True, False, Uncertain or Not enough information: A given budget constraint has only one indifference curve...
True, False, Uncertain or Not enough information: A given budget constraint has only one indifference curve that is tangent for a specific set of prices. However, there may be numerous indifference curves that intersect the same budget constraint. Explain in terms of relative prices, opportunity costs and the marginal rate of substitution.
Homework Answers
True. It is tangent to highest possible indifference curve where marginal rate of substitution is equal to oppututunity cost. But it intersects many lower level indifference curves..here relative price or oppurtunity cost is either greater or less than marginal rate of substitution
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True, False, Uncertain or Not enough information: A given budget
constraint has only one indifference curve...
Indifference Curves and the Budget Constraints: True, False, Uncertain or Not enough information: A given budget...
Indifference Curves and the Budget Constraints: True, False, Uncertain or Not enough information: A given budget constraint has only one indifference curve that is tangent for a specific set of prices however, there may be numerous indifference curves that intersect the same budget constraint. Explain in terms of relative prices, opportunity cost and marginal rate of substitution.
1. When a consumer maximizes utility, which of the following is NOT true? a. The indifference curve is tangent to...
1. When a consumer maximizes utility, which of the following is NOT true? a. The indifference curve is tangent to the budget line b. Marginal utility per dollar is maximized c. The marginal rate of substitution is equal to the relative price d. The marginal utility per dollar spent is equal across all goods
Cat only buys tomatoes (x) and cucumbers (y) and her preferences can be identified with U(x,x)=6x2y....
Cat only buys tomatoes (x) and cucumbers (y) and her preferences can be identified with U(x,x)=6x2y. a. What is Cat's marginal utility for tomatoes, and what is her marginal utility for cucumbers? How does Cat's utility change when she consumes more tomatoes? How does her utility change when she consumes more cucumbers? b. Find Cat’s marginal rate of substitution (tomatoes are on the x axis and cucumbers on the y axis). What is the slope of Cat's indifference curve that...
(a) State and explain if the following statements are True, False or Uncertain. You have to...
(a) State and explain if the following statements are True, False or Uncertain. You have to explain your option even if the answer is True. If marginal cost in two markets is identical for a firm, then an international monopolistically competitive firm would set the same price in both markets. The Heckscher-Ohlin model can explain why the relative demand for skilled workers has increased within all sectors in developed countries in recent decades. In the specific factor model with labor...
curve to the right. True or false? Explain. 4. The budget line shows all possible combinations...
curve to the right. True or false? Explain. 4. The budget line shows all possible combinations of two goods that yield the same level of utility to the consumer. True or false? Explain. 5. In ordinal utility, consumer equilibrium occurs at the point where: MRSxy Py/Px. (Assume good Y is on the Y axis and good X is on the X axis.) True or false? Explain. 6. Ordinal Utility (Indifference Curves & Budget Constraint Lines) has been said to have...
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...
Be thorough and concise. If possible, include a graphical explanation as well as verba True/False/Uncertain. You...
Be thorough and concise. If possible, include a graphical explanation as well as verba True/False/Uncertain. You must provide a proof for your answer. (20 points) 1. The supply curve of labor may be upward sloping, downward sloping or both- it depends on the relative size of substitution and income effects. The demand curve for labor is derived from the marginal product of labor curve- the portion that is subject to increasing returns to labor, due to specialization and division of...
4. Person A and Person B have been stranded on an island. They are the only...
4. Person A and Person B have been stranded on an island. They are the only two people on the island and there are only two goods: coconuts (C) and grapefruits (G). A found (is endowed with) 16 coconuts and 16 grapefruits. B found (is endowed with) 4 coconuts and 144 grapefruits. Therefore, the total endowment for this economy is 20 coconuts and 150 grapefruits. A's marginal rate of substitution between coconuts and grapefruitss MRS here Ca and Ga are...
Suppose that a consumer has a utility function given by u(x1, x2) = 2x1 + x2. Initially the consumer faces prices (2, 2) and has income 24. i. Graph the budget constraint and indifference curves. Find...
Suppose that a consumer has a utility function given by u(x1, x2) = 2x1 + x2. Initially the consumer faces prices (2, 2) and has income 24. i. Graph the budget constraint and indifference curves. Find the initial optimal bundle. ii. If the prices change to (6, 2), find the new optimal bundle. Show this in your graph in (i). iii. How much of the change in demand for x1 is due to the substitution effect? How much due to...
(A) True or False, and explain! (30%) 1. It is impossible to explain why workers have...
(A) True or False, and explain! (30%) 1. It is impossible to explain why workers have the same productivity have different wage in a frictionless labor market. 2. If a person decreases working hour when his or her wage increase, we know that there is no substitution effect. 3. If a labor market has only one buyer of labor, we called it a monopolist. 4. The reservation wage of an unemployed worker is usually zero. 5. A wage increase would...
1. When a consumer maximizes utility, which of the following is NOT true? a. The indifference curve is tangent to the budget line b. Marginal utility per dollar is maximized c. The marginal rate of substitution is equal to the relative price d. The marginal utility per dollar spent is equal across all goods
Cat only buys tomatoes (x) and cucumbers (y) and her preferences can be identified with U(x,x)=6x2y. a. What is Cat's marginal utility for tomatoes, and what is her marginal utility for cucumbers? How does Cat's utility change when she consumes more tomatoes? How does her utility change when she consumes more cucumbers? b. Find Cat’s marginal rate of substitution (tomatoes are on the x axis and cucumbers on the y axis). What is the slope of Cat's indifference curve that...
curve to the right. True or false? Explain. 4. The budget line shows all possible combinations of two goods that yield the same level of utility to the consumer. True or false? Explain. 5. In ordinal utility, consumer equilibrium occurs at the point where: MRSxy Py/Px. (Assume good Y is on the Y axis and good X is on the X axis.) True or false? Explain. 6. Ordinal Utility (Indifference Curves & Budget Constraint Lines) has been said to have...
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...
Be thorough and concise. If possible, include a graphical explanation as well as verba True/False/Uncertain. You must provide a proof for your answer. (20 points) 1. The supply curve of labor may be upward sloping, downward sloping or both- it depends on the relative size of substitution and income effects. The demand curve for labor is derived from the marginal product of labor curve- the portion that is subject to increasing returns to labor, due to specialization and division of...
4. Person A and Person B have been stranded on an island. They are the only two people on the island and there are only two goods: coconuts (C) and grapefruits (G). A found (is endowed with) 16 coconuts and 16 grapefruits. B found (is endowed with) 4 coconuts and 144 grapefruits. Therefore, the total endowment for this economy is 20 coconuts and 150 grapefruits. A's marginal rate of substitution between coconuts and grapefruitss MRS here Ca and Ga are...
(A) True or False, and explain! (30%) 1. It is impossible to explain why workers have the same productivity have different wage in a frictionless labor market. 2. If a person decreases working hour when his or her wage increase, we know that there is no substitution effect. 3. If a labor market has only one buyer of labor, we called it a monopolist. 4. The reservation wage of an unemployed worker is usually zero. 5. A wage increase would...
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