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Characterize utility maximization. When consumers maximize​ utility,

A. they consume each good up to the point where the marginal utility per dollar spent is the same for each good.

B. the marginal rate of substitution equals the price of the good on the horizontal axis divided by the price of the good on the vertical axis at the point of optimization.

C. the slope of the indifference curve equals the slope of the budget constraint at the point of optimization.

D. all of the above.

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Sonal Bahl
Sonal BahlLv10
19 Oct 2020
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Related questions

To maximize​ utility, consumers choose a consumption bundle:

A. where the slope of the budget constraint is equal to the ratio of the good price on the horizontal axis divided by the price of the good on the vert axis (multiplied by minus one).

B. on the highest indifference curve given the budget constraint.

C. where indifference curves intersect one another. 

D. where the marginal utility of each product is maximized. 

E. where the slope of the highest indifference curve is equal to the marginal rate of substitution

1.

Suppose all consumers are maximizing utility with convex indifference curves. All face the same prices, and are perfectly rational. According to microeconomic models, at the maximization bundle they should

A. All have the same marginal rate of substitution

B. All buy more of the least expensive good

C. All end up with the same bundle of goods

D. All have the same level of satisfaction

2.

Consider an indifference map with food on the vertical axis and shelter on the horizontal axis.

If a consumer is willing to give up 3 units of food in exchange for 1 unit of shelter and food is priced at $5 per unit and shelter at $10 per unit, then the consumer is:

A. Purchasing too much food for utility maximization

B. Purchasing too much shelter for utility maximization

C. Purchasing just the right amount of each good for utility maximization

D. Purchasing less than the budget would allow

3.

If a consumer with convex indifference curves moves along her budget line, closer and closer to the horizontal axis, as she is moving:

A. The marginal utility she gets from good Y declines.

B. The marginal utility she gets from good X declines.

C. The marginal utility she gets from good X increases.

D. The price ratio of the two goods changes.

14) At the best affordable point, which statement is true? A) The marginal rate of substitution between two goods equals their absolute price. B) Other points on the same indifference curve are affordable but not preferred. C) The slope of the indifference curve equals the slope of the budget line. D) The highest affordable indifference curve has the same intercept as the budget line. E) Some income is not spent.

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