-TFQ1. True or False. A consumer wants to be on the highest indifference curve possible given their budget constraint. -TFQ2. True or False. fI currently your marginal utility per dollar spent for CDs is higher than your marginal utility per dollar spent for movie tickets, then you should buy more CDs and fewer movie tickets in order to maximize utility. -TFQ3. True or False. The closer the indifference curve is to the origin, the more utility it yields.

-MCQ1. Assume that LeBron always maximizes his total utility given his budget constraint. Every day for lunch LeBron has three tacos and two energy bars. If the marginal utility of the last taco is 40 utils and the price of tacos is $1 each, what can we say about the marginal utility of the last energy bar if the price of each bar is $2? A. It must be equal to 20 utils.

B. It must be equal to 40 utils.

C. It must be equal to 80 utils. D. Indeterminate. -MCQ2. Which of the following is used to depict alternative combinations of goods that are equally satisfying? A. None of the below. B. An indifference curve.

?.A demand curve. A budget constraint

-MCQ3. The slope of the budget constraint is equal to the : A. Marginal rate of substitution B. Ratio of the price of the good on the horizontal axis to the price of the good on the vertical axis C. Income of the consumer D. Reciprocal of the marginal utility of one good.

-SA1. Using the concept of elasticity, explain why airlines have imposed fees on things such as checked bags?

Suppose AAA Airlines is suffering from low revenues and profits. If the company wants to increase ticket revenue and the price elasticity of demand is 0.75, describe what the company should do and why:

According to data from the U.S. Department of Energy, sales of the fuel-efficient Toyota Prius hybrid fell from 158, 574 vehicles sold in 2008 to 139,682 in 2009. During the same time, according to data from the U.S. Energy Information Administration, the average price of regular gasoline fell from $3.27 to $2.35 per gallon. -CGQ4. Based on the information provided above, compute the cross-price elasticity of demand between the Toyota Pri (Prius) and regular gasoline. Based on your computation, are the two goods complements or substitutes?

-CGQ5. Compute the price elasticity of supply for web design services when the price per hour rises from $100 to $150 and the number of hours transacted increases from 300,000 to 500,000. Is supply elastic, inelastic, or unit-elastic?

-CGQ9. nI Figure 5.7, given an income of $30 and a price for good Yof $1, which of the following two points represents optimal consumption? Awhen price of Xis $3 and Cwhen price of Xis $1. Bwhen price of Xis $1 and Dwhen price of Xis $3. C. Awhen price of Xis $1 and Dwhen price of Xis D. BwhenpriceofXis$1andCwhenpriceof Xis$3 -CGQ10. To increase municipal tax revenue, the regional municipal authority has agreed to impose a $1 tax on gasoline. Compute the taxation burden of consumers and producers of this new taxation policy, assuming the consumer's price elasticity is 0.78 and the municipality's price elasticity of supply is 1.23.

