Goods 1 and 2 are perfect complements for Kane
Goods 1 and 2 are perfect complements for Kane. He always consumes these two goods in the ratio of 2 units of good for every unit of good 1. The price of good 1 is $1.00, and the price of good 2 is $4.00. Kane has $819.00 to spend
Give your answers to two decimal places
Part 1
The substitution effect of a change in the price of good 2 from 54.00 to $6.00 will reduce the demand for good 2 by units.
Part 2
The income effect of the increase in the price of good 2 from $4.00 to $6.00 will cause demand for food 2 to fall by units.
Homework Answers
. Goods 1 and 2 are perfect complements. and a consumer always consumes them in the...
. Goods 1 and 2 are perfect complements. and a consumer always consumes them in the ratio of 2 units of good 2 per unit of good 1. If a consumer has an income of $120 and if the price of good 2 changes from $3 to $4, while the price of good 1 stays at $1, then the income effect of the price change a) is 4 times as strong as the substitution e ect. (b) does not change...
20. Goods X and Y are perfect complements. If the price of good Y falls, what...
20. Goods X and Y are perfect complements. If the price of good Y falls, what will be the consequences on the substitution effect? (1) It will not affect the amount of goods X and Y that consumers buy. (2) It will cause consumers to buy more of good X and less of good Y. (3) It will cause consumers to buy more of good Y and less of good X. (4) It will affect the amount of goods X...
5. Douglas consumes two goods, x and y. His utility function is u(x) = Vx+y Let...
5. Douglas consumes two goods, x and y. His utility function is u(x) = Vx+y Let the price of good x be $2 and the price of good y be $2. Furthermore, assume that Douglas has $420.00 to spend on these two goods. Find the demand for good x and y. Now suppose that the price of good x decreases to $1.00. What is the income effect and substitution effect of this price change on the demand for x?
Robert treats coffee and creamer as perfect complements and has very specific requirements for the ratio of creamer to coffee
Robert treats coffee and creamer as perfect complements and has very specific requirements for the ratio of creamer to coffee. He will drink coffee only if he has exactly 1.00 packets of creamer for every cup of coffee. Coffee is priced at $3.00 per cup and creamer at $0.25 per packet. In the questions below, give your answers to two decimal places.Part 1 Suppose that Robert has $39.00 to spend on coffee and creamer. His optimal consumption bundle contains cups of coffee...
06 Question (3 points) e See page 149 Douglas consumes two goods, x and y. His utility function is u(x, y) = (x + y. I...
06 Question (3 points) e See page 149 Douglas consumes two goods, x and y. His utility function is u(x, y) = (x + y. In the questions below, give your answers to two decimal places. 1st attempt Part 1 (1 point) See Hint Let the price of good x be $2 and the price of good y be $10. Furthermore, assume that Douglas has $360.00 to spend on these two goods. How much of good x does Douglas demand?...
Exercise 3 For Sandra, coffee and sugar are perfect complements: she wants to consume exactly 2 g...
Exercise 3 For Sandra, coffee and sugar are perfect complements: she wants to consume exactly 2 g of sugar for each cup of coffee. She has S6 to spend on sugar and coffee. One gram of sugar costs 5 cents and one cup of coffee costs 20 cents. Draw a diagram, with sugar on the horizontal axis and cup of coffee on the vertical axis, to answer the following questions. 1. Which bundle will Sandra consume (represented by point A)?...
18. Two goods, X & Y, all called complements if a) An increase in Px causes...
18. Two goods, X & Y, all called complements if a) An increase in Px causes more Y to be bought. b) An increase in Px causes less Y to be bought. c) An increase in Py causes less Y to be bought. d) An increase in income causes more of both X & Y to be bought. 19. If good X is a normal good and its price rises, then quantity demanded a) May or may not fall. b)...
2. Suppose Voodoo Donuts and Stumptown Coffee are perfect complements, consumed together one donu...
2. Suppose Voodoo Donuts and Stumptown Coffee are perfect complements, consumed together one donut to one cup of coffee. Suppose the price of a donut is $1 and the price of a cup of coffee is $3. Use both graphs and words to explain income and substitution effects when the price of coffee to rise to $4. (Hint: pay attention to the shape of the indifference curve for perfect complements.)
5. Draw out examples of each of the following indifference curves: imperfect substitutes, perfect substitutes, and...
5. Draw out examples of each of the following indifference curves: imperfect substitutes, perfect substitutes, and perfect complements. 6. Jody enjoys having exactly 1 teaspoon of sugar with every cup of coffee she has. What does this say about her indifference curves between the two goods? What happens to her utility level when she is given 5 teaspoons of sugar with one coffee? (Just an explanation) 7. Jay’s Utility function is given by U(x,z) = 3x10.2 x20.8 and P1=$2 and...
Exercise 3 For Sandra, coffee and sugar are perfect complements: she wants to consume exactly 2...
Exercise 3 For Sandra, coffee and sugar are perfect complements: she wants to consume exactly 2 g of sugar for each cup of coffee. She has S6 to spend on sugar and coffee. One gram of sugar costs 5 cents and one cup of coffee costs 20 cents. Draw a diagram, with sugar on the horizontal axis and cup of coffee on the vertical axis, to answer the following questions. 1. Which bundle will Sandra consume (represented by point A)?...
20. Goods X and Y are perfect complements. If the price of good Y falls, what will be the consequences on the substitution effect? (1) It will not affect the amount of goods X and Y that consumers buy. (2) It will cause consumers to buy more of good X and less of good Y. (3) It will cause consumers to buy more of good Y and less of good X. (4) It will affect the amount of goods X...
5. Douglas consumes two goods, x and y. His utility function is u(x) = Vx+y Let the price of good x be $2 and the price of good y be $2. Furthermore, assume that Douglas has $420.00 to spend on these two goods. Find the demand for good x and y. Now suppose that the price of good x decreases to $1.00. What is the income effect and substitution effect of this price change on the demand for x?
06 Question (3 points) e See page 149 Douglas consumes two goods, x and y. His utility function is u(x, y) = (x + y. In the questions below, give your answers to two decimal places. 1st attempt Part 1 (1 point) See Hint Let the price of good x be $2 and the price of good y be $10. Furthermore, assume that Douglas has $360.00 to spend on these two goods. How much of good x does Douglas demand?...
Exercise 3 For Sandra, coffee and sugar are perfect complements: she wants to consume exactly 2 g of sugar for each cup of coffee. She has S6 to spend on sugar and coffee. One gram of sugar costs 5 cents and one cup of coffee costs 20 cents. Draw a diagram, with sugar on the horizontal axis and cup of coffee on the vertical axis, to answer the following questions. 1. Which bundle will Sandra consume (represented by point A)?...
18. Two goods, X & Y, all called complements if a) An increase in Px causes more Y to be bought. b) An increase in Px causes less Y to be bought. c) An increase in Py causes less Y to be bought. d) An increase in income causes more of both X & Y to be bought. 19. If good X is a normal good and its price rises, then quantity demanded a) May or may not fall. b)...
Exercise 3 For Sandra, coffee and sugar are perfect complements: she wants to consume exactly 2 g of sugar for each cup of coffee. She has S6 to spend on sugar and coffee. One gram of sugar costs 5 cents and one cup of coffee costs 20 cents. Draw a diagram, with sugar on the horizontal axis and cup of coffee on the vertical axis, to answer the following questions. 1. Which bundle will Sandra consume (represented by point A)?...
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