Fill-in-the-Blank
1. Fill in the blanks to make the following statements correct.
a. Utility theory is based on the hypothesis that the
received from each additional unit of the good as total
consumption of the good increases.
b. A utility-maximizing consumer will allocate expenditure
such that the per dollar spent on each product is
for all products.
c. An equation that represents a utility-maximizing pattern
of consumption of two goods, A and B, is.
d. Suppose that a consumer’s total utility decreases with
consumption of one additional unit of a good. In this
case, we know that marginal utility must be.
e. Suppose Lori is maximizing her utility as she allocates her
monthly budget between two goods—golf games and ski
passes. If the price of ski passes falls, then, ceteris paribus
the marginal utility per dollar spent on ski passes
maximize her utility she will buy more and less
f. Suppose Jeff has a monthly family budget to allocate
between food and clothing. The price of food is $10 per
unit, the price of clothing is $15 per unit, and the
marginal utility from the last unit of clothing is 75. If he is
maximizing utility, the marginal utility from the last unit
of food is.