Chapter 7, Utility Maximization Video Solutions, Economics: Principles, Problems, and Policies

01:40

Problem 1

True or false. The law of diminishing marginal utility predicts the consumption behavior of addicts quite well.

Anitha Mary

Numerade Educator

02:44

Frank spends 75 dollar on 10 magazines and 25 newspapers. The magazines cost $\$ 5$ each and the newspapers cost $\$ 2.50$ each. Suppose that his $M U$ from the final magazine is 10 utils while his MU from the final newspaper is also 10 utils. According to the utility-maximizing rule, Frank should:
a. Reallocate spending from magazines to newspapers.
b. Reallocate spending from newspapers to magazines.
c. Be satisfied because he is already maximizing his total utility.
d. None of the above.

Jennifer Stoner

Numerade Educator

01:50

Problem 3

Demand curves slope downward because, other things held equal,
a. An increase in a product's price lowers MU.
b. A decrease in a product's price lowers MU.
c. A decrease in a product's price raises $M U$ per dollar and makes consumers wish to purchase more units.
d. An increase in a product's price raises $M U$ per dollar and makes consumers wish to purchase more units.

Kaylee Mcclellan

Numerade Educator

03:00

Problem 4

Jermaine spends his money on cucumbers and lettuce. If the price of cucumbers falls, the MU per dollar of cucumbers will _________ and Jermaine will __________ cucumbers for lettuce. LO7.4
a. Fall; substitute
b. Rise; substitute
c. Fall; supply
d. Rise; demand

Mihir Nayar

Numerade Educator

02:38

Problem 5

Tammy spends her money on lemonade and iced tea. If the price of lemonade falls, it is as though her income ____________ .
a. Increases.
b. Decreases.
c. Stays the same.

Vysakh M

Numerade Educator

Problem 1

Problem 2

Problem 3

Problem 4

Problem 5