a movie is $$\$ 5$$ and the price of a video game is $$\$ 2$$.
FIGURE CANT COPY
a. Draw the correct budget line for this student.
b. Label the axes.
c. Provide the numerical amounts of movies and video games at the "extreme points."

Lily An
Lily An
Numerade Educator
03:09

Problem 17

Circle the correct answer. Engel's Law states that
a. marginal utility declines as more of a good is consumed during a specified period of time.
b. as income rises, the portion of the dollar we spend on food falls.
c. as income rises, the portion of the dollar we spend on food rises.
d. as income rises, food expenditure also increases.

Filip Kokotovic
Filip Kokotovic
Numerade Educator
05:02

Problem 18

According to the following table, which bundle is most preferred? Least preferred?
$$
\begin{array}{cccc|}
\hline \text { Bundle } & \begin{array}{c}
\text { Number of } \\
\text { Wings }
\end{array} & \begin{array}{c}
\text { Bottles of } \\
\text { Coca-Cola }
\end{array} & \text { Total Utility } \\
\hline \text { A } & 3 & 3 & 18 \\
\text { B } & 6 & 4 & 48 \\
\text { C } & 9 & 2 & 36 \\
\text { D } & 12 & 1 & 24 \\
\hline
\end{array}
$$

Anna Jones
Anna Jones
Numerade Educator
03:19

Problem 19

When total utility is at a maximum, marginal utility is________________

Mihir Nayar
Mihir Nayar
Numerade Educator
01:47

Problem 20

We do not need to actually measure the level of satisfaction derived by a consumer from the consumption of goods. We only need a ranking among the alcernative consumption bundles. Thus, utility is $\mathrm{a}(\mathrm{n})$_____________ concept.

Daniel Cisneros
Daniel Cisneros
Numerade Educator

Problem 21

The mathematical representation of the satisfaction a consumer derives from a bundle of goods is called_______ the function.

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Problem 22

The graph of alternative consumption bundles that provide a consumer a given level of satisfaction is called a(n)__________ curve.

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01:55

Problem 23

True or False. Circle the correct answer.
a. Total utility may never be negative.
b. Marginal urility may never be negative.
c. The marginal rate of substitution is always negative.
d. The law of diminishing marginal utility states that total satisfaction declines as more of a good is consumed.

Anitha Mary
Anitha Mary
Numerade Educator
08:47

Problem 24

Suppose a college student can spend $$\$ 30$$ on Subway sandwiches and Chick-Fil-A sandwiches. The price of a Subway sandwich is $$\$ 5$$ and the price of a Chick-Fil-A sandwich is $$\$3$$. Which of the following diagrams describes the correct budget line for this student?
A Subway Sandwiches
FIGURE CANT COPY
B Subway
Sandwiches
FIGURE CANT COPY
C Chick-Fil-A Sandwiches
FIGURE CANT COPY
D Chick-Fil-A Sandwiches
FIGURE CANT COPY

Bharat Koirala
Bharat Koirala
Numerade Educator