Question

2. equal amounts of both ged n ede e m Prudence was maximizing ber vility bje her n change she was better off. Therefore he ew th did.( 3. ff consumer 1 has the demand functiom,1,0o0-3p o 3 ha d - 500-p. then fon the If the price of cucumbers falls by $2 per pond, then the demand for eu ers wi rise try 10 p Therefore we can conclude thsat the demand for esacun ers is siantis aggregate Consumers wouldd be x-1.500-3p for p so. function demand 4. If the supply curve is vertical, then the amouant supplied is independent of prics 5. amount of input. The cost function for this firm is proportional to the price of thve input times the ebm amount of output.( 6. The average variable cost curve must always be U- shaped. A firm faces competitive markets both for its inputs and its outputs. If its long-run supply curve then it cannot have constant returns to scale. A firm produces one output, using one input, with the production function A)-2 wherex is the 7. If someone has a Cobb-Douglas utility function and no income from any source other than la then an increase in wages will not change the amount that person chooses to work. 8. 9 It follows from the weak axiom of revealed preference that if a consumer chooses x when. 10. and chooses y when he could afford x, then his income must have changed between the tw observations. vi th

Answer 1

Part 2 of the question is not clearly visible. The answers of the next four parts are as follows:

3. True. The aggregate demand function for an economy is given by the horizontal summation of the individual demand curves of the commodity. Thus, in the above case the aggregate demand function is given by X = 1500 - 3P.

4. False. The above figures mentioned in the statement give the slope of the demand curve. The slope of the demand curve is not an indicator of the elasticity of the demand curve. The value of initial prices and initial quantity is needed to compute the value of elasticity of demand curve.

5. True. If the supply curve is vertical, then no matter what the price is, only a fixed amount of good or service will be offered in the market. Thus, if the supply curve is vertical, then the amount supplied is independent of the price level.

6. True. The Average Variable Cost curve must always be U-shaped because of the principle of variable proportions- Increasing returns which causes the AVC to fall followed by Constant Returns and then Diminishing Returns which causes the cost to rise.