Suppose that as a consumer you have $34 per month to spend for entertainment, either on movies which cost $6 each or on ice cream which cost $4 each. Placing movies on the vertical axis and ice cream on the horizontal axis, what is the intercept of the vertical axis of the budget constraint? Round your answer to 2 decimal places.

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Suppose that as a consumer you have $34 per month to spend for entertainment, either on movies which cost $6 each or on ice cream which cost $4 each. Placing movies on the vertical axis and ice cream on the horizontal axis, what is the best interpretation of the slope of the budget line?

a.

For every movie I consume, I have to give up ~2/3 of an ice cream.

b.

For every movie I consume, I have to give up ~3/2 of an ice cream.

c.

For every ice cream I consume, I have to give up ~2/3 of a movie.

d.

For every ice cream I consume, I have to give up ~3/2 of a movie.

Suppose that as a consumer you have $34 per month to spend for entertainment, either on movies which cost $6 each or on ice cream which cost $4 each. Suppose further that your preferences are given by the following total utility table.

	1	2	3	4	5	6	7
TU for movies	60	108	138	156	162	166	166
TU for Ice Cream	44	76	100	120	136	148	152

a. Should you purchase movies or ice cream first? How can you tell? (Hint: Use the utility maximizing rule.)

b. Use the utility maximizing rule to identify the consumer equilibrium. What combination of movies and ice cream will maximize your total utility? (Hint: What should you purchase second, third, etc. until you exhaust your budget?)

c. Explain the process you used to confirm that the consumer equilibrium you identified in part b generates the highest combined utility of any affordable combination of goods. A full credit answer will correctly discuss MU.

Can consumer surplus be measured by "adding up" peoples' utilities? Why or why not?

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