Homework Answers
Initialy, the demand curve for
hamburger is given by DD curve. When income increases for the first
time (between points A and B), hamburger being normal good, the
demand curve shifts forward from DD to
D1D1 showing an increase in the
quantity purchased and the price remaining unchanged.
When income increases further(between points B and C), hamburger being inferior good, the demand curve for shifts backward from D1D1 to D2 D2 showing a decrease in the quantity purchased and price remaining unchanged.
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(9) An increase in income, with the prices of all goods fixed, causes consumers to alter...
a consumers income is $100. prices of goods X and Y are $1 per unit. suppose...
a consumers income is $100. prices of goods X and Y are $1 per unit. suppose the consumer facing such prices chooses the bundle that includes 60 units of good Y. next, the price of good X increases to $2 per unit. the consumer's new choice involves a bundle with 40 units of good X. is X a normal good,an inferior good,or is there insufficient information to answer this question? explain using a graph and the concepts of income and...
9.When price increase from $43 to $49, quantity supplied increases from 220 units to 240 units....
9.When price increase from $43 to $49, quantity supplied increases from 220 units to 240 units. The price elasticity of supply in this price range is (use the Midpoint Formula): Multiple Choice a.0.3 b.0.67 c.1.5 d.3.33 10. When any change in price results in an infinite change in quantity demanded: Multiple Choice a.price elasticity of supply is zero. b.demand is perfectly elastic. c.demand is perfectly inelastic. d.price elasticity of supply is infinite. 12. Over a longer period of time: Multiple...
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)...
Suppose Cole buys food (X) and clothing (Y) with his income of $500 per month. The prices that Co...
Suppose Cole buys food (X) and clothing (Y) with his income of $500 per month. The prices that Cole faces in month one are $2 per unit of food and $4 per unit of clothing. His utility-maximizing choice is 100 food units and 75 clothing units. His preferences are convex. Now assume that in month two, Cole's income increases by 11% to $555, the price of food increases by 5% to $2.10, and the price of clothing increases by 15%...
1525 11. Discuss the most significant factors that affect demand for goods and services. 12. What...
1525 11. Discuss the most significant factors that affect demand for goods and services. 12. What causes for a demand curve to shift to right or to left? When do we move from one point to another on a demand curve, what causes it? 13. Demonstrate graphically how a horizontal summation of individual demand curves provides a "market demand curve." 14. Discuss the most important factors/variables that affect supply of goods and services. 15. Explain the difference between moving on...
Rosie makes fudge using two ingredients, sugar and chocolate. She prefers to have more of both...
Rosie makes fudge using two ingredients, sugar and chocolate. She prefers to have more of both goods, but she also prefers similar quantities of each; otherwise the fudge is too sweet or too bitter. In fact, her preferences are given by the utility function U(S,C) = S 1/2 + C 1/2 . A. What is Rosie’s preference between the bundle (4,16) and (16,4)? (Note that the consumption bundle is (# units of sugar, # units of chocolate)). What is Rosie’s...
Question: Consider a consumer with utility function4, income Z, and who faces market prices of p,...
Question: Consider a consumer with utility function4, income Z, and who faces market prices of p, and py (a) Use our optimality condition of MRSy MRTay to find the relationship between x and y which must always be satisfied by a bundle that maximizes the consumer's utility (b) After incorporating the consumer's budget to the problem, calculate the consumer's de- mand for x and y which we will call x(P Z) and y(Py, Z), respectively, because it empha- sizes the...
Sophie's preferences over two goods are given by u21, 12) = 40x12 +22. Good 1 costs...
Sophie's preferences over two goods are given by u21, 12) = 40x12 +22. Good 1 costs $2 per unit and good 2 costs $1 per-unit. a) Sketch Sophie's income offer curve in a clearly labelled diagram. (1 point) b) Find the optimal consumption bundle when Sophie is spending m = $250 on the two goods. Illustrate your answer in the above diagrams. (1 point) c) Suppose that the price of good 1 increases to $4 per-unit. Under the assumption that...
I need 24,25,26,27 &28(rest of 28 is on the second attachment) Last name, First namc b....
I need 24,25,26,27 &28(rest of 28 is on the second
attachment)
Last name, First namc b. inverse; direct C. Inverse: inverse d. direct, direct 24. When the price of a product increases, a consumer is able to buy less of it with a givern moncy income. This describes the a cost effect. b. inflationary effect c. income effect. d. substitution effect. 25. If two goods are complements, a they are consumed independently b. an increase in the price of one...
1. Sketch indifference curves for each of the following consumers for a day’s worth of coffee...
1. Sketch indifference curves for each of the following consumers for a day’s worth of coffee and food, and describe why the indifference curves take the shape they do. Draw the indifference curves as how they would look if the drank a range of 0 to 4 cups. a. Ron treats coffee and food as ordinary goods, but is neutral to coffee beyond 3 cups. b. For Gareth, food is always an ordinary good where more is better; however, coffee...
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)...
1525 11. Discuss the most significant factors that affect demand for goods and services. 12. What causes for a demand curve to shift to right or to left? When do we move from one point to another on a demand curve, what causes it? 13. Demonstrate graphically how a horizontal summation of individual demand curves provides a "market demand curve." 14. Discuss the most important factors/variables that affect supply of goods and services. 15. Explain the difference between moving on...
Question: Consider a consumer with utility function4, income Z, and who faces market prices of p, and py (a) Use our optimality condition of MRSy MRTay to find the relationship between x and y which must always be satisfied by a bundle that maximizes the consumer's utility (b) After incorporating the consumer's budget to the problem, calculate the consumer's de- mand for x and y which we will call x(P Z) and y(Py, Z), respectively, because it empha- sizes the...
Sophie's preferences over two goods are given by u21, 12) = 40x12 +22. Good 1 costs $2 per unit and good 2 costs $1 per-unit. a) Sketch Sophie's income offer curve in a clearly labelled diagram. (1 point) b) Find the optimal consumption bundle when Sophie is spending m = $250 on the two goods. Illustrate your answer in the above diagrams. (1 point) c) Suppose that the price of good 1 increases to $4 per-unit. Under the assumption that...
I need 24,25,26,27 &28(rest of 28 is on the second
attachment)
Last name, First namc b. inverse; direct C. Inverse: inverse d. direct, direct 24. When the price of a product increases, a consumer is able to buy less of it with a givern moncy income. This describes the a cost effect. b. inflationary effect c. income effect. d. substitution effect. 25. If two goods are complements, a they are consumed independently b. an increase in the price of one...
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