Consider a consumer in a two commodity world whose indifference map is such that the slope...
Consider a consumer in a two commodity world whose indifference map is such that the slope of the indifference curves is everywhere equal to -(Y?X), where Y is the quantity of good Y measured along the vertical axis, and X is the quantity of good X measured along the horizontal axis.
a. what is the value of the optimum Marginal Rate of Substitution for this consumer, given that the price of X is $1, the price of Y is $3 and the consumer's income is $120?
b. How much X ands Y will be consumed?
c. Explain, with the aid of a graph, what would happen to the consumption of X if its prices rose to $2, everything else constant?
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Consider a consumer in a two commodity world whose indifference
map is such that the slope...
Question 16 1 pts A typical indifference curve is negatively sloped because: as we consume more...
Question 16 1 pts A typical indifference curve is negatively sloped because: as we consume more of one good, we are willing to give up the consumption of another good without changing our utility higher indifference curves represent higher levels of utility higher indifference curves represent lower levels of utility we assume that a consumer's income is constant Question 17 1 pts A typical indifference curve: O is convex to the origin (bowed in) has a constant slope is concave...
Question Two Suppose that in a two-commodity world, the consumer's utility function takes the form (x)-la...
Question Two Suppose that in a two-commodity world, the consumer's utility function takes the form (x)-la +. This utility function is known as the constant elasticity of substitution utility function a) Show that when p-1, indifference curves become linear Show that when p o. this utility function comes to represent the same preference as the cable Douglas utility function () c) Show that as , indifference curves become right angles" that is this utility function has the limit the indifference...
Suppose that there two goods X and Y, available in arbitrary non- negative quantities (so the...
Suppose that there two goods X and Y, available in arbitrary non- negative quantities (so the the consumption set is R2). The consumer has preferences over consumption bundles that are strongly monotone, strictly convex, and represented by the following (differentiable) utility function: u(x, y)-y+2aVT, where z is the quantity of good X, and y is the quantity of good Y, and a 20 is a utility parameter The consumer has strictly positive wealth w > 0. The price of good...
Question 9 1 pts Logan Roy is spending all his money income by buying mineral water...
Question 9 1 pts Logan Roy is spending all his money income by buying mineral water and popcorn. At his current consumption level, the marginal utility of mineral water is 70 and the marginal utility of popcorn is 60. The price of a bottle of mineral water is $2.00 and the price of a box of popcorn is $1.50. The utility-maximizing rule suggests that Logan should: O Increase consumption of popcorn and increase consumption of mineral water Decrease consumption of...
Question 5 [8] 5.1. With reference to the indifference theory with good Y on the vertical axis and good X on the horizo...
Question 5 [8] 5.1. With reference to the indifference theory with good Y on the vertical axis and good X on the horizontal axis, graphically illustrate a change in consumer equilibrium due to a change in income. Remember to label the diagram correctly and to indicate the "income consumption curve clearly. 5.2. Referring to the graph above and consumer equilibrium, indicate what will happen to the budget line should there be an increase in the price of good X (on...
A consumer has preferences represented by the utility function u(x, y) -xlyi. (This means that a....
A consumer has preferences represented by the utility function u(x, y) -xlyi. (This means that a. What is the marginal rate of substitution? b. Suppose that the price of good x is 2, and the price of good y is 1. The consumer's income is 20. What is the optimal quantity of x and y the consumer will choose? c. Suppose the price of good x decreases to 1. The price of good y and the consumer's income are unchanged....
can you please explain this deeply? thank you Question 7 Consider a consumer with preferences over...
can you please explain this deeply? thank you
Question 7 Consider a consumer with preferences over two goods 1 and 2. Assume that the horizontal axis pertains to the amount of good 1 and the vertical axis pertains to the amount of good 2. Suppose that, given the consumption bundle r = 10 and y = 10, a consumer's MRS (marginal rate of substitution) is equal (in absolute value) to 4. The price of good 1 is $1, the price...
Question 2 Question 2 (15 pts) A consumer has preferences represented by the utility function u(x,y)...
