Economics Homework Four Answers - Student Eleven

AllieT

1\. A consumer’s overall satisfaction is expressed in economics as his ________. A. Total Utility

Excellent.

2\. Consumer surplus is $ 1000. Consumer surplus is what a consumer saved from his or her purchase. The number is never negative because it would not benefit the consumer if it were negative.

Superb point about how it is never negative! Might use as a model.

3\. In order to maximize my utility, I would hike for three hours, and then read for two hours. I would achieve a maximum utility of 34 units. If I hike for three hours, I would have a utility of 23 units, which is the maximum that can be achieved before tiring out. Then, reading for two hours would result in a utility of 11 units.

Almost. Hike for two hours, then read, then return to hiking. (Minus 1).

4\. You tell the dealer you want to the market value price because the car has depreciated. The value of the car has been reduced because a hundred miles have already been put on it.

Excellent.

5\. The shape of the indifference curve of two perfect substitutes is a straight line is because the consumer does not care what the price is. The person will be just as happy with the substitution. For example, if a person wants to buy a red Nissan car with low miles, but there is only a blue Nissan car with low miles available, the buyer will be just as happy with the purchase. Extra Credit: the slope of the line will always be -1 because the lines are parallel.

First part is superb. Extra credit part not accurate because lines can be parallel without having slope of -1.

6\. The change in the price of a good effects the income of the buyer. For example, when the price of a good decreases, the buyer saved money on that good. The money save is as if the buy earned more money. In addition, the money saved could be used to buy more of the good or used on other goods. This concept is called the “income effect”.

"affects", not "effects". Superb otherwise and may use as a model.

7\. Free market is the most important aspect in the economic world. In the free market, people are attracted to the good or service because there will be a reciprocation. Charity is the giving away of a good or service without gaining a reward. Free market gives an incentive for people to work for gain and then give charity to those who are in need.

Excellent again about the incentive!

Superb answers, and you may qualify for a rare double-entry in the model answers! 69/70.--Andy Schlafly 15:22, 11 October 2009 (EDT)