Marginal utilities of two goods must be equal for utility maximization. True or false Explain very...
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False.
To obtain the greatest utility the consumer should allocate money income so that the last dollar spent on each good or service yields the same marginal utility.
MUx/Px = MUy/Py
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Marginal utilities of two goods must be equal for utility
maximization. True or false Explain very...
the consumers utility maximizing choice is where the ratio of the marginal utilities of two goods...
the consumers utility maximizing choice is where the ratio of the marginal utilities of two goods are equal to each other (Mux/Px = Muy/Py). What does this condition mean and why is it the utility maximizing choice? explain.
Explain why utility maximization subject to the budget constraint implies that the consumer purchases that basket...
Explain why utility maximization subject to the budget constraint implies that the consumer purchases that basket of commodities for which 1. all income is used up. 2. the marginal rate of substitution equals the price ratio. 3. the marginal utilities per dollar of the two goods are equal. If you use a diagram in your answer, make the diagram large and label all curves, axes, and points.
Classify each of the statements as true or false True False Answer Bank Marginal utility is...
Classify each of the statements as true or false True False Answer Bank Marginal utility is always positive. Numerical utility values are relatively easy to calculate. Diminishing marginal utility means that consumption of an additional unit decreases utility. Marginal utility is the extra satisfaction experienced by one additional unit of consumption Marginal utility is always negative. Utility is a measure of the satisfaction people receive from their choices If you eat a slice of pizza that gives you food poisoning....
A consumer must maximize utility, U-f(x.y), subject to the constraint that she spends all her inc...
A consumer must maximize utility, U-f(x.y), subject to the constraint that she spends all her income, M on purchasing two goods x, v. The unit prices of the goods, px and py respectively, are market determined and hence exogenous. (i) State the objective function, constraint, and choice variables of this problem (3 marks) (ii) Obtain the Lagrangean for this problem, using λ to represent the Lagrange multiplier. (3 marks) (i) Obtain the first order conditions of this problem in terms...
Utility maximization with more than two goods Suppose that there four goods Q, R, X and Y , avail...
Utility maximization with more than two goods Suppose that there four goods Q, R, X and Y , available in arbitrary non-negative quantities (so the the consumption set is R 4 +). A typical consumption bundle is therefore a vector (q, r, x, y), where q ≥ 0 is the quantity of good Q, r ≥ 0 is the quantity of good R, x ≥ 0 is the quantity of good X, and y ≥ 0 is the quantity of...
True or false, the marginal value product for labor is equal to the marginal physical product...
True or false, the marginal value product for labor is equal to the marginal physical product for labor times the product price?
Diminishing marginal utility violates the assumption that more is better. a. True b. False 3.
Diminishing marginal utility violates the assumption that more is better. a. True b. False 3.
Explain why total utility is maximized when the marginal utility per dollar from a good is...
Explain why total utility is maximized when the marginal utility per dollar from a good is equal across goods as
"Water is very inexpensive. Thus, the marginal and total utility of water is small." Explain the...
"Water is very inexpensive. Thus, the marginal and total utility of water is small." Explain the statements.
a) True or false: If goods are perfect substitutes, then the MRS can never equal 1....
a) True or false: If goods are perfect substitutes, then the MRS can never equal 1. Expain. b) Suppose that there are two consumers, A and B, and two goods, X and Y. Also, suppose MRSA MRSB. Explain under what conditions an allocation of X and Y will be Pareto efficient. Be specific,
Classify each of the statements as true or false True False Answer Bank Marginal utility is always positive. Numerical utility values are relatively easy to calculate. Diminishing marginal utility means that consumption of an additional unit decreases utility. Marginal utility is the extra satisfaction experienced by one additional unit of consumption Marginal utility is always negative. Utility is a measure of the satisfaction people receive from their choices If you eat a slice of pizza that gives you food poisoning....
A consumer must maximize utility, U-f(x.y), subject to the constraint that she spends all her income, M on purchasing two goods x, v. The unit prices of the goods, px and py respectively, are market determined and hence exogenous. (i) State the objective function, constraint, and choice variables of this problem (3 marks) (ii) Obtain the Lagrangean for this problem, using λ to represent the Lagrange multiplier. (3 marks) (i) Obtain the first order conditions of this problem in terms...
Diminishing marginal utility violates the assumption that more is better. a. True b. False 3.
Explain why total utility is maximized when the marginal utility per dollar from a good is equal across goods as
a) True or false: If goods are perfect substitutes, then the MRS can never equal 1. Expain. b) Suppose that there are two consumers, A and B, and two goods, X and Y. Also, suppose MRSA MRSB. Explain under what conditions an allocation of X and Y will be Pareto efficient. Be specific,
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