1. If the marginal utility of an extra hamburger is 8 utils, the marginal utility of a soft drink is5 utils, the price of a hamburger is $1, and the price of a soft drink is 50 cents, then the consumer can achieve equilibrium when:

a) she buys more soft drinks.

b) she buys more hamburgers.

c) the price of hamburgers decreases.

d) the price of soft drinks increases.

2. A consumer attains equilibrium by_____.

a) allocating income such that the total amount spent on each good is equal

b) consuming all goods to the point where the marginal utility of each are equal

c) allocating income such that the marginal utility of the last dollar spent on each good is the same

d) consuming all goods to the point where the total utility of each are equal

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3. Which of the products described below is mostly likely considered an inferior good?

1. At lower prices people consume higher quantities of shredded wheat.
2. As incomes increase canned meat product consumption falls.
3. The higher the price of jeans the higher the demand for jeans.
4. The lower the price of jeans the more the demand for shirts.

4. In deriving an income-consumption curve, it is assumed that:

1. nominal income is constant.
2. the prices of all but one good are held constant.
3. the consumer's preferences may change.
4. the consumer's income changes.

5. Suppose food is on the horizontal axis and all other goods on the vertical axis. Your budget allowance is $200, the market price of food is $5, and the market price of all other goods is $20. You are expending your total budget and the marginal rate of substitution at your present consumption bundle is 0.1 so to maximize utility you should consume:

1. more food and less of all other goods.
2. less food and more of all other goods.
3. less of both food and all other goods.
4. more of both food and all other goods.