Homework Answers
Answer: C, J
the indifference curve passes through A and B. if we draw the curve from A to B through C and J than the points labeled in the IC (indifference curve ) will be A,C,J,K and B
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11 Question (1point) The diagram below shows various bundles of good 1 and good 2. John's...
Question 2. Consider the following 8 bundles of goods x and y: A = (8,4) B...
Question 2. Consider the following 8 bundles of goods x and y: A = (8,4) B = (5,6) C = (5,9) D = (10,3) E =(1,4) F =(6,5) G=(2,8) H =(7,8) (a) Come up with an example of a utility function that will produce the following order of preference for the bundles, where H is most preferred, A and G are equally preferred, and E is least preferred. H , C , B , F , A = G ,...
3. Craig likes both apples and bananas. He consumes nothing else. The consumption bundle where Craig...
3. Craig likes both apples and bananas. He consumes nothing else. The consumption bundle where Craig consumes x, bushels of apples per year and Xg bushels of bananas per year is written as (X4, Xg). Last year, Craig consumed 20 bushels of apples and 5 bushels of bananas. It happens that the set of consumption bundles (XA, Xg) such that Craig is indifferent between (XA, Xg) and 0,5) is the set of all bundles such that Xg = 100/XA. The...
Problem 2 1. Bob consumes two types of goods. He thinks that a consumption bundle (xı, x2) is at least as good as a bun...
Problem 2 1. Bob consumes two types of goods. He thinks that a consumption bundle (xı, x2) is at least as good as a bundle (yı, y2) if and only if x1 2 y and x2 2 y2. Are his weak preferences complete? Reflexive? Transitive? 2. Randy hates studying both economics and history. The more time he spends studying either subject, the less happy he is. But Randy has strictly convex preferences. (a) Sketch an indifference curve for Randy where...
3. Indifference curves and preferences Edison likes both chocolate and ice cream. Assume that the more...
3. Indifference curves and preferences Edison likes both chocolate and ice cream. Assume that the more is better" principle applies to Edison; that is, he would always prefer to consume more of either good, holding the consumption of the other good constant. The points on Figure 1 represent combinations of ice cream and chocolate that Edison might choose to consume. Figure 2 shows the same points as Figure 1, but it also shows some of Edison's indifference curves: 11, 12,...
7) The picture below shows several indifference curves of a consumer and several budget lines: X2...
7) The picture below shows several indifference curves of a consumer and several budget lines: X2 1 2 3 4 5 6 7 8 9 10 11 12 Note that the lines passing through A, C, and E are parallel. Also the lines passing through B, D, and F are parallel. Move over at each bundle labeled with a letter, the budget line and indifference curve passing through that bundle are tangent. The consumption levels at each of the labeled...
The budget equation 2X + 3Y = 12 suggests that price per unit of Good X...
The budget equation 2X + 3Y = 12 suggests that price per unit of Good X = $2, price per unit of Good Y = $3 and total income, I = $12. a) Use your mathematical calculation to determine the end-points of the budget equation. and illustrate the budget line in a clearly labeled diagram. b) Suppose that consumer maximizes her consumption by consuming 3 units of Good X and 2 units of Good Y. Illustrate where the indifference curve...
Fit to page Page view A Re 2. Basket A contains 5 apples and 1 orange....
Fit to page Page view A Re 2. Basket A contains 5 apples and 1 orange. Basket B contains 1 apple and 5 oranges. Basket C contains 3 apples and 3 oranges. Assume throughout that tastes are monotonic. On Monday, Anne is offered a choice between basket A and C, and she chooses A. On Tuesday, she is offered a choice between basket B and C, and she chooses B. a) Graph these baskets on a graph with apples on...
1. Assume a consumer has as preference relation represented by u(c1, 2) for g E (0,...
1. Assume a consumer has as preference relation represented by u(c1, 2) for g E (0, 1) and oo > n > 2, with x E C = Ri. Answer thefollow (x1+x2)" ing: a. Show the preference relation that this utility function induces "upper b. Show the preference relation these preferences represent are strictly C. Give another utility function that generates exactly the same behavior as level sets that are convexif U(x) is Convex for any xeX monotonic. this one....
A consumer has a demand function for good 2, ?2, that depends on the price of...
A consumer has a demand function for good 2, ?2, that depends on the price of good 1, ?1, the price of good 2, ?2, and income, ?, given by ?2 = 2 + 240 + 2?1. Initially, assume ? = ??2 40, ?2 = 1, and ?1 = 2. Then the price of good 2 increases to ?2′ = 3. a) What is the total change in demand for good 2? [2 marks] b) Calculate the amount of good...
Indifference curves and utility: Consider the utility function ? (?1, ?2) = 6?1^1/2 + ?2 that...
Indifference curves and utility: Consider the utility function ? (?1, ?2) = 6?1^1/2 + ?2 that describes Moe’spreferences. For the following, think of q1 as the variable you would graph on the horizontal axis. a. Derive an expression for his marginal utility (U1) from a small increase in q1 holding q2 fixed. Also, find U2. b. What is Moe’s marginal rate of substitution (MRS)? Give a brief (2 sentences maximum) intuitive description of what MRS represents. c. Given your answer...
3. Craig likes both apples and bananas. He consumes nothing else. The consumption bundle where Craig consumes x, bushels of apples per year and Xg bushels of bananas per year is written as (X4, Xg). Last year, Craig consumed 20 bushels of apples and 5 bushels of bananas. It happens that the set of consumption bundles (XA, Xg) such that Craig is indifferent between (XA, Xg) and 0,5) is the set of all bundles such that Xg = 100/XA. The...
Problem 2 1. Bob consumes two types of goods. He thinks that a consumption bundle (xı, x2) is at least as good as a bundle (yı, y2) if and only if x1 2 y and x2 2 y2. Are his weak preferences complete? Reflexive? Transitive? 2. Randy hates studying both economics and history. The more time he spends studying either subject, the less happy he is. But Randy has strictly convex preferences. (a) Sketch an indifference curve for Randy where...
3. Indifference curves and preferences Edison likes both chocolate and ice cream. Assume that the more is better" principle applies to Edison; that is, he would always prefer to consume more of either good, holding the consumption of the other good constant. The points on Figure 1 represent combinations of ice cream and chocolate that Edison might choose to consume. Figure 2 shows the same points as Figure 1, but it also shows some of Edison's indifference curves: 11, 12,...
7) The picture below shows several indifference curves of a consumer and several budget lines: X2 1 2 3 4 5 6 7 8 9 10 11 12 Note that the lines passing through A, C, and E are parallel. Also the lines passing through B, D, and F are parallel. Move over at each bundle labeled with a letter, the budget line and indifference curve passing through that bundle are tangent. The consumption levels at each of the labeled...
Fit to page Page view A Re 2. Basket A contains 5 apples and 1 orange. Basket B contains 1 apple and 5 oranges. Basket C contains 3 apples and 3 oranges. Assume throughout that tastes are monotonic. On Monday, Anne is offered a choice between basket A and C, and she chooses A. On Tuesday, she is offered a choice between basket B and C, and she chooses B. a) Graph these baskets on a graph with apples on...
1. Assume a consumer has as preference relation represented by u(c1, 2) for g E (0, 1) and oo > n > 2, with x E C = Ri. Answer thefollow (x1+x2)" ing: a. Show the preference relation that this utility function induces "upper b. Show the preference relation these preferences represent are strictly C. Give another utility function that generates exactly the same behavior as level sets that are convexif U(x) is Convex for any xeX monotonic. this one....
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