If the price of good X is $4, the price of good Y is $2, and...
If the price of good X is $4, the price of good Y is $2, and the marginal rate of substitution is currently 4, how could consumer increase their utility without decreasing their total expenditure?
a) Purchase more Y and less X
b) Purchase more X and less Y
c) Do nothing; cannot improve utility while keeping spending the same
d) Purchase more of X and Y
Homework Answers
Ans) the correct option is b) Purchase more X and less Y
Since marginal rate of substitution exceeds the price ratio so more of good X should be consumed and less of good Y to get the equality between MRS and price ratio.
Suppose the price of Good X is $4 and the price of Good Y is $3....
Suppose the price of Good X is $4 and the price of Good Y is $3. If a consumer has a Marginal Rate of Substitution (MRSxy) of 2 for the bundle they are considering, then given their budget constraint, the consumer... Select one O a. Cannot reach a higher level of utility given their budget constraint. Ob. Would have a higher utility if they bought more of Good X. c. Would have a higher utility if they bought less of...
Question 14 (1 point) If the price of good x changes relative to good y, the...
Question 14 (1 point) If the price of good x changes relative to good y, the substitution effect suggests that consumers will: buy more of the cheaper good and less of the more expensive. buy more of the more expensive good and less of the cheaper. buy more of both goods. buy less of both goods Question 15 (1 point) As consumers consume more of a good, we expect marginal utility to Increase Decrease Remain constant. Impossible to tell.
Cole is about to purchase 4 units of good A and 6 units of good B....
Cole is about to purchase 4 units of good A and 6 units of good B. The price of A is $3 and the price of B is $2. Cole has only $24 to spend. Assume that the marginal utility of the fourth unit of A is 18 and the marginal utility of the sixth unit of B is 6. If Cole wants to maximize utility he should buy less of B and more of A. Cole cannot maximize utility...
2) Suppose that the price of good X is $2 and the price of good Y...
2) Suppose that the price of good X is $2 and the price of good Y is $3. You have $90 to spend and your preferences over X and Y are defined as: U(x,y) = x2/3y1/3 Keep in mind that we review this concept because consumer choice is based on their preferences. People demand items that fulfill their Utility (perhaps happiness). As a result, we need to visualize how an individual’s budget is allocated to create the highest level...
A consumer has the utility function U(X, Y) = (X + 2)(Y + 4). Her income is...
A consumer has the utility function U(X, Y) = (X + 2)(Y + 4). Her income is $100, the price of X is $4, and the price of Y is $5. In order to maximize utility subject to her budget constraint, how many units of X and Y will our consumer choose to purchase? Sketch a budget line – indifference curve diagram illustrating this optimum. Label this optimum A. Suppose the price of X increases to $8, while income and the price...
Suppose a consumer had a utility function given by: U=X^4*Y. If the price of Good X...
Suppose a consumer had a utility function given by: U=X^4*Y. If the price of Good X (Px) is $6 and the price of Good Y is $2.40 then what is the utility maximizing quantity of Good X the consumer will purchase with a budget of $7.50? (Round to the nearest decimal place if necessary.)
A consumer’s marginal rate of substitution (MRSxy) is always 4. The price of Good X is...
A consumer’s marginal rate of substitution (MRSxy) is always 4. The price of Good X is $10 and the price of Good Y is $2. Which of the following will be true? a. The consumer will only buy Good Y. b. The consumer will only buy Good c. The consumer will spend all her income and buy some of Good X and some of Good Y. d. The consumer's expenditures on Good X will be four times more than her...
Q5. Suppose that marginal utility of Good X = 100, the price X is $10 per...
Q5. Suppose that marginal
utility of Good X = 100, the price X is $10 per unit, and the price
of Y is $5 per unit. Assuming that the consumer is in equilibrium
and is consuming both X and Y, what must the marginal utility of Y
be?
P12. The following tables
illustrate Eileen’s utilities from watching first-run movies in a
theater and from renting movies from a video store. Suppose that
she has a monthly movie budget of $36,...
Refer to the table above. Assume that the price of good X is $2 per unit,...
Refer to the table above. Assume that the price of good X is $2
per unit, the price of good Y is $5 per unit, and that the consumer
spends a total of $44 on both goods. What combination of
X and Y will the consumer purchase in order to maximize
utility?
A.
We don’t have enough information of determine his consumption
bundle.
B.
