a) budget line: 1*x1+2*x2 = 40
Apples on the y axis and bananas on the x axis
Utility: xi*x2 = 150
Apples on the y axis and bananas on the x axis
Utility: xi*x2 = 300
Apples on the y axis and bananas on the x axis
b)
Apples on the y axis and bananas on the x axis
Utility: 150, Yes, the combination as above
Utility: 300, No as the budget constraint is breached
c)
Apples on the y axis and bananas on the x axis
A (20,10)
d) Marginal utility of apples = dU/dx1 = x2
Marginal utility of bananas = dU/dx1 = x1
Marginal rate of substitution = -x2/x1
4. Charlie likes both apples and bananas. He consumes nothing else. Charlie consumes x bushels of apples per year...
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...
7. Charlie consumes apples and bananas. We had a look at two of his indifference curves. In this problem we give you enough information so you can find all of Charlie's indifference curves. We do this by telling you that Charlie's utility function happens to be U (XA, xB ) = xA* x8 (a) Charlie has 40 apples and 5 bananas. Charlie's utility for the bundle (40, 5) is U (40 5)- The indifference curve through (40, 5) includes all...
Diana's utility function for consuming apples (Xa) and Bananas (Xb) is U(Xa,Xb) = XaXb. Suppose the prices of apples is $1, bananas $2, and her income is $40. On a graph with bananas on the y-axis, use blue ink to draw Bianca’s budget line.With red ink, plot an indifference curve that gives her a utility level of 150. Using black ink, plot an indifference curve that gives her a utility level of 300. Can Bianca afford any bundles that give...
3. Consider Charlie who consumes apples (xi) and bananas (2). Suppose that he consumes one apple and 8 bananas. That is, his current consumption bundle is (1,8). (a) Suppose that Charlie's marginal rate of substitution for one more apple is 2 bananas. If he is offered to trade apples and bananas at one-to-one rate, does he trade? Explain your answer. (b) Suppose that Charlie's preference is convex. If he were to consume 8 apples and one banana, his marginal rate...
please show all your works 1. Craig consumes apples and bananas. We had a look at two of his indifference curves. In this problem we give you enough information so you can find all of Craig's indifference curves. We do this by telling you that Craig's utility function happens to be U(XA, XR) = XAXB a. Craig has 40 apples and 5 bananas. Craig's utility for the bundle (40,5) is? b. Draw the indifference curve showing all of the bundles...
Charlie consumes apples and bananas. His utility function is: U(xA; xB) xAxB. The price of apples is $1, the price of bananas is $2, and Charlie's income is $40 a day. The price of bananas suddenly falls to $1. Find the substitution and income effect of the price change for apples and bananas.
Can't use Lagrange on this. Multiple Choice Practice- Show work or provide short explanation 4. Charlie's utility function for apples (A) and bananas (B) is U(AB)-AB. The price of apples used to be S1 per apple and the price of bananas used to be $2 per banana. His incomse was $40 per day. If the price of apples increases to $2.25 and the price of bananas falls to S1.25, then in order to be able to afford his old bundle,...
1. Suppose a consumer is maximizing utility consuming a bundle apples and bananas x and has standard preferences. Her budget constraint is given by the equation 1000-2a-2b0. Apples are normal goods and bananas are normal. a) plot the optimal bundle, showing the proper indifference curve and budget constraint. Call this bundle x1 b) show the effect of an increase of a single price increase for apples on the budget constraint. Use a hypothetical budget line to identify substitution effects for...
2. Ali has a $7 weekly budget that he spends on songs (S, SI per download) and prosein bars (B, S1 per bar). His usility information for the two products is below from songsof a song y fTotal utiliay Marginal wtilityQuantity ofTotal utility Marginal utility of a bar from bars protein bars 10 18 14 18 21 28 30 31 a) Calculate Ali's marginal utilities and finish the filling out the table b) If Ali spends his entire budget on...
3. Ramon has $100 to spend on apples and bananas. The price of apples is $4 a pound and the price of bananas is $2 a pound. The graph below represents Ramon's budget line with his consumption of apples on the Y-axis and his consumption of bananas on the X-axis. Homework 2: Problem Set 2 Apples (pounds) BL1 Bananas (pounds) (a) On the graph above: Add the intercepts of BL . Assuming that Ramon chooses to purchase 20 pounds of...