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Draw a budget line /indifference curve diagram for two goods: water and electricity. Show the income...
1) A) Use a budget line and Indifference curve to show an initial optimal consumption bundle...
1) A) Use a budget line and Indifference curve to show an initial optimal consumption bundle of onions and peppers. Assume onions are normal goods and peppers are inferior goods. Next suppose the price of peppers increases. Graphically Illustrate and explain the income and substitution effects. B) Using the two prices and two quantities of peppers from the previous part of this problem, construct a demand curve. Explain where your numbers are coming from. Also show the income and substitution...
Jane commutes to work. She can either use public transport or her own car. Her indifference curve...
Jane commutes to work. She can either use public transport or her own car. Her indifference curves obey the four properties of indifference curves for ordinary goods 1. Draw Jane's budget line (BL,) with car travel on the vertical axis and public transport on the horizontal axis 2. Suppose that Jane consumes some of both goods. Explain how her optimal consumption bundle can be obtained. Then, draw an indifference curve that helps you illustrate that optimal consumption bundle represented by...
In the following diagram, we show one of Jane's indifference curves and her budget line a. If the price of good...
In the following diagram, we show one of Jane's indifference curves and her budget line a. If the price of good X is $100, what is her income? b. What is the equation for her budget line? c. What is the slope of her budget line? d. What is the price of good Y? e. What is Jane's marginal rate of substitution in cquilibrium? 8. Good X 40 80 0 Good Y
In the following diagram, we show one of...
8 Joe buys two goods, beer and wine, which are substitutes. Also, assume that beer is...
8 Joe buys two goods, beer and wine, which are substitutes. Also, assume that beer is an inferior good. a. Draw an indifference curve-budget line diagram showing the substitution and income effects of an increase in the price of wine. b. How do you know from your graph that beer and wine are substitutes and that beer is inferior?
The graph shows Tom’s budget line and indifference curve for good x and y. The price...
The graph shows Tom’s budget line and indifference curve for good x and y. The price of good x is $40 . If he uses all of his income on good Y , then 20 units of y will be consumed. If all income is spent on good x then 4 units will be consumed. What is the marginal rate of substitution of good y for x at the point where the indifference curve is tangent to the budget line?
Assume X and Y are economic goods. Plot X on the x axis and Y on...
Assume X and Y are economic goods. Plot X on the x axis and Y on the y axis using graph paper. Assume income is $50 and the price of X is $2.50 and the price of Y is $5.00. Draw the original budget line and show a utility maximizing interior equilibrium using an indifference curve. a. Draw a new budget line if the price of X falls to $2.00. Show using indifference curves the substitution and income effects if...
5. Draw out examples of each of the following indifference curves: imperfect substitutes, perfect substitutes, and...
5. Draw out examples of each of the following indifference curves: imperfect substitutes, perfect substitutes, and perfect complements. 6. Jody enjoys having exactly 1 teaspoon of sugar with every cup of coffee she has. What does this say about her indifference curves between the two goods? What happens to her utility level when she is given 5 teaspoons of sugar with one coffee? (Just an explanation) 7. Jay’s Utility function is given by U(x,z) = 3x10.2 x20.8 and P1=$2 and...
Assume an income equation, $24 = $6 Meat + $3 Cheese, and an appropriate indifference curve....
Assume an income equation, $24 = $6 Meat + $3 Cheese, and an appropriate indifference curve. Solve the intercept points and graph my budget constraint for these two goods. If you did Entry 10, you may use those numbers. Let the price of Meat falls from $6 to $5 and then to $4. Draw the resulting budget constraints (with indifference curves) and derive the Demand Curve for Meat.
Question 2 A consumer purchases two goods, food (x) and clothing (y). He has the utility function...
Question 2 A consumer purchases two goods, food (x) and clothing (y). He has the utility function U(X,Y) = XY, where X and Y denote amounts of X and Y consumed. Marginal utilities of X and Y are MUx = y and MUy = x. The consumer’s income is $72 per week and that the price of y is Py = $1 per unit and price of x is Px1 = $9 per unit. What are his initial quantities of X and...
On the budget line/indifference curve diagram (dick on it to make it bigger), if LQ and...
On the budget line/indifference curve diagram (dick on it to make it bigger), if LQ and DK are parallel, which of the following changes could cause a shift from LQ to DK? A decrease in the consumer's income. A proportionate decrease in the prices of both goods. A doubling of the consumer's income and the prices of both goods. All of the above None of the above Cokes SK Hot Dogs
1) A) Use a budget line and Indifference curve to show an initial optimal consumption bundle of onions and peppers. Assume onions are normal goods and peppers are inferior goods. Next suppose the price of peppers increases. Graphically Illustrate and explain the income and substitution effects. B) Using the two prices and two quantities of peppers from the previous part of this problem, construct a demand curve. Explain where your numbers are coming from. Also show the income and substitution...
Jane commutes to work. She can either use public transport or her own car. Her indifference curves obey the four properties of indifference curves for ordinary goods 1. Draw Jane's budget line (BL,) with car travel on the vertical axis and public transport on the horizontal axis 2. Suppose that Jane consumes some of both goods. Explain how her optimal consumption bundle can be obtained. Then, draw an indifference curve that helps you illustrate that optimal consumption bundle represented by...
In the following diagram, we show one of Jane's indifference curves and her budget line a. If the price of good X is $100, what is her income? b. What is the equation for her budget line? c. What is the slope of her budget line? d. What is the price of good Y? e. What is Jane's marginal rate of substitution in cquilibrium? 8. Good X 40 80 0 Good Y
In the following diagram, we show one of...
On the budget line/indifference curve diagram (dick on it to make it bigger), if LQ and DK are parallel, which of the following changes could cause a shift from LQ to DK? A decrease in the consumer's income. A proportionate decrease in the prices of both goods. A doubling of the consumer's income and the prices of both goods. All of the above None of the above Cokes SK Hot Dogs
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