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Consumer Behavior Questions

The consumer derives maximum total utility by consuming 7 units of good X, given that the price of X is $0.04 per unit and the consumer's marginal utility derived from each additional unit is shown in the table. The rational consumer would distribute their $95 income between goods X, Y, and Z by purchasing 5 units of X at $10 each, 3 units of Y at $15 each, and 1 unit of Z at $20 to maximize total utility based on the prices and marginal utility derived from each additional unit. To maximize total utility from a fixed $5 income between goods A and B, the consumer should purchase 3 units of good A at $0.50 each and 2 units of good

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335 views

Consumer Behavior Questions

The consumer derives maximum total utility by consuming 7 units of good X, given that the price of X is $0.04 per unit and the consumer's marginal utility derived from each additional unit is shown in the table. The rational consumer would distribute their $95 income between goods X, Y, and Z by purchasing 5 units of X at $10 each, 3 units of Y at $15 each, and 1 unit of Z at $20 to maximize total utility based on the prices and marginal utility derived from each additional unit. To maximize total utility from a fixed $5 income between goods A and B, the consumer should purchase 3 units of good A at $0.50 each and 2 units of good

Uploaded by

lisabasure151
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Consumer behavior questions

1 the schedule shows the utility derived by a consumer of a good X at different levels of
consumption.
Quantity of X 1 2 3 4 5 6 7 8 9 10
Total utility 20 38 54 68 80 90 98 104 108 110
The consumer derives 2 units of satisfaction from the last penny spent on good X. What is the
maximum number of units of X that he will consume if the price of X is 4 cents?

2 Assume that there are only three commodities for a consumer to purchase. The table below
shows the price of each commodity and the marginal utility derived from the consumption of
each up to and including the fifth.
Quantity price per unit marginal utility from each unit
1st 2nd. 3rd. 4th. 5th
X. $10. 25. 20. 12. 10. 9
Y. $15. 30. 15. 10. 2. 1
Z. $20. 60. 50. 40. 20. 10
How would the rational consumer distribute his income of $95 between X,Y and Z.

3 The consumer has a fixed money income of $5. The price of good A is $0.50 and the price of
good B is $1.
MU of good A Quantity consumed. MU of good B
10. 1. 30
8. 2. 25
5. 3. 20
2. 4. 16
0. 5. 10
-1. 6. 4
What combination of goods maximizes the consumer's total utility from his fixed income?

4 The following table shows the price per unit and the marginal utility derived by a consumer
who devotes the whole of his weekly income of $20 to two goods, X and Y, whose unit prices
are $2 and $4 respectively.
Quantity MU of X MU of Y
1 10 12
2 8 10
3 6 8
4 4 4
in order to maximize his utility, the consumer should spend his income on how many units of
good X and good Y.
5 An individual is given a voucher worth $3 to spend in a sea food bar which sells only prawns
and crabs. His marginal utility schedules for portions of both foods are given below.
Marginal utility marginal utility
Number of portions of prawns of crabs
1 100 160
2 90 150
3 80 140
4 70 130
5 60 120
6 50 110
7 40 100
8 30 90
9 20 80
10 10 70
if the price of a portion of prawns is 15 cents and that of a portion of oysters is 30 cents, what is
the combination of portions that yield the greatest utility?

6 A consumer spends his disposable income on food and clothing. When his weekly income is
$40 he buys 5 units of food at a unit price of $5. His marginal utility from food consumption is
10 utils. If the price of a clothing unit is $0,50, what is the consumer’s marginal utility from
clothing.

7 the following table shows the total utility derived by a consumer from each of three goods.
Total utility derived from

Units of good Apples Oranges Bananas


1 8 5 20
2 15 10 24
3 21 15 26
4 26 20 27
5 30 25 26
From the above information it can be concluded that the consumer experiences diminishing
marginal utility in the consumption of
A apples and oranges B apples and bananas
C oranges and bananas D bananas alone

8 An individual’s satisfaction is maximized when his income is allocated between alternative


purchases X and Y in such a way that the utility he derives from an extra unit of each good is
diminishing and the
A marginal utility of X = price of X B marginal utility of X = marginal utility of Y
marginal utility of Y price of Y

C marginal utility of X = price of Y D price of X = price of Y


Marginal utility of Y price of X
9 A household makes the following purchases of fruit.

fruits Quantity purchased (Kg) Price per $


Bananas 5 1,00
apples 10 0,50
The household derives twice as much utility from the fifth Kg of bananas as from the tenth kg
of apples.
What should the household do to maximize utility from the purchase of these fruits?

Purchase of bananas purchase of apples


A increase decrease
B decrease increase
C increase increase
D no change no change

10 A consumer allocates his expenditure between three goods X, Y and Z


The table shows the prices of the goods and the consumer’s marginal utilities.

good X Y Z
Price $ 20 15 5
Marginal utility 40 20 10
How should the consumer’s expenditure be allocated in order to maximize utility?
X Y Z
A more less less
B more less more
C less more more
D less less more

11 a housewife makes the following purchases


Price per kg ($)
10 kg apples 0,50
5kg bananas 1,00
2kg oranges 1,50
She derives twice as much utility from the fifth kg of bananas as from the tenth kg of apples,
and three times as much utility from the second kg of oranges as from the tenth kg apples.
What should she do in order to maximize he utility from the purchase of these three
commodities.
Purchase of apples purchase of banana purchase of oranges
A decrease decrease increase
B decrease increase increase
C increase decrease decrease
D no change no change no change

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