iv. What would be the new marginal rate of substitution that corresponds to the optimal consumption choice? Interpret the marginal rate of substitution. v. Assume for this question only that when the price of dresses decreases, less of that good is demanded. Illustrate the income and substitution effect of this price decrease.
Q: kindly answer question 2 and 3 Robinson makes $200 a week and spends his entire income on running…
A:
Q: Suppose we have the following utility function: U(x,y)=x^0.33 y^0.67 1) What is the Marginal utility…
A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…
Q: Suppose that consumer has the following utility function: U(X,Y) = XY and Px = 1, Py = 4 and I =…
A: Here in the question, we have to find out the magnitude of the substitution effect. Income = 720 Px…
Q: Suppose the marginal rate of substitution is constant at 6 for all possible consumption bundles.…
A:
Q: Can explain to me how to solve the question? TQ 1. Suppose the marginal rate of substitution is…
A:
Q: 25. Imagine a consumer who spends her income (y) entirely on apples and ba- nanas. Apples are…
A: Utility maximization occurs when marginal rate of substitution is equal to slope of the budget…
Q: Utility function U(X,Y)=(x^(3/4))(Y^(1/4)) 1)Suppose Px=2, Py=1, and Income is 100. What are the new…
A: 1) Given the utility function u(X,Y) = (x^(3/4))(y^(1/4)), prices of good X and good Y as Px=2 and…
Q: Assume for this question only that when the price of dresses decreases, less of that good is…
A: When the price of the good (dresses) decreases then there must be an increase in demand but here it…
Q: A consumer has $300 to spend on goods X and Y. The market prices of these two goods are Px = $15 and…
A: Market rate of substitution refers to the rate at which two goods can be exchanged in a market place…
Q: Based on research into marginal rates of substitution, which of the following is true regarding…
A: Answer-
Q: Suppose your tastes over consumption and leisure have constant elasticity of substitution. I observe…
A: Elasticity of substitution refers to the change in capital labor in comparison with the marginal…
Q: Lorena uses her income to consume two goods. Originally, she was consuming at point (a), but then…
A: The budget line is a graphical representation of all possible combinations of the two commodities…
Q: Consider a consumer with preferences represented by the utility function: u (x, y) = x+y a. Draw a…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: (c) Does Jane have enough money to attain a utility (d) Assume the price of y marginally increases.…
A: Answer in step 2.
Q: Consumption theory makes extensive use of indifference curves and budget lines to explain consumer…
A: The consumer has traditional smooth convex indifference curves. Income of the consumer is €100 and…
Q: Consider the utility function U(r, g) = r+ Iny. (a) Find the marginal rate of substitution, MRS of…
A: The marginal rate of substitution (MRS) is the amount of a good that a consumer is willing to…
Q: Sarge's utility function is U(X1,X2)= X1*X2. If his marginal rate of substitution (MRS) is 3 and he…
A: MRS = Marginal utility from good x1 / Marginal utility from good x2
Q: 3) Oğuz has the utility function U (X1,X2) = X:*x2?. (x:: nuts, x: berries). a) If Oğuz has 25 units…
A: Note: Since this question has five subparts, we are not allowed to answer more than three subparts…
Q: Tom has the following utility function: U = FC2 where F is food and C is clothing. Show that…
A: 1. U = FC2 1. Marginal Rate of Substitution (MRS) is the rate at which a good is sacrificed to get…
Q: 2. What is the economic interpretation of the condition that the consumer at his optimum equates his…
A: An indifference curve refers to the combination of two goods that gives an equal satisfaction to the…
Q: Consider a consumer with the utility function U(X,Y) = xiyi and suppose that the prices of goods and…
A: Answer: Given, Utility function:UX,Y=X14Y34pX=$2pY=$3I=$880pX(new)=$3 Let us first calculate the…
Q: 2. Suppose John's utility function is UX,Y) = 4/XY , where X is consumption of beer and Y is…
A: Marginal rate of substitution refers to the ratio of marginal utility of good X and marginal utility…
Q: (d) What point in the graph will lead to utility maximizing with the budget line LZ and the…
A: The budget line is a graphical representation of all potential combinations of the two commodities…
Q: Question 12 As we move along an indifference curve, the marginal rate of substitution…
A: Indifference Curve is the locus of different combinations of two goods that gives maximum…
Q: 29. Which one is not a assumption of the theory of demand based on analysis of indifference curves?…
A: Indifference Curve Analysis Assumptions:- (1) In order to achieve maximum satisfaction, the customer…
Q: Question 1 (a) What is the marginal rate of substitution and what is its importance in consumer…
A: Since you have posted multiple questions we will solve only first question here, please post the…
Q: Suppose Mika has budget of $600 for only two goods, x and y. The price of a Good X is $10 and the…
A: Since you posted a question with multiple sub-parts, we will solve the first three sub-parts for…
