Please answer the following question. Please show all your work/explanation. This question asks you to recall...
Please answer the following question. Please show all your work/explanation.
This question asks you to recall what you know about how we study the choices of individual consumers. We will focus on an American tourist consumer in Tehran who must decide how many Persian Rugs (R) and how many ounces of Saffron (S) to purchase.
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Assume our consumer has complete, transitive preferences over Rugs and Saffron and prefers more to less. Explain in words the meaning of these assumptions. Draw a typical indifference map (set of indifference curves) with Rugs on the Y-axis and Saffron on the X-axis. Explain why the indifference map you drew satisfies the assumptions we have made about the household’s preferences.
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Define the marginal rate of substitution of Saffron for Rugs, which you may denote MRSS,R. How is the MRSS,R represented on your graph of the indifference curves?
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Suppose all transactions take place in cash, and our household has W units of cash (W stands for wealth). If the price of Rugs in terms of money is PR and the price of Saffron in terms of money is PS , write the household’s budget constraint (you may use R to denote the number of Rugs purchased and S to denote the ounces of Saffron purchased). Draw the consumer’s budget line on a graph (again, with Rugs on the Y-axis and Saffron on the X-axis).
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If the tourist maximizes her utility given the limited budget available to it, then the consumer's optimal choice of Rugs and Saffron is the point on the budget line which yields the highest utility. Draw the consumer’s optimal choice. At the optimal choice of the tourist, what is true about the slope of the budget line and the slope of the indifference curve? What does this result tell you about the marginal rate of substitution of Saffron for Rugs and the prices of Saffron and Rugs?
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Now, suppose that the U.S. introduces a tax on all imports. How would your answer to the last part change? Graphically illustrate the outcome. Suppose that this tax is only on saffron. How does your answer change?
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Please answer the following question. Please show all your
work/explanation.
This question asks you to recall...
Please answer the following question. Please show all your work/explanation. This problem provides a mathematical example...
Please answer the following question. Please show all your work/explanation. This problem provides a mathematical example of the previous problem and asks you to solve the household’s problem using the method of Lagrange Multipliers. Suppose the household’s preferences over Non-Durables and Health Services are given by U(N, H) = a log(N) + (1 − a) log(H) where 0 < a < 1, N is non-durable consumption and H is health services. Write the maximization problem of the household assuming prices...
Instructions: Answer the following questions as completely as possible. Write your answer neatly and legibly. When...
Instructions: Answer the following questions as completely as possible. Write your answer neatly and legibly. When drawing a graph, make sure that you label axes and curves, and include appropriate coordinates. Always show your work. Suppose that Bridget and Erin spend their incomes on two goods, food (F) and clothing (C). Bridget’s preferences are represented by the utility function U(F,C) = 10FC, while Erin’s preferences are represented by the utility function U ( F , C ) = 0.20 F^2...
Jane commutes to work. She can either use public transport or her own car. Her indifference curve...
Jane commutes to work. She can either use public transport or her own car. Her indifference curves obey the four properties of indifference curves for ordinary goods 1. Draw Jane's budget line (BL,) with car travel on the vertical axis and public transport on the horizontal axis 2. Suppose that Jane consumes some of both goods. Explain how her optimal consumption bundle can be obtained. Then, draw an indifference curve that helps you illustrate that optimal consumption bundle represented by...
answer all the questions in a type format thank you 100 pts Question 1 Write an...
answer all the questions in a type format thank you
100 pts Question 1 Write an essay that answers the following questions about utility theory. (In your essay, select the appropriate graphs from the file of graphs found at: https://drive.google.com/file/d/1pYKDpKZ5WQYZCICKYeWJ9Z vgeVO v/view? usp=sharinge. Be sure to explain whatever graphs you refer to in terms of your overall essay) 1. How is utility measured? 2. Explain the difference between total utility and marginal utility. 3. Explain the law of diminishing marginal...
Please show your work Problem 1. [30 points) Jane's favorite flowers are tulips I and roses...
Please show your work
Problem 1. [30 points) Jane's favorite flowers are tulips I and roses 22. Suppose P1 = 10, P2 = 5 and Y = 100. a) (5) Write down Jane's budget constraint (an inequality) and plot all Jane's affordable bundles on the graph (her budget set). Find the slope of a budget line (number). b) [5] Jane's utility function is given by U(11, 12) = V(Intı + ln 12)2 + 7 Propose a simpler utility function that...
Please answer question 2 and show the work. This is Q1 and answer for Q1 needed...
Please answer question 2 and show the work.
This is Q1 and answer for Q1 needed to answer question
2
2. Assume the consumer from Q1 has the following indifference map, where the MRS = -20 along Ray #1 and MRS = -15 along Ray #2. ce (Sk) toys 350 300 360 200 333% What is this consumer's best affordable bundle (BAB) before she receives the gift card? Please provide the rationale for your answer. 2pt (b) Draw this consumer's...
John has preferences for food F and clothing C described by a utility function U(F,C) =...
