Consider a consumer with well-behaved preferences and an income of $160. The price of good 1 is $12 and the price of good 2 is $16. At the consumption bundle (4,2), where 4 is the number of units of good 1 purchased and 2 is the quantity of good 2, the opportunity cost of consuming an extra unit of good 1 is ["", "", "", "", ""] units of good 2.
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Consider a consumer with well-behaved preferences and an income of $160. The
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- Problem 1: Suppose you have an income of $100 to spend on two goods. Good 1 costs $25 per unit. Good 2 costs $10 per unit. a) Write down your budget constraint. b) If you spend all your income on Good 1, how much can you buy? c) If you spend all your income on Good 2, how much can you buy? d) Graph your budget line. Please make sure your line passes through the appropriate points. Also, be sure to label the axes. I e) Suppose the price of Good 2 falls to $5 per unit. Draw the new budget line on the graph in Part d). f) Suppose your income falls to $75 to spend on the two goods, where the price of Good 1 is $25 and the price of Good 2 is $5 per unit. Draw the new budget line on the graph in part d). g) Highlight the area on your graph representing bundles you could afford in your budget equation from part a) that you cannot afford with the budget line in part f). h) Highlight the area on your graph representing bundles you can afford in your budget equation from part f) that you could…Suppose that Joe consumes cupcakes and pizzas. The price of cupcakes is $5 per unit and the price of pizzas is $10 per unit. The table shows Joe's utility from the consumption of each good; each row represents a possible consumption bundle. Currently, Joe is consuming 18 cupcakes and 9 pizzas. A Quantity of cupcakes 10 12 14 16 18 20 22 24 26 Utility of cupcakes (utils) 50.00 68.30 81.00 89.00 93.70 96.40 97.74 98.20 98.56 Q of pizzas 5 13 12 11 10 8 7 6 9 Utility of pizzas (utils) 263.00 258.00 250.00 240.00 227.00 212.00 195.00 175.00 150.00 Show Transcribed Text n a. Calculate the marginal utility per dollar of going from eight to nine pizzas. b. To increase total utility without increasing spending, should Joe change the amount of consumption of either good? OYes, Joe should choose more cupcakes and fewer pizzas. O Yes, Joe should choose more cupcakes and more pizzas. O No, Joe is already consuming at the optimal consumption bundle. O Yes, Joe should choose fewer cupcakes and more…There are two goods in an economy: apples (a) and bananas (b). Price of anapple is $1 and price of a banana is $2. Your income is $10. Suppose your utility function isu(a, b) = 2a2 b+5a. (8 points) How many apples and bananas will you consume?b. (4 points) Are a and b normal or inferior goods?c. (4 points) Are a and b substitutes or complements?d. (4 points) Draw the Engel curve for apples for the income levels ranging from $10, $20,$30 and so on.
- c) Consider John who consumes two goods, (X and Y), with prices ?? = ?$35, ?? = ?$25 and income I =N$1500 i) Construct budget constraint ii) Draw John’s budget line with good X on the horizontal axis. iii) Use a graph to show the effect of an increase in income from N$1500 to N$2000. iv) What will happen to the slope of the budget line if the price of good X decreases to N$18?Consider John who consumes two goods, (X and Y), with prices ?? = ?$35, ?? = ?$25 and income I =N$1500 i) Construct budget constraint and draw John’s budget line with good X on the horizontal axis. (ii) Use a graph to show the effect of an increase in income from N$1500 to N$2000. What will happen to the slope of the budget line if the price of good X decreases to N$18?Use the following information to answer the next 3 questions. Assume that an individual consumes two goods, X and Y. The total utility (assumed measurable) of each good is independent of the rate of consumption of other goods. The price of X is $5, and the price of Y is $10. Units of the Good Total Utility of X Total Utility of Y 1 50 400 234 95 750 135 950 4 170 1100 5 200 1220 6 225 1320 7 245 1400 8 260 1450 Question A What is the marginal utility of the third unit of good Y? A. 20 B. 200 C. 316.7 D. 950 Question B If the consumer has $65 to spend on goods X and Y, what amount should be purchased of each in order to maximize utility? A. 1 unit of good X and 6 units of good Y B. 3 units of good X and 5 units of good Y C. 3 units of good X and 7 units of good Y D. 6 units of good X and 8 units of good Y Question C If the consumer has $110 to spend on goods X and Y, what optimal combination will the con- sumer choose? A. 6 units of good X and 8 units of good Y B. 7 units of good X and…
- 1. Doug consumes two goods, electricity, e, and a composite commodity z. Doug has the following utility function: U = z²-e Last week, he clicked on a Facebook ad and got free solar panels put on his roof! Now Doug has solar panels on his roof that generate 50 units of electricity per day. For the going price of electricity, if Doug demands more than 50 units of electricity, he can buy more at that price. If he demands less than 50 units, he can sell the extra electricity (50 - his consumption) back to the grid, and earn the going price as extra income. a. What are his Marshallian demand functions for e and z? b. Currently, Doug's income is $100 per day, the price of z is $1 and the price of electricity is $0.50. How much electricity is he consuming and what is his utility? (note, the utility numbers may get a bit large). C Calculate quantity demanded for electricity and his utility if the price of electricity rises to $1. And then calculate the quantity demanded and utility when the…Please tell me which of the multiple choices in question 1.6)1.7)1.8) are correct.State only the correct ones please. 1.6) The marginal rate of substitution (MRS) can be defined as: Select one or more: a. The amount of one good that the consumer is willing to trade for one unit of the other. b. The ratio of the amounts of two goods. c. The change in the consumer’s utility when one good is substituted for another. d. The absolute value of the slope of the indifference curve. 1.7) (SEE ATTACHED PICTURE) The diagram shows that: Select one or more: a. If Angela works 24 hours a day she can still survive. b. There is a technically feasible allocation where Angela does not work. c. A new technology that produced more grain would give a larger technically feasible set. d. If Angela needed less grain to survive the technically feasible set would be smaller.I. TOTAL AND MARGINAL UTILITY Reset E UTILITY CALCULATIONS Total Utility Quantity Consumed Marginal Utility Total 70 Utility 60 50 22 40 1 22 30 18 20 2 40 10 14 3 4 54 Quantity Consumed 10 Marginal Utility 4 64 20 10 70 2. 3 5 6 -10 6 72 -20 -2 Quantity Consumed 70 Quantity Consumed -6 64 2 4 6.
- The budget set, or budget constraint, in the graph shows the possible combinations of brownies and ice cream cones that can be purchased. Assume that this person has a total of $18 to spend on brownies and ice cream cones. How much does a brownie cost? $ Assume that at point A, the marginal utility from a brownie is 10 and the marginal utility for an ice cream cone is 18. This person should consume more brownies and fewer ice cream cones. is utility maximizing. should consume more ice cream cones and fewer brownies.The following table depicts a consumer's utility from consuming two goods, Fish and Chips. Units of Fish Utility from Fish Units of Chips Utility from Chips 6 1 3 2 11 2 7 3 14 3 12 4 15 4 18 If the consumer has a budget, the price of Fish is $5, and the price of Chips is $2, what is the first unit that this consumer will want to consume? The consumer is indifferent about what to buy first. Fish, because it provides the most marginal utility per dollar. Chips, because it is cheaper. Fish, because it provides the most marginal utility. Chips, because it provides the most marginal utility per dollar.You are choosing between two goods, X and Y, and your marginal utility from each is as shown in the following table. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? What total utility will you realize? Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? Using the two prices and quantities for X, derive a demand schedule (a table showing prices and quantities demanded) for X.
