Question

4. Due to significant lobbying efforts the government sets the price of cheese at $5. Compared to before the price change, what is the effect on total consumer surplus? a increase b. decrease c.not change d increase and then decrease 5. Lourie spent last year working at a tire shop and earned an hourly wage. The year before working at the tire shop Lourie managed a bakery. Given this information we can determine: a Lourie's opportunity costs of working at the bakery exceeded Lourie's benefits from working at the tire shop b. Lourie's opportunity costs of working for the tire service exceeded Lourie's benefits from working at the bakery c. Lourie's opportunity costs of working for the tire shop exceeded Lourie's opportunity costs of working at the bakery. d. Lourie's opportunity costs of working at the bakery exceeded Lourie's opportunity costs of working at the tire shop 6. Andy's favorite snack is caramel flavored rice cakes. His total utility after eating 4 rice cakes was more than his total utility after eating 3 rice cakes. This means Andy's MU from the 4th rice cake was a negative. b. positive. . d. positive, but less than one 7. The graph below shows the relationship between total utility and MU with regard to pizza slices What is the MU of consuming the fourth slice of pizza? Up to the fourth Slice of pizza, what is happening with MU? a 90: increases b. 15decreases c. 10, stays the same d. 90: decreases

Answer 1

4. As price decreases consumer surplus increase since current equilibrium price is $6 and price cap is at 5 COnsumer surplus will increase hence, option a is correct

5. SInce lourie is working at the tire shop now instead of bakery so her opportunity cost of working at bakery shop is higher than that of working at the tire shop or benefit of working at tire shop is higher than opportunity cost of working there. Out of given option only Option D can justifies the rationale

6.Since total utility after eating 4 cake is higher than that after eating 3 4th cake will have positive non zero marginal utility hence option b is correct

7. Image is not clear... But looks like at 4th slice Total utility is at 90 and at 3rd slice at 75 so MU=15 and MU is decreasing from 3rd to 4th Hence, Option b is correct