1. The consumer optimum:
A. occurs when a consumer buys more of a good as a result of a relative price change.
B. the combo of goods and services that maximizes utility for given income
C. is the additional satisfaction derived from consuming one more unit of a good or service.
D. occurs when there is a change in purchasing power as a result of a change in the price of a good.
E. occurs when utility declines as consumption increases.
2. Kati-Lyn has to choose between eating Chinese food and Indian food. Both Chinese and Indian food cost the same. Which of the following equations, where MU is marginal utility and U is total utility, will lead to the optimal level of consumption?
A. MU chinese> MU indian
B. U Chinese = U Indian
C. MU Chinese = MU Indian
D. MU Chinese < MU Indian
E. U Chinese > U Indian
3. Assume that strawberries cost $1 and apples cost $2. If a consumer has $16, the bundle of goods that would maximize his utility per dollar and remain within his budget would be:
A. 7 strawberries, 7 apples
B. 4 strawberries, 6 apples
C. 6 strawberries, 5 apples
D. 4 starwberries, 2 apples
E. 2 strawberries, 7 apples
4. To reach the consumer optimum for two goods, the:
A. ratio of total utility to price for both good must be equal.
B. price of both goods must be equal.
C. ratio of marginal utility to price for both good must be equal.
D. marginal utility for both goods must be equal.
E. total utility for both goods must be equal.