Homework Answers
2) Answer: False
In budget constraint line we can see the combination of two goods that consumer can consume. One good will be one Y axis and another good on X axis. Budget line is the graphical representation of two goods that a consumer can buy with the budget he had.
3) Answer: 3
Here from the budget constraint graph
James initially had 2 bananas and 6 chips
Where when James want to by 2 more bananas the chips have fallen to 3
It means if he want to consume 2 more bananas he has to loose (6-3) 3 chips
So loosing 3 chips is the opportunity cost for James
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Question 2 & 3
Question 2 (1 point) Any combination of two goods that would be...
3) Sally consumes two goods, X and Y. Her utility function is given by the expression...
3) Sally consumes two goods, X and Y. Her utility function is given by the expression U = 3 · XY2. The current market price for X is $10, while the market price for Y is $5. Sally's current income is $500. a. Sketch a set of two indifference curves for Sally in her consumption of X and Y. b. Write the expression for Sally's budget constraint. Graph the budget constraint and determine its slope. c. Determine the X, Y...
Sally consumes two goods, X and Y. Her utility function is given by the expression U...
Sally consumes two goods, X and Y. Her utility function is given by the expression U = 2 · XY ^2 . The current market price for X is $10, while the market price for Y is $12. Sally’s current income is $900. a. Sketch a set of two indifference curves for Sally in her consumption of X and Y. b. Write the expression for Sally’s budget constraint. Graph the budget constraint and determine its slope. c. Determine the X,Y...
Lucas gets utility (satisfaction) from two goods, A and B, according to the utility function U(A,B)...
Lucas gets utility (satisfaction) from two goods, A
and B, according to the utility function U(A,B) = 10[A−2 +B−2]−2.
While Luke would like to consume as much as possible he is limited
by his income.
a. Maximize Lucas’ utility subject to the budget constraint using
the Lagrangean method.
3. Utility maximization under constraint Lucas gets utility (satisfaction) from two goods, A and B, according to the utility function U(A,B) = 10[A-? +B)-2. While Luke would like to consume as much...
. (15 marks) Rajan spends all his money on only two goods, bananas and scones. Bananas...
. (15 marks) Rajan spends all his money on only two goods, bananas and scones. Bananas cost $0.60/kg, and scones $0.50 each (assume he can purchase partial scones). (1) Sketch Rajan's budget constraint if he has an income of $20/day. (Put bananas on the horizontal axis.) Rajan has well-behaved preferences[1], and his optimal bundle contains 20 scones. b) (2) Illustrate his optimal bundle in your diagram for (a); label it A. Why is this choice optimal? What conditions does it satisfy? (2)...
@ See page 74 02 Question (5 points) Hugo carefully divides his spending into things he needs and things he wants, and...
@ See page 74 02 Question (5 points) Hugo carefully divides his spending into things he needs and things he wants, and he has quasilinear preferences over both goods. His preferences can be represented by the function u(x, y) = 4x + y, where x represents needs and y represents wants. Hugo faces a price of $12 for needs and $36 for wants; he has income of $180. 1st attempt Part 1 (2 points) O See Hint The graph below...
ZOOM Page 2 of 2 D. Consumer Decision Making Total Utility Candy Total Bananas Utility 1...
ZOOM Page 2 of 2 D. Consumer Decision Making Total Utility Candy Total Bananas Utility 1 50 40 2 94 2 76 132 3 106 4 162 4 128 5 182 5 138 1. Candy costs $2, bananas cost S. What is the utility maximizing quantity of candy and bananas to purchase, if you have an $8 budget? 2. I offer you the option to use your $8 to buy 3 pieces of candy and 2 bananas (yay candy!) Why...
2. (3 pts.) Given the graph below: a. At point A is MRS equal to, greater...
2. (3 pts.) Given the graph below: a. At point A is MRS equal to, greater than, or less than the ratio of the prices (circle one b. Will they buy more of Y or more of X or maintain the combination of goods at A to c. What will the value of the MRS be when the consumer is maximizing their utility given option)? maximize their utility (circle one option)? the budget line shown in the graph? 10
Figure 2-1 4) Refer to Figure 2-1. Point A is A) technically efficient. B) unattainable with...
