Question

13.

Suppose Katie has the option to buy a shirt or buy a pair of pants.Suppose Katie purchases a shirt. Consider the followingstatements:

I: Katie’s total utility increases
II: Katie’s marginal utility of shirts increases
III: Katie’s marginal utility of shirts decreases
IV: Katie’s marginal utility of pants increases
V: Katie’s marginal utility of pants decreases
VI: Katie’s total utility decrease

Choose the best answer below.
A) Only statements I, III, and V are true
B) Only statements III and VI are true
C) Only statements III and V are true
D) Only statements I and II are true
E) Only statements I, II, and IV are true
F) Only statements I and III are true
G) Only statements I, III, and IV are true
14.
Suppose Travis can buy a burger for $2 and can buy a soft drink for$1. He has spent all of his money. Based on what he consumed, hismarginal utility of burgers is 12, and his marginal utility of softdrinks is 4. Did Travis spend his money in a utility-maximizingway?
A) Yes – Travis spent his money optimally.
B) No – Travis should go now go purchase more burgers.
C) No – Travis should have bought more soft drinks and lessburgers
D) No – Travis should have bought more burgers and less softdrinks
15.

Suppose Dave is at the arcade. He can play 3 possible games: MarioPinball, Elk Hunt, and Street Fighter. All games are priced at $1per play. The table below shows the marginal utility of playingeach game. Suppose Dave’s mom gave him $4 to spend. If Dave spendsall of his money $1 at a time, in what order will he play games atthe arcade?


A) Street Fighter, Mario Pinball, Elk Hunt, Street Fighter
B) Street Fighter, Street Fighter, Mario Pinball, Elk Hunt
C) Mario Pinball, Street Fighter, Elk Hunt, Elk Hunt
D) Elk Hunt, Mario Pinball, Street Fighter, Mario Pinball
16.
Suppose now that upon entering the arcade, Dave finds the strongestkid in the room, beats him up, and steals $3 from him. Thus, Davenow has $7. If Dave spends all $7 optimally, what will his totalutility be after playing his last game? (Assume Dave gets noutility from the act of beating up the kid and stealing hismoney).
A) Total Utility = 20
B) Total Utility = 261
C) Total Utility = 241
D) Total Utility = 243