Problem PS3.3.1

In the optimal bundle purchased by a consumer, the ratio of marginal utilities _______ equals the ratio of prices.

Never

Sometimes

Always

Problem PS3.3.2

James previously worked as a waiter that gave him a budget of $10 per week to spend on either chocolates or ice cream, both of which cost him $2.5 each. At those prices, James ate equal amounts of chocolate bars and ice cream. James now switches his job to work at the ice cream shop, which allows him to spend $7 on chocolates and ice cream per week. But as an employee benefit, he only has to pay $1 for ice cream.

What is the effect of switching jobs on James's welfare?

The effect on James's welfare cannot be determined from given information

James's welfare is unaffected

James's welfare is harmed

James's welfare is improved

Problem PS3.3.3

Suppose we further know that James's indifference curves have no kinks.

In this case, what is the effect of switching jobs on James's welfare?

The effect on James's welfare cannot be determined from given information

James's welfare is unaffected

James's welfare is harmed

James's welfare is improved

Problem PS3.3.4

Receiving cash _______ makes someone strictly better off than receiving the same amount of money in food stamps.

Never

Sometimes

Always

Problem PS3.3.5

Kathy only eats apples and bananas for fruit. But she likes apples a lot more in the sense that she always wants to eat another apple more than a banana. This implies that Kathy will _______ eat more apples than bananas in her optimal consumption bundle.

Certainly not

Maybe

Certainly