Suppose Jan chooses Bundle d when faced with budget line L2 and Bundle e when faced with budget line L³. Given Jan's revealed preferences, draw an indifference curve for her through Bundle a using the three-point curved line drawing tool (1). Attach the provided label. 17 Y, Units per week L² a X, Units per week e
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Could someone explain why the curve l drawing like that?
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- Maria has a fixed weekly budget which she has been spending on goods A, B, and C. Her utility function exhibits a diminishing marginal rate of substitution. She uses the equi-marginal principle to decide how much to purchase of each product. Suppose that for Maria's current consumption bundle it holds that MUA MUB MUC PA Рв PC You may assume that she has spent her entire budget. If Maria wishes to maximise utility, next week, she should A) buy product A only. B) buy products B and C only. C) buy less of A and more of B and C. D) buy more of A and less of B and C.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?Why is the consumer’s MRS equal to the price ratio at the optimal consumption point? Givea graphical interpretation of this fact in XY space (hint: what do we know about the indifferencecurves and the budget line?).
- 7. Bob receives utility from days spent traveling on vacation domestically (D) and daysspent traveling in a foreign country (F) as given by the utilityU(D; F) = DFThe price of a day spent traveling domestically is 160 pounds and in a foreigncountry 200 pounds. Bobís annual budget for traveling is 8000 pounds. (a) Find Bobís utility maximising choice of days traveling domestically and of daystravelling in a foreign country. Find also his utility level from consuming thatbundle. Suppose that the price of domestic traveling increases to 250 pounds per day.Denoting his budget for traveling x, (suppose by now that it is unknown) findthe demand for D and F under the new prices as a function of x.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 barsYunqin always gets twice as much satisfaction from an extra burger as he does from an extra Boost juice. Draw (for yourself) three indifference curves for him on a graph - passing through the bundles (2 juices, O burgers), (4 juices, 0 burgers) and (5 juices, O burgers) respectively. Qourger 2 1 1 2 3 4 5 Qjuice The graph above includes two budget lines with different slopes to help you answer the following question. Which conclusions can you draw about Yunqin's utility maximising choices? Select all that applies. Yunqin would never consume both burgers and juice at the same time Yunqin always consumes only juice if Yunqin' budget line is flatter than his indifference curves, then he consumes only juice if the ratio of the price of burger to the price of juice is larger than 2, then Yunqin consumes only juice
- Jason has the following utility function: U = F2C where F is food and C is clothing. Clothing is measured on the vertical axis while food is measured on the horizontal one. Suppose the price of food is €3 per unit, the price of clothing is €2 per unit and that Jason's income is €36. Calculate the number of units of clothing that Jason consumes in equilibrium. ourCTIOuPlease no written by hand and no emage Consider a consumer that consumes 2 teaspoons of sugar with each cup of coffee. For each cup of coffee with sugar the consumer gains 10 utils.a) Write down the utility function that gives the total utility if the consumer consumes S teaspoons of sugar and C cups of coffee. The consumer has assigned £7 per week to be spent on drinking coffee with sugar. The current price of coffee is £0.50 per cup and each spoon of sugar costs £0.10. b) Calculate the optimal weekly consumption bundle for this consumer.c) Does the consumer view C and S as complements or substitutes?Question 3Draw indifference curves for the following sets of preferences and indicate the direction inwhich the individuals’ satisfaction (or utility) is increasing. Be specific about slopes when itis necessary. Assume for both parts (a) & (b) that soft drinks are measured on x-axis andhamburgers on the y-axis. (a) Mary always gets twice as much satisfaction from an extra hamburger as she does froman extra soft drink. (b) Bob loves soft drinks but dislikes hamburgers.
- Gopal is a rational consumer and consumes two goods X and Y. Is a cardinal measureof utility or satisfaction necessary in order to sketch a set of indifference curves? Whatare the main characteristics of indifference curves? On the same set of axis draw threeindifference curves showing increasing marginal rate of substitution as we move downthe indifference curve. Please answer it in little more detail as it is descriptiveRefer 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.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,…