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Jane consumes a bundle of two goods, wine and chocolate. The price of The price of...
Question 3. Jane consumes X-rays(X) and fancy yogurts(Y) with the following preferences U(X,Y) = X 0.2Y...
Question 3. Jane consumes X-rays(X) and fancy yogurts(Y) with the following preferences U(X,Y) = X 0.2Y 0.8. X-rays cost $10 each and fancy yogurts cost $20 each. The consumer has $100 to spend. (a) What is the optimal bundle of X and Y that optimizes Jane’s utility? (b) Jane is super happy to find out that the price of fancy yogurts(Y) drop to only $10! What is her new optimal bundle of X and Y? (c) Decompose the change in...
Sally consumes two goods, X and Y. Her preferences over consumption bundles are repre- sented by the utility function r...
Sally consumes two goods, X and Y. Her preferences over consumption bundles are repre- sented by the utility function r, y)- .5,2 where denotes the quantity of good X and y denotes the quantity of good Y. The current market price for X is px 10 while the market price for Y is Pr = $5. Sally's current income is $500. (a) Write the expression for Sally's budget constraint. (1 point) (b) Find the optimal consumption bundle that Sally will...
2.Consider the inter-temporal model of consumption studied in class, with two possible periods. A...
2.Consider the inter-temporal model of consumption studied in class, with two possible periods. Assume that initially that an individual is a saver. If the interest rate rises, which statement is false? a. The individual will never become a borrower. b.The individual will necessarily increase their savings. c.The individual must remain a saver d. The individual could increase or decrease their savings, but she must remain a saver. 4. Consider the inter-temporal model of consumption studied in class, with two possible...
Jake spends $100/week on two goods, apples and DVD's. Th price of an apple is $2...
Jake spends $100/week on two goods, apples and DVD's. Th price of an apple is $2 and the price of a DVD is $10. Show Jake's budget constraint. Be clear about the values of the two intercepts on the budget constraint. Put the quantity of apples on the horizontal axis. a. Assume Jake is consuming 20 apples and spends the rest on DVDs. Label that point on your graph as point A. b. Jake has well-behaved preferences. At his initial...
Q1. Suppose consumer consumes two goods, X and Y. The price of X is P x...
Q1. Suppose consumer consumes two goods, X and Y. The price of X is P x , price of Y is P Y and the consumer income is m. a. Derive and interpret the budget constraint and its slope. b. If slope is -3, how will you interpret it? c. Suppose a government wants to discourage the excessive consumption of X and decides to impose a tax t 1 if someone consume more than X 1 but less than X...
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...
Consider a consumer who lives for two periods. The consumer gets utility from consumption in each...
Consider a consumer who lives for two periods. The consumer gets utility from consumption in each period. The consumer also gets an endowment of time in each period, L hours, which the consumer can use to work or consume as leisure . The consumer gets NO utility from leisure, however. There is no borrowing or lending. (a)(10%) Let w1 and w2 be the wage rates per hour in periods 1 and periods 2 respect- ively. In period 1, the consumer...
Jeff is deciding his optimal consumption bundle, where there are two possible goods he could purchase....
Jeff is deciding his optimal consumption bundle, where there are two possible goods he could purchase. He can consume good x and good y, both of which are priced at $1. His utility function can be given by U(x,y) = 2x^2 (y^2) a.) Find his optimal consumption bundle if he has $100 to spend b.) What is his optimized utility? c.) Suppose his income doubles to $200. What are the income and substitution effects, in terms of the good x?...
Consider an exchange economy with two goods and two agents. Agent A likes to consume more...
Consider an exchange economy with two goods and two agents. Agent A likes to consume more of either good, but when she consumes a bundle, she dislikes mixing her consumption of both goods. Therefore she only cares for the maximal amount of either good contained in a bundle. Her preferences are represented by ui(xA1 , xA2 ) = max{xA1 , xA2 }. Agent B has preferences represented by ui(xB1 , xB2 ) = (xB1 )^2 + (xB2 )^2. Both agents...
Utility maximization with more than two goods Suppose that there four goods Q, R, X and Y , avail...
Utility maximization with more than two goods Suppose that there four goods Q, R, X and Y , available in arbitrary non-negative quantities (so the the consumption set is R 4 +). A typical consumption bundle is therefore a vector (q, r, x, y), where q ≥ 0 is the quantity of good Q, r ≥ 0 is the quantity of good R, x ≥ 0 is the quantity of good X, and y ≥ 0 is the quantity of...
Sally consumes two goods, X and Y. Her preferences over consumption bundles are repre- sented by the utility function r, y)- .5,2 where denotes the quantity of good X and y denotes the quantity of good Y. The current market price for X is px 10 while the market price for Y is Pr = $5. Sally's current income is $500. (a) Write the expression for Sally's budget constraint. (1 point) (b) Find the optimal consumption bundle that Sally will...
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...
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