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2- Lisa's preference between good X and a composite good of everything else (Z) can be...
9. Explain why two indifference curves that represent distinct levels of preference (or utility) can not...
9. Explain why two indifference curves that represent distinct levels of preference (or utility) can not cross and how this would violate the assumption that preferences are transitive. Provide a sketch to support your answer. homo economicus agent's preferences can be represented using a Cobb-Douglas utility functionn The agent's "taste for good 1 relative to good 2 depends on a single parameter, a. The larger the value of a, the more good 2 she is willing to give up to...
4- Bart's utility of consuming firecrackers (X) and everything else (Y) can be shown as U(X,Y)...
4- Bart's utility of consuming firecrackers (X) and everything else (Y) can be shown as U(X,Y) = 2 X +Y His marginal rate of substitution can be shown as? MRS = 1/ JE Y is a composite good of everything-but-not-firecracker that Bart buys with $1. His daily income is $20, and the price of firecracker is 50 cents. a. *How many firecrackers will he buy? Use an X-Y graph and sketch the budget constraint and the indifference curve passing through...
4. Devon's preferences over food and a composite good are given by u(x, y) = xy...
4. Devon's preferences over food and a composite good are given by u(x, y) = xy , where x is the quantity of food and y is the quantity of composite good. His income is $120 per week. a) Find Devon's optimal bundle when the price of food is $4 per unit. b) Calculate Devon's income and substitution effects of a decrease in the price of food to $2 per unit.
Suppose Bill has preferences over chocolate,x, and ice cream,y, that are represented by the Cobb-Douglas utility...
Suppose Bill has preferences over chocolate,x, and ice cream,y, that are represented by the Cobb-Douglas utility function u(x, y) =x^2 y. 1. Write down two other Cobb-Douglas utility functions, besides the one above, that represent Bill’s preferences. 2. Write down two more Cobb-Douglas utility functions that do NOT represent Bill’s prefer- ences. 3. Draw 3 indifference curves that represents Bill’s preferences at 3 different levels of satsifaction. 4. What is Bill’s marginal rate of substitution between chocolate and ice cream?...
7. (4 Points) Describe what the marginal rate of substitution of x for Y (MRSxy) to...
7. (4 Points) Describe what the marginal rate of substitution of x for Y (MRSxy) to us about a consumer's preferences between the two goods. 8 (4 Points) Suppose you have preferences over two goods, bottles of wine (good X) and slices of pizza (good Y). Explain what it means that for the bundle A = (3, 15), the MRSxy = 2. 9. For this question, use the utility function U(X,Y)= XY. (a) (2 Points) What is the marginal utility...
7. (4 Points) Describe what the marginal rate of substitution of X for Y (MRSxy) telle...
7. (4 Points) Describe what the marginal rate of substitution of X for Y (MRSxy) telle us about a consumer's preferences between the two goods. 8. (4 Points) Suppose you have preferences over two goods, bottles of wine (good X) and slices of pizza (good Y). Explain what it means that for the bundle A = (3.15), the MRSxy = 2 9. For this question, use the utility function U(X,Y)= XY. (a) (2 Points) What is the marginal utility of...
Question 2. Consider the following 8 bundles of goods x and y: A = (8,4) B...
Question 2. Consider the following 8 bundles of goods x and y: A = (8,4) B = (5,6) C = (5,9) D = (10,3) E =(1,4) F =(6,5) G=(2,8) H =(7,8) (a) Come up with an example of a utility function that will produce the following order of preference for the bundles, where H is most preferred, A and G are equally preferred, and E is least preferred. H , C , B , F , A = G ,...
Suppose that a fast-food junkie derives utility from three goods-soft drinks (x), hamburgers (y), and ice...
Suppose that a fast-food junkie derives utility from three goods-soft drinks (x), hamburgers (y), and ice cream sundaes (z)-according to the Cobb- Douglas utility function: Suppose also that the prices for these goods are given by Px-1,py-4, and pz-8 and this consumer's income is given by 1-8 If z-0, then the combination of x and y that optimize utility involve x*- utility U and y*- , These values of x* and y result in a level of If z- 1,...
1. True or False, and explain briefly. 1) The assumption that more is better implies that...
1. True or False, and explain briefly. 1) The assumption that more is better implies that the indifference curves are upward sloping 2) Convexity of indifference curves implies that consumers are willing to give up more to get an extra the more they have 3) Consider the following three bundles. Bundle Good Goody If Bundles A and B are on the same indifference curve, preferences satisfy all the usual assumptions introduced in the lecture, Bundle Cis preferred to Bundle A...
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...
9. Explain why two indifference curves that represent distinct levels of preference (or utility) can not cross and how this would violate the assumption that preferences are transitive. Provide a sketch to support your answer. homo economicus agent's preferences can be represented using a Cobb-Douglas utility functionn The agent's "taste for good 1 relative to good 2 depends on a single parameter, a. The larger the value of a, the more good 2 she is willing to give up to...
4- Bart's utility of consuming firecrackers (X) and everything else (Y) can be shown as U(X,Y) = 2 X +Y His marginal rate of substitution can be shown as? MRS = 1/ JE Y is a composite good of everything-but-not-firecracker that Bart buys with $1. His daily income is $20, and the price of firecracker is 50 cents. a. *How many firecrackers will he buy? Use an X-Y graph and sketch the budget constraint and the indifference curve passing through...
4. Devon's preferences over food and a composite good are given by u(x, y) = xy , where x is the quantity of food and y is the quantity of composite good. His income is $120 per week. a) Find Devon's optimal bundle when the price of food is $4 per unit. b) Calculate Devon's income and substitution effects of a decrease in the price of food to $2 per unit.
7. (4 Points) Describe what the marginal rate of substitution of x for Y (MRSxy) to us about a consumer's preferences between the two goods. 8 (4 Points) Suppose you have preferences over two goods, bottles of wine (good X) and slices of pizza (good Y). Explain what it means that for the bundle A = (3, 15), the MRSxy = 2. 9. For this question, use the utility function U(X,Y)= XY. (a) (2 Points) What is the marginal utility...
7. (4 Points) Describe what the marginal rate of substitution of X for Y (MRSxy) telle us about a consumer's preferences between the two goods. 8. (4 Points) Suppose you have preferences over two goods, bottles of wine (good X) and slices of pizza (good Y). Explain what it means that for the bundle A = (3.15), the MRSxy = 2 9. For this question, use the utility function U(X,Y)= XY. (a) (2 Points) What is the marginal utility of...
Suppose that a fast-food junkie derives utility from three goods-soft drinks (x), hamburgers (y), and ice cream sundaes (z)-according to the Cobb- Douglas utility function: Suppose also that the prices for these goods are given by Px-1,py-4, and pz-8 and this consumer's income is given by 1-8 If z-0, then the combination of x and y that optimize utility involve x*- utility U and y*- , These values of x* and y result in a level of If z- 1,...
1. True or False, and explain briefly. 1) The assumption that more is better implies that the indifference curves are upward sloping 2) Convexity of indifference curves implies that consumers are willing to give up more to get an extra the more they have 3) Consider the following three bundles. Bundle Good Goody If Bundles A and B are on the same indifference curve, preferences satisfy all the usual assumptions introduced in the lecture, Bundle Cis preferred to Bundle A...
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...
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