Suppose Ann has typical preferences over two goods. Then:O If bundle (3,1) gives the same utility level as (1,3), she would prefer bundle (2,2) to either of them.O If she prefers bundle A to bundle B, and bundle B to bundle C, then she must also prefer bundle C to bundle A.Her indifference curves slope upwards.O All of the above are true.

Utility refers to the satisfaction. The aim of the consumer is to maximize the utility given the…

Suppose Ann has typical preferences over two goods. Then: If bundle (3,1) gives the same utility level as (1,3), she would prefer bundle (2,2) to either of them. If she prefers bundle A to bundle B, and bundle B to bundle C, then she must also prefer bundle C to bundle A. Her indifference curves slope upwards. All of the above are true.

Suppose Ann has typical preferences over two goods. Then: If bundle (3,1) gives the same utility level as (1,3), she would prefer bundle (2,2) to either of them. If she prefers bundle A to bundle B, and bundle B to bundle C, then she must also prefer bundle C to bundle A. Her indifference curves slope upwards. All of the above are true.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.7P

See similar textbooks

Similar questions

A. Bundle C is preferred to Bundle A because Bundle C represents a more balanced Bundle. Do you agree or disagree with this statement and why? Calculate the MRSXY between points A and B, and between points C and D. Interpret your computed values. What assumption about preferences would allow you to say that Bundle E is preferred to Bundle B? Briefly explain. Bundle E has one less cheeseburger than Bundle D. What assumption(s) would still allow you to say that Bundle E is preferred to Bundle D? Briefly explain. B. Consider the utility function of individual A given by UA (X,Y) = X0.5Y0.5 in answering the items below: 1.Calculate the marginal utility for each good (MUX & MUY) of individual A and the marginal rate of substitution (MRSXY). Interpret your computed values. 2. If PX = 0.5, PY = 1, and I = 10, solve for X*, Y*, and U* using the Lagrange Multiplier Method
Connie has a monthly income of $20.00 that she allocates among two goods: meat (M) and potatoes (P) O 8- Suppose meat costs $10.00 per pound and potatoes $2.00 per pound. Connie's budget line (L) is drawn in the figure to the right 7- 6- Suppose also that her utility function is given by the equation U(M,P) 2M P. What combination of meat and potatoes should she buy to maximize her utility? 5 To maximize utility, Connie should buy pounds of meat and pounds of potatoes. (Enter your responses rounded to two decimal places.) An outbreak of potato rot raises the price of potatoes to $4.00 per pound. What combination of meat and potatoes maximizes Connie's utility now? L. U3 pounds of meat and Connie now maximizes utility by consuming pounds of 1 U, potatoes. (Enter your responses rounded to two decimal places.) 2 3 10 11 12 13 14 15 16 Potatoes When using the multipoint curve drawing tool, hit the
The graph show some of Martha's indifference curves (over goods X and Y). About them, choose the correct alternative: Y D 8 X O Even if we knew Martha's preferences satisfy the "more is better and transitivity assumptions, we could not know whether she likes bundle D better than bundle B. ● If her preferences satisfy the completeness and transitivity assumptions, then we know that, for Martha, either A > D or D>A. O If her preferences satisfy the "more is better" and transitivity assumptions, then Martha ranks the four bundles D > C > B>A. O Martha's MRSxy at bundle A is greater than her MRSxy at bundle B.
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,…
9 of 15 Laura has an income of 100 and she has to spend it to buy daisies (x₁) and daffodils (x2). Her preferences are represented by a Cobb Douglas utility function u(x1,x2)= x1x2. If daisies are twice as expensive as the daffodils, what would her optimal bundle be? O Buy only daffodils O Buy only daisies O Buy twice as many daffodils as daisies O Buy twice as many daisies as daffodils O Buy same amount of daisies and daffodils O No answer.
John likes Coca-Cola. After consuming one Coke, John has a total utility of 10 utils. After two Cokes, he has a total utility of 25 utils. After three Cokes, he has a total utility of 50 utils. Does John show diminishing marginal utility for Coke, or does he show increasing marginal utility for Coke? Supposethat John has $3 in his pocket. If Cokes cost $1 each and John is willing to spend one of his dollars on purchasing a first can of Coke, would he spend his second dollar on a Coke, too? What about the third dollar? If John’s marginal utility for Coke keeps on increasing no matter how many Cokes he drinks, would it be fair to say that he is addicted to Coke?
X2 Phil has preferences over olives (x₁) and ice creams (x₂) with a utility function, u(x₁, x₂)= x₁0.5+ x₂0.5. Suppose his income is $16 and the price of olives is $1 and the price of ice creams is $1, too. Which of the following is TRUE? O The utility level when he spends all of his income on good 1 is 8. O The optimal bundle Phil will choose to consume is (6,10). O The utility level at a bundle (1,16) is 11. None of the above. The optimal bundle Phil will choose to consume is (8,8).
Refer to the indifference curve/budget line diagram below in Figure 7. Given that a consumer initially faces budget line (BL1) and ICI, and thus, by choosing consumption point c, is able to achieve the optimal utility level. If the price of x (Px) decreases, then the substitution effect (SE) is the movement from _-. effect (IE) is the movement from and the income y a IC2 d IC: BLI Figure 7 O a. from b to a; and a to d. O b. from a to b; and b to c. O c. No correct answwers. O d. from c to d; and d to a.
A consumer is making purchases of products Alpha and Beta such that the marginal utility of product Alpha is 63 and the marginal utility of product Beta is 40. The price of product Alpha is $9, and the price of product Beta is $5. The utility-maximizing rule suggests that, to stay within a given budget constraint, this consumer should Multiple Choice O O O increase consumption of product Beta and increase consumption of product Alpha. make no change in the consumption of Alpha or Beta. increase consumption of product Beta and decrease consumption of product Alpha. increase consumption of product Alpha and decrease consumption of product Beta.
A consumer has the following utility function: Ulx, y) = xy -y, *21 where x and y represents the quantities consumed of goods X and Y. y 20 What will be the substitution and income effects for X and Yassuming that the consumer attempts to maintain the same level of utility achieved before price of Y increased (that is, when price of Y was $1)? SEx= +0.5 IEx = -0.5 SE, = -0.25 IE- = -0.25 SEx= +0.293 IE = -0.293 SEy = -0.414 IE, = +0.414 SEr= +0.25 IE SE, = -0.75 IE, = -0.75 = -0.25 SEx= +0.414 IEx = -0.414 SEy = -0.293 IE, = -0.207 Income = $3 Px= $1, Py= $2
Assume Pat spends all of her allowance to purchase 4 apples and 4 candy bars. Pat's marginal utility of the fourth apple is 20 utils, and her marginal utility of the fourth candy bar is 40 utils. If an apple costs $1.00 and a candy bar $0.50, to maximize utility Pat should(A) purchase more apples and more candy bars(B) maintain the current purchase of 4 apples and 4 candy bars(C) purchase more apples and fewer candy bars(D) purchase fewer apples and more candy bars(E) purchase fewer apples and fewer candy bars
You are choosing between two goods, X and Y, and your marginal utility from each is as shown in the table below. 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 (price–quantity-demanded table) for X.