Reference no: EM132290080

Question 1. Kate plans to brighten up her apartment in New York City with house plants and framed prints. The total utility she derives from the plants and prints is as follows:

Number of Plants	Tu of Plants	Number of Prints	TU of Prints
1	120	1	20
2	200	2	36
3	264	3	50
4	304	4	60
5	334	5	68
6	360	6	74

Suppose the price of plants is $40 and the price of prints is $20. The MU/$ spent on the fourth plant is
(a) 6
(b) 10
(c) 1
(d) .8
(e) .5

Question 2. Suppose there is a sale on prints, reducing the price from $20 to $10. If Kate had $140 to spend on plants and prints, how many of each would she buy to maximize her total utility?
(a) 3 plants and 2 prints
(b) 4 plants and 3 prints
(c) 6 plants and 2 prints
(d) 2 plants and 2 prints
(e) 6 plants and 0 prints

Question 3. Suppose Kate, who is a freelance publicist for several alternative music labels, earns way that $50,000 annually. To maximize her total utilit, she will spend her income in such a

(a) the marginal utility she derives from every good she buys is zero
(b) the marginal utility-to- price ratio for each of the goods she buys is zero
(c) the marginal utility-to-price ratio for each of the goods she buys is at a maximum
(d) the marginal utility-to-price ratio for each of the goods she buys is at a minimum
(e) the marginal utility-to-price ratio for each of the goods she buys is equal