(1 Pt) 1. the Mathematical Representation of the Satisfaction a Consumer Derives from A

AGEC 105 Capps AQ#2 FALL 2013

Name: ______UIN # ______

(1 pt) 1. The mathematical representation of the satisfaction a consumer derives from a bundle of goods is called the ______.

(2 pts) 2. Given the information below, what is the marginal utility associated with drinking coffee? Show all work.

Total Utility Quantity of Coffee 48 2 88 10

(1 pt) (a) The graph deals with ______curves.

(1 pt) (b) Among points A, B, C, and D, which combination of wings and hamburgers yields the highest level of satisfaction? ______Wings ______Hamburgers

(1pt) (c) Among points A, B, C, and D, which combination of wings and hamburgers yields the lowest level of satisfaction? ______Wings ______Hamburgers

(2 pts) (d) Given points A and B, how many wings is this consumer willing to give up in order to get one more hamburger? Show all work!

1 AGEC 105 Capps AQ#2 FALL 2013 (1 pt) (e) What is the technical name of the situation described in (d)? ______

(1 pt) 4. The shift in the budget line in the graph to the right is due to: (Circle the correct answer.)

(a) an increase in the price of hamburgers. (b) an increase in the price of tacos. (c) a rise in income (d) a fall in income. .

(1 pt) 5. The clockwise rotation of this diagram may be best explained as: (Circle the correct answer.)

(a) The price of pork rose. (b) The price of beef rose. (c) Total consumer income allotted to beef and pork fell. (d) The price of beef fell.

(2 pts) 6. Illustrate a demand curve for Peter Pan peanut butter. Be sure to label your axes.

2 AGEC 105 Capps AQ#2 FALL 2013

7. Mr. Valentine wishes to buy steak and pork. Mr. Valentine has a budget of $20.

Steak (lbs) 4

A 2 •

5 10 Pork (lbs)

(1 pt) (a) At point A, the consumer is said to be in ______.

(4 pts) (b) Fill in the entries in the table below in conjunction with point A.

Quantity of Steak Quantity of Pork Price of Steak Price of Pork (lbs) (lbs) ($/lb) ($/lb)

(1 pt) (c) The marginal rate of substitution at point A is equal to ______.

(1 pt) 8. Assume that for a given consumer, the marginal utility of cheap food is 100 and the price of cheap food is $40. Also, assume that the marginal utility of environmental quality is 200 and the price of environmental quality is $100. This consumer: (Circle the correct answer.)

(a) is in equilibrium. (b) should buy more cheap food. (c) should buy more environmental quality. (d) can’t tell; insufficient information given to answer this question.

(2 pts) 9. TRUE or FALSE. Circle the correct answer.

T F (a) Indifference curves may intersect. T F (b) The share of the food dollar for food eaten at home is slightly more than 50%. T F (c) In order to construct the budget line, one only needs to know the prices of the goods in question. T F (d) Equity equals liabilities minus assets.

3 AGEC 105 Capps AQ#2 FALL 2013

(2 pts) 10. Consider the following diagram, which deals with shrimp from Galveston Bay.

(1pt) (a) This diagram is technically called a/an ______curve.

(1pt) (b) From this diagram, we can conclude that shrimp from Galveston Bay is a/an ______good.

(1pt) 11. The retail value of one dozen eggs is $2.89. Farmers receive $1.04 for this dozen of eggs. What is the farmer’s share of the retail dollar? ______%

BONUS (1pt): Completely off the wall question: In the United States today, what is the annual number of Coca-Cola soft drink products drunk each year per person? (I will accept as the correct answer plus or minus 5%.)