Q: Joe Bob has a utilityfunction given by u(x1, X2) = x1 + 2x1x2 + x2. a. Compute Joe Bob's marginal…
A: Marginal rate of substitution is the rate at which consumer is willing to substitute one good for…
Q: 6. [1] (Chapter 8) Charlie's utility function is XAXB. The price of apples is $1, the price of…
A:
Q: Natalie is always willing to give up 10 ounces of licorice for 1 ounce of chocolate. Mitchell, on…
A: In economics, rational choice theory states that once humans are given with numerous choices…
Q: 16. The slope at any point on anündifference curve is known as: a. The marginal rate of price…
A: A curve that represents different combinations of two goods that gives the same level of utility to…
Q: Utility maximization under constraint, substitution and income effect, CV and EV Josh gets utility…
A: A rational consumer will always want to maximize his utility. The utility is represented by…
Q: a. Is the “more is better” assumption satisfied for both goods? Explain. b. What type of function is…
A: Utility Function id given as U(x,y) = 0.5x0.4y0.6
Q: In order to compute the substitution effect of a change in the price of some good on the demand for…
A: When an individual enters the market, he tries to choose a bundle that gives maximum satisfaction…
Q: a. Is the “more is better” assumption satisfied for both goods? Explain. b. What type of function is…
A: The total utility is defined as the amount of satisfaction a consumer is able to receive by…
Q: more Y and less X the same amount of X and Y more X and less Y in order to maximize his/her…
A: The utility function of the consumer is U=100X0.25y0.25 Where X and y are the amounts of the two…
Q: Calculating the marginal rate of substitution (MRS). Crystal enjoys eating muffins and scones. The…
A: At point A; U(X,Y)=U(10,70) At point B; U(X,Y)= U(15,45) MRS=Change in good YChange in good X…
Q: Sarge's utility function is U(X1,X2)= X1*X2. If his marginal rate of substitution (MRS) is 3 and he…
A: An utility function represents the preferences of a set of goods and services that give the consumer…
Q: 3. The utility that Elena receives by consuming food F and clothing C is given by U(F, C) = FC + F.…
A: Utility is maximized at a point where the slope of an indifference curve is equal to the slope of…
Q: 3. Draw and describe analytically the set of feasible consumption choices. What is the marginal rate…
A: Answer: Feasible consumption choices: the set of feasible consumption choices are all the choices…
Q: 1.3. Consider the following utility function for a consumer who consumes two goods, x1 and x2, and…
A: U(x1,x2) = ln(x1) + x2 where x1 = good 1 and x2 = good 2
Q: Utility maximization under constraint, substitution and income effect, CV and EV Josh gets utility…
A: Given information Utility function U(A,B)=4(A-4+B-4)-4+40 Budget constraint M=PA*A+PB*B
Q: Suppose that U(f,c) = f + 8c^(1/2) is a utility function that describes Amelia’s preferences over…
A: Since you have posted multiple questions, we will answer the first two questions for you. if you…
Q: The utility that Elena receives by consuming food F and clothing C is given by U(F, C) = FC + F.…
A: Utility is maximized when consumer chooses a bundle where slope of indifference curve, MRS is equal…
Q: gpodY good X In the graph above, points Q. U and T represent different bundles of good X and good Y…
A: Marginal rate of substitution (MRS): - it is the rate that shows the number of units of one good…
Q: What is the consumer’s income? What is the consumer ‘s marginal rate of substitution of food for…
A: 1. Calculate consumer income as follows: Food: 10* 20 = 200 Clothing: 5*50 = 250. Total income = 200…
Step by step
Solved in 2 steps with 1 images
- Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either call her on the land-line phone for five cents per minute or he can drive to see her, at a round—trip cost of 2 in gasoline money. He has a total of 10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses a handy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values in Table 6.6, figure out the points 011 Jeremys consumption choice budget constraint (it may be helpful to do a sketch) and identify his utility-maximizing point.As a college student you work at a part-time job, but your parents also send you a monthly allowance. Suppose one month your parents forgot to send the check. Show graphically how your budget constraint is affected. Assuming you only buy normal goods, what would happen to your purchases of goods?NIVERSITY DURAI Consider the following data describing the change in Nora's utility when she consumes various levels of Nuts and chocolate per week, the price per portion for the considered goods are respectively AED 20 and AED10. Nora has a budget equal to 160 per day to spend on her snack. Q Nuts Total UtilityQ Chocolate Total Utility ChocolateMU Nuts MU ChocolateMU/ AEDMU/AED MRS Chocolate Nuts Nuts 40 1 28 72 52 100 3. 72 4 124 88 144 5. 102 160 6. 114 7 172 122 1. Complete the table above by calculating the marginal utility, the marginal utility per dollar spent and marginal rate of substitution for each good. 2. Identify the potential set of equilibrium points Where MUI/P1=MU2/P2 Nuts Chocolate Income 2. 2. 6.