John has preferences for food F and clothing C described by a utility function U(F,C) = min (F, 2C). Suppose that food costs $1 a unit and that clothing costs $2 a unit. John has $12 to spend on food and clothing. (10 pts.) a) On a graph, draw indifference curves corresponding to u = 6, u = 10, u = 14. Make sure to label coordinates clearly. Using the graph, find the optimal choice of food and clothing. Let...
Question: Hi.I need your answer for all from A to G for this question 2*. Assume...
Question: Hi.I need your answer for all from A to G for this question 2*. Assume that Bob has a budget constraint p1x1 + p2x2 = m, and that his preferences are represented by the Cobb-Douglas utility function U(x1, x2) = x1 c x2 d , where c>0 and d>0. State Bob’s optimization (utility maximization) problem. a) Set up the Lagrangian function. b) Derive the necessary conditions (the first-order conditions) for an optimal interior solution. c) Show that the MRS...
Question 2: Lorelai's choice behavior can be represented by the utility function u(x1, 2)0.9Inx)0.1x2 The prices...
Question 2: Lorelai's choice behavior can be represented by the utility function u(x1, 2)0.9Inx)0.1x2 The prices of both x1 and x2 are $5 and she has an income of $40. 1. What preference does this utility function represent? (Hint: the utility is function is not linear, 2. Drawinwg indifference curves: you can copy down the graph on your paper using econgraphs. Set but at least linear in good x2) the preferences and parameters accordingly as given in the question. Click...
Show all math work 1. Jerome has budgeted $10,000 this year for groceries and entertainment (nights...
Show all math work 1. Jerome has budgeted $10,000 this year for groceries and entertainment (nights out on a date.) After some consideration, Jerome provided the following information about various combinations of groceries (measured in bags) and entertainment (measured in nights out) per year to which he is indifferent: INDIFFERENCE CURVE #1: Total Utility =300 Utils Groceries 15 Entertainment Bundle 90 A 70 30 55 55 C 50 65 D 47 80 E INDIFFERENCE CURVE #2: Total Utility = 200...
Jane commutes to work. She can either use public transport or her own car. Her indifference curves obey the four properties of indifference curves for ordinary goods 1. Draw Jane's budget line (BL,) with car travel on the vertical axis and public transport on the horizontal axis 2. Suppose that Jane consumes some of both goods. Explain how her optimal consumption bundle can be obtained. Then, draw an indifference curve that helps you illustrate that optimal consumption bundle represented by...
answer all the questions in a type format thank you
100 pts Question 1 Write an essay that answers the following questions about utility theory. (In your essay, select the appropriate graphs from the file of graphs found at: https://drive.google.com/file/d/1pYKDpKZ5WQYZCICKYeWJ9Z vgeVO v/view? usp=sharinge. Be sure to explain whatever graphs you refer to in terms of your overall essay) 1. How is utility measured? 2. Explain the difference between total utility and marginal utility. 3. Explain the law of diminishing marginal...
Please show your work
Problem 1. [30 points) Jane's favorite flowers are tulips I and roses 22. Suppose P1 = 10, P2 = 5 and Y = 100. a) (5) Write down Jane's budget constraint (an inequality) and plot all Jane's affordable bundles on the graph (her budget set). Find the slope of a budget line (number). b) [5] Jane's utility function is given by U(11, 12) = V(Intı + ln 12)2 + 7 Propose a simpler utility function that...
Please answer question 2 and show the work.
This is Q1 and answer for Q1 needed to answer question
2
2. Assume the consumer from Q1 has the following indifference map, where the MRS = -20 along Ray #1 and MRS = -15 along Ray #2. ce (Sk) toys 350 300 360 200 333% What is this consumer's best affordable bundle (BAB) before she receives the gift card? Please provide the rationale for your answer. 2pt (b) Draw this consumer's...
John has preferences for food F and clothing C described by a utility function U(F,C) = min (F, 2C). Suppose that food costs $1 a unit and that clothing costs $2 a unit. John has $12 to spend on food and clothing. (10 pts.) a) On a graph, draw indifference curves corresponding to u = 6, u = 10, u = 14. Make sure to label coordinates clearly. Using the graph, find the optimal choice of food and clothing. Let...
Question 2: Lorelai's choice behavior can be represented by the utility function u(x1, 2)0.9Inx)0.1x2 The prices of both x1 and x2 are $5 and she has an income of $40. 1. What preference does this utility function represent? (Hint: the utility is function is not linear, 2. Drawinwg indifference curves: you can copy down the graph on your paper using econgraphs. Set but at least linear in good x2) the preferences and parameters accordingly as given in the question. Click...
Show all math work 1. Jerome has budgeted $10,000 this year for groceries and entertainment (nights out on a date.) After some consideration, Jerome provided the following information about various combinations of groceries (measured in bags) and entertainment (measured in nights out) per year to which he is indifferent: INDIFFERENCE CURVE #1: Total Utility =300 Utils Groceries 15 Entertainment Bundle 90 A 70 30 55 55 C 50 65 D 47 80 E INDIFFERENCE CURVE #2: Total Utility = 200...
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