Question 2
Question 2 (15 pts) A consumer has preferences represented by the utility function u(x,y) -xlyi. (This means that a. What is the marginal rate of substitution? b. Suppose that the price of good x is 2, and the price of good y is 1. The consumer's income wWhat is the optimal quantity is 20. What is the optimal quantity of x and y the consumer will choose? c. Suppose the price of good x decreases to 1. The...
If the demand for good decreases when income increases, the good is called an ().... If...
If the demand for good decreases when income increases, the good is called an ().... If the demand for good 1 goes up when the price of good 2 goes up, good 1 is (2...or If the demand for good 1 goes down when the price of good 2 goes up, good 1 is a (3 Increases in income m shift the constraint (4).. in a parallel manner, thereby enlarging the set and improving choice Decreases in income m shift...
Question 16 1 pts A typical indifference curve is negatively sloped because: as we consume more of one good, we are willing to give up the consumption of another good without changing our utility higher indifference curves represent higher levels of utility higher indifference curves represent lower levels of utility we assume that a consumer's income is constant Question 17 1 pts A typical indifference curve: O is convex to the origin (bowed in) has a constant slope is concave...
Question Two Suppose that in a two-commodity world, the consumer's utility function takes the form (x)-la +. This utility function is known as the constant elasticity of substitution utility function a) Show that when p-1, indifference curves become linear Show that when p o. this utility function comes to represent the same preference as the cable Douglas utility function () c) Show that as , indifference curves become right angles" that is this utility function has the limit the indifference...
Suppose that there two goods X and Y, available in arbitrary non- negative quantities (so the the consumption set is R2). The consumer has preferences over consumption bundles that are strongly monotone, strictly convex, and represented by the following (differentiable) utility function: u(x, y)-y+2aVT, where z is the quantity of good X, and y is the quantity of good Y, and a 20 is a utility parameter The consumer has strictly positive wealth w > 0. The price of good...
Question 9 1 pts Logan Roy is spending all his money income by buying mineral water and popcorn. At his current consumption level, the marginal utility of mineral water is 70 and the marginal utility of popcorn is 60. The price of a bottle of mineral water is $2.00 and the price of a box of popcorn is $1.50. The utility-maximizing rule suggests that Logan should: O Increase consumption of popcorn and increase consumption of mineral water Decrease consumption of...
Question 5 [8] 5.1. With reference to the indifference theory with good Y on the vertical axis and good X on the horizontal axis, graphically illustrate a change in consumer equilibrium due to a change in income. Remember to label the diagram correctly and to indicate the "income consumption curve clearly. 5.2. Referring to the graph above and consumer equilibrium, indicate what will happen to the budget line should there be an increase in the price of good X (on...
A consumer has preferences represented by the utility function u(x, y) -xlyi. (This means that a. What is the marginal rate of substitution? b. Suppose that the price of good x is 2, and the price of good y is 1. The consumer's income is 20. What is the optimal quantity of x and y the consumer will choose? c. Suppose the price of good x decreases to 1. The price of good y and the consumer's income are unchanged....
can you please explain this deeply? thank you
Question 7 Consider a consumer with preferences over two goods 1 and 2. Assume that the horizontal axis pertains to the amount of good 1 and the vertical axis pertains to the amount of good 2. Suppose that, given the consumption bundle r = 10 and y = 10, a consumer's MRS (marginal rate of substitution) is equal (in absolute value) to 4. The price of good 1 is $1, the price...
Question 2
Question 2 (15 pts) A consumer has preferences represented by the utility function u(x,y) -xlyi. (This means that a. What is the marginal rate of substitution? b. Suppose that the price of good x is 2, and the price of good y is 1. The consumer's income wWhat is the optimal quantity is 20. What is the optimal quantity of x and y the consumer will choose? c. Suppose the price of good x decreases to 1. The...
If the demand for good decreases when income increases, the good is called an ().... If the demand for good 1 goes up when the price of good 2 goes up, good 1 is (2...or If the demand for good 1 goes down when the price of good 2 goes up, good 1 is a (3 Increases in income m shift the constraint (4).. in a parallel manner, thereby enlarging the set and improving choice Decreases in income m shift...
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