As MRS is fixed always = 4
This means that consumers will spend good X four times the value he spends at good Y.
Therefore, the correct answer is option (D)
A consumer’s marginal rate of substitution (MRSxy) is always 4. The price of Good X is...
7. (4 Points) Describe what the marginal rate of substitution of x for Y (MRSxy) to us about a consumer's preferences between the two goods. 8 (4 Points) Suppose you have preferences over two goods, bottles of wine (good X) and slices of pizza (good Y). Explain what it means that for the bundle A = (3, 15), the MRSxy = 2. 9. For this question, use the utility function U(X,Y)= XY. (a) (2 Points) What is the marginal utility...
7. (4 Points) Describe what the marginal rate of substitution of X for Y (MRSxy) telle us about a consumer's preferences between the two goods. 8. (4 Points) Suppose you have preferences over two goods, bottles of wine (good X) and slices of pizza (good Y). Explain what it means that for the bundle A = (3.15), the MRSxy = 2 9. For this question, use the utility function U(X,Y)= XY. (a) (2 Points) What is the marginal utility of...
2. Suppose that Peggy’s marginal rate of substitution of two goods (MRSXY) is greater than the relative price ratio (Px/Py) in absolute value. Assuming that a diagram of Peggy’s budget constraint reflects the quantities of good Y measured on the vertical axis and quantities of good X measured on the horizontal axis, she will Buy more of good Y and move down the budget line Buy more of good Y and move up the budget line Buy more of good...
QUESTION 2 Find the Marginal Rate of Substitution (MRSxy) of a consumer with preferences described by U(x, y) = ln(2x + y). c. MRSxy=0.5 MRSxy=2 MRSxy = ? MRSxy = 2x+y None of the above 1 QUESTION 3 A consumer has preferences represented by utility function U(x, y) = x+y. The initial prices are Px = 1 and Py = 2, while initial income is 12. Find the income effect associated with an increase in the price of x to...
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...
At the consumer's optimal consumption bundle, the MRSxy is 4, and the marginal utility of good X is 8. What is the marginal utility of good Y? Select one: a. 24 b. 1/2 c. 16 d. 2
Suppose that a consumer’s utility function is U=xy with MUx=y and MUy=x. Suppose the consumer‘s income is $480. For this question you may need to use the following approximations: sqrt(2) is approximately 1.4, sqrt(3) is approx. 1.7 and sqrt(5) is approx 2.2. a) Initially, the price of y is $4 and the price of x is $6. What is the consumer’s optimal bundle? b) What is the consumer's initial utility? Now suppose that price of x increases to $8 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
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...
The Marginal Rate of Substitution measures the change in the quantity of the good on the vertical axis that is necessary per one unit change of the good on the horizontal axis, in order for the consumer to receive the same amount of total utility. True or False