Econ 101 - Microeconomics » Summer 2021 » Chapter 19 App Ex Part 1

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Question #1
Choice 1 (Beverage): Kombucha vs. Pabst Blue Ribbon 1. Marginal Utility of kombucha= 500; Price of kombucha=$5 2. Marginal Utility of Pabst Blue Ribbon=100; Price of Pabst Blue Ribbon=$1 Question: Which beverage will a utility maximizing individual choose?
A.   Pabst Blue Ribbon
B.   Neither of them because both beverages are terrible.
C.   The individual is indifferent between the two beverages due to the fact that the marginal utility per dollar for both beverages are equal.
D.   Kombucha
Question #2
Choice 2 (activity): date with Harley Harriet vs. Library Lucy 1. Marginal utility of Harley Harriet=10,000; Price=$100 2. Marginal utility of Library Lucy=100; Price=$20 Question: Which date will a utility maximizing individual choose?
A.   Harley Harriet
B.   Library Lucy
C.   The individual is indifferent between the two dates due to the fact that the marginal utility per dollar
D.   The individual will not go on a date.
Question #3
Choice 3 (activity): hot air balloon ride vs San Diego Zoo 1. Marginal utility of hot air balloon=20,000; Price=$80 2. Marginal utility of San Diego Zoo=10,000; Price=$100 Question: Which activity will a utility maximizing individual choose?
A.   The individual will choose neither of the activities.
B.   San Diego Zoo
C.   The individual is indifferent between the two activities due to the fact that the marginal utility per dollar
D.   hot air balloon
Question #4
Now suppose that an individual needs to make a simultaneous decision where they consume 1 beverage and choose 1 activity. Which of the following is a plausible combination that a rational utility maximizing individual would make?
A.   Kombucha and hot air balloon ride.
B.   Kombucha and a date with Harley Harriet.
C.   Pabst Blue Ribbon and Library Lucy.
D.   Pabst Blue Ribbon and the San Diego Zoo.

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