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Same as before, these problem sets contain concepts from the modules

Economics

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Same as before, these problem sets contain concepts from the modules. You can work with other students to do these problem sets...in fact I encourage it. And, I will be putting together groups later on. But each student needs to submit their own answers online  by the due date and they need to be in your own words. 

This is a chance to earn more points (up to 20). Effort matters. You may still get a high score on this problem set even if every answer is not exactly correct as long as you are close and show that you really tried. 

And, please reach out for help. Come to Zoom office hours or email me any time. My goal is to work with you on these. 

Click the following link to download the problem set for this module. If you would like to access this material in a different format please let me know and I am more than happy to help provide the material in another way:

• Utility Problem Set

  Utility Problem Set[1]

   

   

   

  1. Suppose that the price of oranges is $1 per unit and the price of pencils is $70 per unit. In addition, suppose that your income is $1900.

  If you spend all your money on oranges, how many oranges can you buy?

   

  2. The table below shows total utility for two products. Suppose that the price for product A is $5 and the price for product B is $5.

  Number of product A	Total Utility for A	Number of product B	Total Utility for B
  0	0	0	0
  1	140	1	180
  2	260	2	340
  3	360	3	460
  4	440	4	520
  5	500	5	540

   

  Given this data, complete the table below:

   

  Quantity of A	Marginal Utility for A	Marginal Utility for A per dollar	Quantity of B	Marginal Utility for B	Marginal Utility for B per dollar
  0			0
  1			1
  2			2
  3			3
  4			4
  5			5

   

   

   

   

   

  Use the following information to answer questions 3 and 4:

  The table below shows total utility for two products. Suppose that the price for product A is $5 and the price for product B is $5.

  Number of product A	Total Utility for A	Number of product B	Total Utility for B
  0	0	0	0
  1	140	1	180
  2	260	2	340
  3	360	3	460
  4	440	4	520
  5	500	5	540

  
  Suppose that a person has $25.

   

  3. How many units of product A should she buy to maximize her happiness given her budget constrain?

   

  4. How many units of product B should she buy to maximize her happiness given her budget constrain?

   

   

   

  5. Suppose that the original budget constraint is Curve 1 and the consecutive budget constraint is Curve 2.

   

   

  

   

   

  As a result we can conclude that the

• income decreased.
• income increased.
• income stayed the same.

•  

   

   

  6. Suppose that the original budget constraint is Curve 1 and the consecutive budget constraint is Curve 2.

   

  

   

   

  As a result we can conclude that

• the price of apples has decreased.
• the price of envelopes has increased.
• the price of envelopes has decreased.
• there has been no change in the price for apples or envelopes.
• the price of apples has increased.

• 
   

   

   

  7. Suppose that the original budget constraint is Curve 1 and the consecutive budget constraint is Curve 2.

   

  

   

   

  As a result we can conclude that

• the price of books has decreased.
• the price of pineapples has increased.
• the price of pineapples has decreased.
• there has been no change in the price for books or pineapples.
• the price of books has increased.

• 
   

   

   

  28. The graph below shows indifference curves for product X and Y.

   

  

   

   

  Which indifference curve provides the highest level of happiness or satisfaction?

• Curve 2
• Curve 1
• Curve 3

•  

   

   

  9. Suppose that the consumer is spending all of her income and is consuming at point A.

   

  

   

   

  What should the consumer do in order to maximize her happiness?

• Buy less of product X and more of product Y.
• Buy more of product X and less of product Y.
• She is already maximizing her happiness and should not change her consumption bundle.

•  

   

   

   

  10. If the consumer spends all her income and tries to maximize her utility, which utility curve will she end up on?

   

  

  
  

   

• Curve 1
• Curve 2
• Curve 3

•  

   

   

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  [1] This assignment by Lumen Learning is licensed under a Creative Commons Attribution 4.0 International License. You can access an alternative means to plotting points at https://www.desmos.com/calculator.