Page 87 - 6727

Economic Theory

Application Questions

1. The table below gives Andy’s utility from popcorn. What is Andy’s
total utility from four boxes of popcorn?

Quantity (boxes) Total utility Marginal utility

0 0 X
1 30 30
2 50 20
3 66 16
4 ? 12

a) 78; b) 70; c) 66; d) 82.

2. If a consumer has an income of $100, the price of good U is $10,
the price of good V is $20, the maximum quantity of good U the consumer

is able to purchase is:
a) 10; b) 20; c) 30; d) 5.

1 Robert is maximizing his satisfaction in consuming two goods, X
and Y. If the marginal utility of X is half that of Y, what is the
price of X if the price of Y is $1.00?

a) $0.50; b) $1.00; c) $1.50; d) $2.00.

3. Bianca consumes apples and bananas and is in consumer
equilibrium. The marginal utility of the last apple is 10 and the marginal

utility of the last banana is 20. If the price of an apple is $0.50, then what
is the price of a banana?
a) $1.00; b) $0.50; c) $0.25; d) $0.10.

4. Joe has $50 to spend on pizza and movies. If movies are $5 each
and a pizza is $10 then, assuming he spends all his money, he can buy:
a) 6 movies and 2 pizzas; c) 2 movies and 6 pizzas;

b) 8 movies and 4 pizzas; d) 6 movies and 4 pizzas.

87