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Anna Blajer-Gołębiewska M. Sc.

Microeconomics

CONSUMER BEHAVIOUR

Exercise 1.

Match the labę] with a proper defmition.

In eąuilibrium point an agent will allocate expenditures so that the ratio of marginal utility to price (marginal cost of acąuisition) is egual across all goods and services.

Gosseris First Law

The "law" of diminishing marginal utility: that marginal Utilities are diminishing across the ranges relevant to decision-making.

Sossen's Second Law

Exercise 2.

Fili in the tables.

Quantity	TU	MU
1	25
2	40
3	46
4	46
5	44

Quantity	TU	MU
1		40
2		27
3		0
4		-5
5		-12

Quantity	TU	MU
1		8
2	14
3	16
4	16
5		-1

Exercise 3.

Elizabeth has a fixed income 1=280 per month. She purchases only 20 units of X and 40 units of Y. Her marginal Utilities are MU_X = 36 and MU_Y= 24 utiles. Find if consumer is in her eąuilibrium, if prices for goods are P_x = 6 and P_Y = 4.

Exercise 4.

Paul gets £120 of pocket money per month. He always buys 6 magazines (P_M = £8) and 24 bottles of cola (P_c = £3). His marginal utility (from the last magazine) is MU_m=40 U, and form the last bottle of cola is MU_C= 1 8 U. Does it meet the eąuilibrium point?

Exercise 5.

Consumer maximizing his total utility spent his total income of 30 only on goods X and Y (P_x = 4 and P_Y = 5). His marginal utility of the fifth unit of X was MU_X=20 U.

a)    How many units of Y did he buy?

b)    Calculate his marginal utility for the last unit of Y?

Exercise 6.

Consumer’s purchases are 3 units of X and 5 units of Y, P_x = 1, P_Y = 2. Is it consumer’s eąuilibrium point? If not, what should he do when:

a)    MU_X    = 7,    MU_y =    14,    I = 13;

b)    MU_X    =6,    MU_y =    12,    1 = 28;

c)    MU_X    =4,    MU_y =    15,    1= 13;

d)    MU_X    = 10, MU_y = 10, 1= 13.

Exercise 7.

The table shows total and marginal Utilities of goods X and Y . Px=2, Py=l, 1= 15. Find the eąuilibrium point and the total utility from goods X and Y (in eąuilibrium point).

X				Y
Quantity	TUx	MUx		Quantity	TUy	MUy
1		14		1		18
2		10		2	28
3		9		3	35
4		8		4	40
5		7		5		3,5

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