He will spend more on X than on Y because X is less expensive
than Y.
C....
B 1. Suppose that a 20 percent increase in the price of normal good Y causes...
B 1. Suppose that a 20 percent increase in the price of normal good Y causes a 10 percent decline in the quantity demanded of normal good X. The coefficient of cross elasticity of demand is: A. negative and therefore these goods are substitutes. 10 B. negative and therefore these goods are complements. C. positive and therefore these goods are substitutes. D. positive and therefore these goods are complements. 2. To maximize utility a consumer should allocate money income so...
Suppose the price of Good X is $4 and the price of Good Y is $3. If a consumer has a Marginal Rate of Substitution (MRSxy) of 2 for the bundle they are considering, then given their budget constraint, the consumer... Select one O a. Cannot reach a higher level of utility given their budget constraint. Ob. Would have a higher utility if they bought more of Good X. c. Would have a higher utility if they bought less of...
Question 14 (1 point) If the price of good x changes relative to good y, the substitution effect suggests that consumers will: buy more of the cheaper good and less of the more expensive. buy more of the more expensive good and less of the cheaper. buy more of both goods. buy less of both goods Question 15 (1 point) As consumers consume more of a good, we expect marginal utility to Increase Decrease Remain constant. Impossible to tell.
Cole is about to purchase 4 units of good A and 6 units of good B. The price of A is $3 and the price of B is $2. Cole has only $24 to spend. Assume that the marginal utility of the fourth unit of A is 18 and the marginal utility of the sixth unit of B is 6. If Cole wants to maximize utility he should buy less of B and more of A. Cole cannot maximize utility...
Q5. Suppose that marginal
utility of Good X = 100, the price X is $10 per unit, and the price
of Y is $5 per unit. Assuming that the consumer is in equilibrium
and is consuming both X and Y, what must the marginal utility of Y
be?
P12. The following tables
illustrate Eileen’s utilities from watching first-run movies in a
theater and from renting movies from a video store. Suppose that
she has a monthly movie budget of $36,...
Refer to the table above. Assume that the price of good X is $2
per unit, the price of good Y is $5 per unit, and that the consumer
spends a total of $44 on both goods. What combination of
X and Y will the consumer purchase in order to maximize
utility?
A.
We don’t have enough information of determine his consumption
bundle.
B.
He will spend more on X than on Y because X is less expensive
than Y.
C....
B 1. Suppose that a 20 percent increase in the price of normal good Y causes a 10 percent decline in the quantity demanded of normal good X. The coefficient of cross elasticity of demand is: A. negative and therefore these goods are substitutes. 10 B. negative and therefore these goods are complements. C. positive and therefore these goods are substitutes. D. positive and therefore these goods are complements. 2. To maximize utility a consumer should allocate money income so...
Most questions answered within 3 hours.
-
A concave spherical mirror has a radius of curvature of
magnitude 19.6 cm.
(a) Find the...
asked 6 minutes ago -
Calculate the equillibrium constent K for a redox reaction that
has E°cell = -.98 V at...
asked 5 minutes ago -
3. draw a diagram of the magnetic field:
a. around a long straight wire with a...
asked 5 minutes ago -
If you titrated 30.0 mL of 0.1 M HCl with 0.1 M NaOH, indicate
the approximate...
asked 14 minutes ago -
NADH passes electrons into the electron transport chain. List
the carriers that would receive the electrons,...
asked 22 minutes ago -
A cylindrical cable with a resistivity of 1.6x10-8 Ω·m and cross
sectional area of 3x10-5 m^2...
asked 22 minutes ago -
True or False.
A consumer with convex preferences who is indifferent between
the bundles (5,2) and...
asked 25 minutes ago -
A diamond's index of refraction for red light, 656 nm, is 2.410,
while that for blue...
asked 38 minutes ago -
Compare HPLC, SPE, and GC. Identify the differences, the
advantages, and the weaknesses of each method.
asked 40 minutes ago -
Characteristic x-rays emitted by potassium have a wavelength of
0.374 nm. What is the energy of...
asked 42 minutes ago -
there is a function to create two random numbers between 1 and
25 and a function...
asked 1 hour ago -
At a certain temperature, the ?pKp for the decomposition of
H2SH2S is 0.832.0.832.
H2S(g)↽−−⇀H2(g)+S(g)H2S(g)↽−−⇀H2(g)+S(g)
Initially, only...
asked 54 minutes ago