Figure 2-1 4) Refer to Figure 2-1. Point A is A) technically efficient. B) unattainable with current resources. C) inefficient in that not all resources are being used. D) the equilibrium output combination. 5) Refer to Figure 2-1. Point B is A) technically efficient. B) unattainable with current resources. C) inefficient in that not all resources are being used. D) the equilibrium output combination. 6) Refer to Figure 2-1. Point C is A) technically efficient. B) unattainable with current resources....
Question 23 (1 point) Figure 4-18 20 price 1 2 3 4 5 6 7 8...
Question 23 (1 point) Figure 4-18 20 price 1 2 3 4 5 6 7 8 9 10 quantity Refer to Figure 4-18. What is the equilibrium quantity in this market? a) 7.5 units Ob) 5 units OC) 10 units O d) The equilibrium quantity cannot be determined from this graph. Question 24 (1 point) Figure 4-18 2 prace 1 2 3 4 5 6 7 8 9 10 quantity Refer to Figure 4-18. What is the equilibrium price in...
Quick intuition check via True or False Questions 1. 2. If all prices double and income...
Quick intuition check via True or False Questions 1. 2. If all prices double and income triples, then the budget line will become steeper There are two goods. You know how much of good 1 a consumer can afford if she spends all of her income on good 1. If you knew the ratio of the prices of the two goods, then you could draw the consumer's budget line without any more information. lf good l is on the horizontal...
3) Sally consumes two goods, X and Y. Her utility function is given by the expression U = 3 · XY2. The current market price for X is $10, while the market price for Y is $5. Sally's current income is $500. a. Sketch a set of two indifference curves for Sally in her consumption of X and Y. b. Write the expression for Sally's budget constraint. Graph the budget constraint and determine its slope. c. Determine the X, Y...
Lucas gets utility (satisfaction) from two goods, A
and B, according to the utility function U(A,B) = 10[A−2 +B−2]−2.
While Luke would like to consume as much as possible he is limited
by his income.
a. Maximize Lucas’ utility subject to the budget constraint using
the Lagrangean method.
3. Utility maximization under constraint Lucas gets utility (satisfaction) from two goods, A and B, according to the utility function U(A,B) = 10[A-? +B)-2. While Luke would like to consume as much...
@ See page 74 02 Question (5 points) Hugo carefully divides his spending into things he needs and things he wants, and he has quasilinear preferences over both goods. His preferences can be represented by the function u(x, y) = 4x + y, where x represents needs and y represents wants. Hugo faces a price of $12 for needs and $36 for wants; he has income of $180. 1st attempt Part 1 (2 points) O See Hint The graph below...
ZOOM Page 2 of 2 D. Consumer Decision Making Total Utility Candy Total Bananas Utility 1 50 40 2 94 2 76 132 3 106 4 162 4 128 5 182 5 138 1. Candy costs $2, bananas cost S. What is the utility maximizing quantity of candy and bananas to purchase, if you have an $8 budget? 2. I offer you the option to use your $8 to buy 3 pieces of candy and 2 bananas (yay candy!) Why...
2. (3 pts.) Given the graph below: a. At point A is MRS equal to, greater than, or less than the ratio of the prices (circle one b. Will they buy more of Y or more of X or maintain the combination of goods at A to c. What will the value of the MRS be when the consumer is maximizing their utility given option)? maximize their utility (circle one option)? the budget line shown in the graph? 10
Question 23 (1 point) Figure 4-18 20 price 1 2 3 4 5 6 7 8 9 10 quantity Refer to Figure 4-18. What is the equilibrium quantity in this market? a) 7.5 units Ob) 5 units OC) 10 units O d) The equilibrium quantity cannot be determined from this graph. Question 24 (1 point) Figure 4-18 2 prace 1 2 3 4 5 6 7 8 9 10 quantity Refer to Figure 4-18. What is the equilibrium price in...
Quick intuition check via True or False Questions 1. 2. If all prices double and income triples, then the budget line will become steeper There are two goods. You know how much of good 1 a consumer can afford if she spends all of her income on good 1. If you knew the ratio of the prices of the two goods, then you could draw the consumer's budget line without any more information. lf good l is on the horizontal...
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