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Krugman/WellsTheRationalConsumer10CHECKYOURUNDERSTANDING
CheckYourUnderstanding10-1
Questions1and2
1)Forarationalconsumeritisalwaysgoodtoconsumemoreaslongasthegoodisfree.
TrueFalse
2)Martadrinksthreecupsofcoffeeaday,forwhichshehasdiminishingmarginalutility.Whichofthefollowingistrue?Hersecondcupofcoffeeprovidesmoreutilitythanthefirst.Herlastcupofcoffeeprovidesmostutility.Herfirstcupofcoffeeprovidesmostutility.Allofthecupsprovidedthesameamountofutility.
CheckYourUnderstanding10-1
Question3 Ineachofthefollowingcases,doestheconsumerhavediminishing,constant,orincreasingmarginalutility?
3a)ThemoreMabelexercises,themoresheenjoysgoingtothegym.
DiminishingConstantIncreasing
3b)AlthoughMei’sclassicalCDcollectionishuge,herenjoymentfrombuyinganotherCDhasnotchangedashercollectionhasgrown.
DiminishingConstantIncreasing
3c)WhenDexterwasastrugglingstudent,hisenjoymentfromagoodrestaurantmealwasgreaterthannow,whenhehasthemmorefrequently.
DiminishingConstantIncreasing
CheckYourUnderstanding10-2
Question1a Usingthefollowingscenarioandgraphanswerthefollowingquestions. Aconsumptionbundleconsistsofmovieticketsandbucketsofpopcorn. Eachticketcosts$5.00,eachbucketcosts$2.50,andtheconsumer’seis$10.00.
1ai)Eachticketcosts$5.00,eachbucketcosts$2.50,andtheconsumer’seis$10.00.
Whatistheinterceptontheverticalaxis(quantityofmovietickets)?2468
1aii)Eachticketcosts$5.00,eachbucketcosts$2.50,andtheconsumer’seis$10.00.Whatistheinterceptonthehorizontalaxis(quantityofpopcorn)?
24682
1aiii*)Whatistheslopeofthebudgetline?-0.5-0.75-0.25-224
1aiv*)Whatistheopportunitycostof1bucketofpopcornintermsofmovietickets?0.50.750.25224
CheckYourUnderstanding10-2
Questions1b Aconsumptionbundleconsistsof
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