- I like drinking Smirnoff and Stoli Vodka, but I really only careabout the total amount of alcohol I get out of it. They areperfect substitutes. Smirnoff is sold in liter bottles that are100 proof (that’s 50% alcohol). Stoli is sold in liter bottlesthat are 80 proof (40% alcohol). What is my utility functionfor bundles of these two vodkas? What do my indifferencecurves look like?Anya is awake for 100 hours per week. Using onediagram, show Anya’s budget constraints if sheearns $12 per hour, $16 per hour, and $20 per hour.Now draw indifference curves such that Anya’slabor-supply curve is upward-sloping whenthe wage is between $12 and $16 per hour andbackward-sloping when the wage is between $16and $20 per hourceriuppose that Isaiah has a weekly fixed budget and spends it all on haircuts and ice cream. At his current combination arof consumption, the marginal utility of the last dollar spent on haircuts is greater than the marginal utility of the last dollar spent on ice cream. Has Isaiah maximized his utility? A C E Yes, because changing his current consumption combination will reduce his total utility B No, because he can increase his total utility by purchasing more haircuts and D fewer ice creams Yes, because he has purchased 2 goods in proportion so that he can get- the maximum utility from each Yes, because he purchased the maximum possible with a limited budget No, because he can increase his total utility by purchasing fewer haircuts and more ice creams
- For questions 15-16 make use of the following information and table. Suppose that Elif spends her income on shoes and outfits. The price of a shoe is 100/unit and the price of an outfit is 200/unit. Q shoes outfits total utility marginal util. MU/Ps total utility marginal util. MU/Po 1 1000 1800 2 1700 3000 3 2000 4000 4 2200 4600 15) What is the quantity of shoes and outfits that maximizes Elif’s utility? a) 3 shoes and 3 outfits b) 4 shoes and 2 outfits c) 3 shoes and 4 outfits d) 4 shoes and 3 outfitsWhat are the assumptions of cardinal utility theory? Explainthe law of diminishing marginal utility with the help of diagramMylie’s total utility from singing the same song over andover is 50 utils after one repetition, 90 utils after tworepetitions, 70 utils after three repetitions, 20 utils afterfour repetitions, 250 utils after five repetitions, and 2200utils after six repetitions. Write down her marginal utilityfor each repetition. Once Mylie’s total utility beginsto decrease, does each additional singing of the songhurt more than the previous one or less than the previousone?
- Carol needs to decide how to spend her wealth on sh and chicken.For Carol, 1 lb of sh is equivalent to 2 lb of chicken. Her preferencecan be represented by the utility functionu(x; y) = 2x + ywhere x is the quantity of sh (in lbs) and y is the quantity of chicken(in lbs). The consumption set is R2+. (a) Draw two typical indi erence curves for Carol, one correspondingto a utility level of u1 and one corresponding to a utility level u2,where 0 < u1 < u2. Make sure you label the slope of the indif-ference curves and the intercepts with the horizontal and verticalaxes.(b) Suppose the price of sh is $1:5 per lb and and the price of chickenis $1 per lb. Carol has $20 to spend on sh and chicken.(i) Draw Carol's budget set, labeling the slope and the interceptpoints clearly.(ii) How much sh and chicken will Carol choose to purchase? I am looking for an answer to the points (c) and (d) below (c) Suppose now that the price of sh increases to $2 per pound.(i) Draw Carol's budget set,…The following table shows Madison's utility from consuming popcom and Coke Suppose that Madison han income of $21.00, the price of popcom is 6.00 and the price of Coke in $4 50 FMadson wants to maiire her y how much popcom and Coke should she buy? ITT Popcorn Marginal Unity 192 144 Coke Marginal Uity 144 100 72 36 18 Quantity 48 24 12 Madison should buy boxes of popcom and cans of Coke Enter your reponses as negers)Intialy mr. John is at equilibrium such that the last dollar spent on each of several products gives hi identical marginal utility i.e MUorange/porange=MUApple/pApple=...=MUn/pn where Mu orange =aditional utility derived from consuming one more unit of Apple ,pApple=price of a unit of Apple etc Q.how will Mr.Jhon react if the price of orange and other goods remain constant?and how can the equilibrium be restored?