Homework Answers
(a) Consumer Income = Money spend entirely on rice or Money spend entirely on beans
Let B represent Beans quantity, R as Rice quantity and P be the prices and I as income of the consumer
I = R*PR + B*PB
I = 2*12 + 0*3 or 0*2 +3*8 =24
Income of Consumer = $24
(b) Budget Constraint :
B: 2R + 3B = 24
(C) Budget Constraint when price of rice falls to $1.
C: R + 3B = 24
(d) Budget Constraint when income is increased to $48
D: 2R + 3B =48
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Please answer question 2 and show the work.
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please solve exercise 8.21 es the consumer buy at the higher price of beer and her...
please solve exercise 8.21
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Please answer question 2 and show the work.
This is Q1 and answer for Q1 needed to answer question
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2. Assume the consumer from Q1 has the following indifference map, where the MRS = -20 along Ray #1 and MRS = -15 along Ray #2. ce (Sk) toys 350 300 360 200 333% What is this consumer's best affordable bundle (BAB) before she receives the gift card? Please provide the rationale for your answer. 2pt (b) Draw this consumer's...
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please solve exercise 8.21
es the consumer buy at the higher price of beer and her new different consumption bundle from O? llicks compensation? Explain h. Using red ink, draw the draw the new budget line and label the new optimal point, Point C. books and CDs does the consumer purchase at the new prices and her original which income? old new budget line in blue ink and label the new optimal consumption bundle, Point j. Draw this new budget...
(5) Consider how a consumer decides how much of two goods, x and y, to consume but races amb constraint. The consumer maximizes the following utility function s.t. the budget constraint U(x, y) = (x - rayß subject to Pxx + p,Y = 1 Where x and y stand for the two goods, Px, and Py stand for the prices of the goods X and Y, respectively, and I stands for Income (a) Write down the Lagrangian and solve for...
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Identify the point of consumer equilibrium and label it X. Mark the original consumption levels for both goods. (Circle one) Which good is higher in price, a) wool or b) lamb chops? Explain briefly. I. Wool 2. 3. Say the consumer's income rises by 20%. Draw the resulting new budget line and label it B'B'. Draw a new indifference curve, labeled IC2, such that it includes the new consumer equilibrium, and label that point Y. 4. Show the effect of...
whole question: Just answer as many as possible, dont have to be
100%
1. Consider the market for dried beans in a small town of 9,000 consumers. Let each consumer's preferences over beans (B, in pounds) and other goods (G) be given by U(B,G) = 120 +G For the rest of this question, fix the price of other goods at PG = 1 and let each consumer have a total weekly budget of I = 100. (a) Write the budget...
1 [75 points; Chapter 5] You are to solve the consumer choice problem for three different consumers. Each consumer has $150 to spend (income) and faces prices Px = $2 and Py = $3 for goods X and Y. Consumers I, II, and III have utility functions U'(X, Y) = X? + Y, U"(X, Y) = X12 + Yl2, and UTM(X, Y) = X´Y, respectively. For each consumer, do the following steps. a [15 points] Carefully express the consumer's choice...
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