In the United States, 2007 was a bad year for growing wheat. And as wheat supply decreased, the price of what rose dramatically, leading to a lower quantity demanded. The table below describes what happened to prices and the quantity of wheat demanded: 2006 2007 Quantity demanded (bushels) 2.2 billion 2 billion Average Price (per bushel) $3.42 $4.26 CGQ1. Using the midpoint method compute the price elasticity of demand for winter wheat. CGQ2. Compute the total revenue for U.S. wheat farmers in 2006 and 20077 CGQ3. Did the bad harvest increase or decrease the total revenue of U.S. wheat farmers? How could you have predicted this from your answer to question CGQ17? Computational and graphical questions T-shirts demanded T-shirts demanded at average tourist income of at average tourist income of Price of T-shirt $20000 $30000 $4 3000 5000 $5 2400 4200 $6 1600 3000 $7 800 1800 CGQ6. Using the above data, compute the income inelasticity of demand when the price of a T- shirt is $4 and the average tourist income increases from $20,000 to $30,000. CGQ7. illustrate and compute the percentage change in the price of Product Z assuming demand for this product increased by 5.65%; given the price elasticity of demand for this product is .45 and the price elasticity of supply is 0.86.Use the indifference curves and the budget lines in Figure 5.7 to answer the indicated questions. Assume the price of Y is $1 per unit. Figure 5.7 Quantity of Good TG 20 30 Quantity of Good .Y Computational and graphical questions - 35 >GQ8. Refer to Figure 5.7. If the price per unit of good X is $3, the consumer would maximize utility at which point and why? Quantity of hours worked Total Benefit Total Cost 0 $0 30 1 30 10 2 55 21 3 75 34 4 90 50 5 100 70 CGQ11. Using the above table and marginal analysis determine the optimal number of hours that should be worked. Q1. ) TRUE . Why ? = because as IC increases you consume more of both commodities; hence , you get more whility . 92 . ) TRUE . give you an example let MU [ CDS ) = 80 Price of CDS = 10. MU ( movie tickets ) .= 80 forice . of movie tickets = 20 MUcy MUM 2 ) 80 8 7 4 2:0 So very obviously you're deriving more whility from. CDS. than from movie tickets. . You should buy more CDS. and fewer movie tickets ... 93 .) FALSE . .. Hence, as you move How ? =) closes to the ong'n you consume less A of both goods , B Y 2+ here it gives C IC 2 less utility. - X *1 4 2 7 3M ( 8 1 = ) Of MU / tacos ) = 40 P ( tacos ) = $1 . MUT 40. 1 . At MUT - MUB If Pg = $2 , then what value you'll put for MUB , such that it equals MUT = 40 . MUB - 80 fit must be to 8 that MUB 80 40 .= MUT 2 Option ( c) is Correct ... Mc82 : Along an IC, two points gives the same level of whility . why ? 2 ) because in order to get one extra unit of the commodity , you have to sacrifice the other commodity This is called Marginal Rate of Substitution ( MRS . ). Option ( B ) is Correct . same level i If you move A - of utility . from point A to B you give up some units of y in order X to get' one extra unit 0 of x .Mcg 3 We know M = Px . X + Pg . y. Pq . Y = M - P x . X . M - P x x . .. Let us differentiate y winit, (X' we get the slope of the budget line. dy . 0 - PX dx 2 2 dy d x Option ( 1 ) is Correct . C GO S , ( q Q 6, ( G Q F , CGQ 10 , ( 6911 is alread well- explained BUT ,If you require any more clarification, I'll be happy to do it getting concepts cleared i's very important. But Please mention the question number on which past you need help and clarification. Because, I've already explained most of the questions and now I don't know which part you need help with f. fx Please mention the question number, whenever you need help . . I think (48 8 and (GQ9 , you need helpt So here it is :Cad8 : dee, me know M = Px x + ly . y . On the y-axis, value of x - 0 . M = RX . 0 + Ry. Y. M = Ry . Y. Y = M Similarly on the x-axis Y = O 2 ) M =Ry . X + Py . O . M The Budget lime looks like . . M . . Budget time . 6 X Mfor (48 8 : it is given that , 1 x = 3 .,M = $ 30 . And from the diagram you can see the vertical apis ( 1-axis ) , the maximum value - 30. = M 30 $ 1. -30 If ly = $1,then M - 30, M = 30 1 4 = 30 x 1 = $30. Now we have the following information known to us : - ( guren in the question ) Rx = $ 3 M = $30 foe calculated above ] If you want to maximize utility , then you must spent all your income. . ) M = Pq . x . + ly .. 9 . :. At point A are have , Y = 21 and X = 3 .. M = 3 x 3 + 1 X 2 1 = 9 + 21 32 M = 30 Point A is the whility -maiming point( 48 9 : : By the same logic, Which of the following two points Represents optimal consumption . for one - point : Point A. =) when ly =$ 3, we produed in C498 Again, for point. B ; you can check yourself : M = Px. X + Py. Y. At point C , y = 15 , X = 15 M = R x . 1 5 + PX : 15 . = ) 30 = 1X15+ 14 15 . 30 = 15+ 15 = 30. This can only happen if ly = $1. . You can coose he-check also. At ly = $3 , you were at point A . Now, as Proce of x falls to $1. your Budget Line ROTATES outward along the X-apis . .15 option is Correct . 30 Point A, when Ry = $3 . LA and point c , when, RX = $1. * O 10 30