Michael and Kelly consume food and clothing. In particular, Michael currently consumes 19 units of food and 23 units of clothing and Kelly currently consumes 21 units of food and 17 units of clothing. At these levels of consumption, Michael's MRS of food for clothing is 1.50 and Kelly's MRS of food for clothing is 0.50. Illustrate with an Edgeworth box. 1.) Using the three-point curved line drawing tool, draw an indifference curve for Michael when consuming 19 units of food and 23 units of clothing. Label this curve UM 2.) Using the three-point curved line drawing tool, draw an indifference curve for Kelly when consuming 21 units of food and 17 units of clothing. Label this curve UK. Carefully follow the instructions above, and only draw the required objects. (...)
Q: A machine purchased 3 years ago for $140,000 is now too slow to satisfy the demand of the customers.…
A: The concept of equivalent annual worth (AW) is a way of comparing the annual cash flows of different…
Q: Mexico and the United States are trade partners. Each country has a zero current account balance and…
A: The objective of the question is to understand the impact of changes in inflation rates, national…
Q: Suppose Giocattolo estimates the demand for toy cars in Spain as 45,000 toys per year. Based on the…
A: This question asked us to determine Giocattolo's best strategy (establish a subsidiary factory,…
Q: The graph shows the cost curves, demand curve, and marginal revenue curve of a firm in monopolistic…
A: A monopoly is a market structure characterized by a single dominant seller controlling the supply of…
Q: Which of the following statement correctly describes 'depreciation' ? (a) It is a monthly allowance…
A: The correct statement that describes 'depreciation' is:(c) It is calculated as the cost of a good…
Q: Consider the basic Solow model with no population growth and no technological progress and a…
A: This question asked us to calculate the steady-state equilibrium of the economy, prove the…
Q: 6.9 Consumer surplus with many goods In Chapter 5, we showed how the welfare costs of changes in a…
A: “Since you have posted a question with multiple sub parts, we will provide the solution only to the…
Q: Some people advocated the following modification of the auction rule. A bidder cannot bid for only…
A: Considering the modified auction rule, determine the optimal strategy for a bidder with valuations…
Q: Consider the following plain-vanilla swap. Party A pays a fixed rate 8.29% per annum on a semiannual…
A: A net swap payment refers to the distinction among the bills that events, involved in a change…
Q: Structural unemployment refers to the unemployment due to (a) people changing from one job to…
A: Unemployment is a situation when a person is able and willing to work but he/she is not getting job.
Q: Suppose Indonesia drastically decreases the size of their import quota for red onions. Use the…
A: Exchange rate:It is the rate at which currencies are exchanged for another currency. It affects the…
Q: 6. Expected Utility. Consider a Princeton student who feels that a "normal" year on campus is like…
A: To begin, it is crucial to grasp the concept of expected utility, which serves as an assessment of…
Q: A profit - maximizing firm in a competitive market is currently producing 100 units of output. It…
A: In case of perfect competition there are large number of buyers and sellers. The firms sell…
Q: Suppose that the total factor productivity, z, increases to 4. What is the income effect of this…
A: Calculate the original Wage and consumption using the production function and total factor…
Q: in the development of a publicly owned, commercial waterfront area, three possible independent plans…
A: The objective of the question is to determine which plan(s) should be adopted based on the…
Q: Suppose a borrower with a 25% risk of default and no collateral wants to borrow from a lender whose…
A: Interest Rate: The pеrcеntagе that a lender fees a borrower for the usage of the property is known…
Q: - Suppose that we need to develop a model to help us to allocate a resource between two time…
A: The objective of the question is to find the marginal user cost in a two-period model where the…
Q: In 2017, in proposing a $1 trillion increase in government spending on infrastructure, President…
A: These questions asked us analyzing the impact of increased federal spending involves identifying…
Q: a. How would the growth rate of ideas behave if a <1? b. Assuming a = 1, solve for the new growth…
A: “Since you have posted a question with multiple sub-parts, we will provide the solution only to the…
Q: What is the CPI base period a. Period the index equals 100 b. Period the weight data have been…
A: The CPI (Consumer Price Index) base period is the period used as a reference point for calculating…
Q: the typical firm in a monopolistically competitive industry is in the situation as depicted in the…
A: A monopolistically competitive firm produces at the intersection of MR and MC curves to maximize…
Q: a. show the impact of tariff on a small country's import price, domestic demand, domestic supply,…
A: “Since you have asked multiple questions, we will solve the first three questions for you. If you…
Q: (a) Suppose the natural rate of unemployment for the economy is 5 percent and the economy is…
A: The objective of the question is to understand the impact of unemployment rates on wages and prices,…
Q: Consider the following economy populated by a government and a representative household. There is no…
A: This question asks us to define a competitive equilibrium, find steady-state levels of capital,…
Q: The relation of foreign debt/GDP of country Indebted is 60%, given that the greatest part is…
A: The summation of a country's goods and services is called its gross domestic product. GDP is an…
Q: 2. Understanding the role of fixed cost in the Consider an airline's decision about whether or not…
A: Cost refers to the sum of money that the production or consumption of a certain good or service…
Q: Most likely estimates for a project are as follows. Choose the correct choice below. MARR Useful…
A: Present worth refers to the value of certain investments or assets that are receivable in the future…
Q: (a) From the table below, calculate the M1 and M2 values of this economy's money supply. Currency…
A: The objective of the first part of the question is to calculate the M1 and M2 money supply of an…
Q: You converted 15 million yen into pounds on 6/1. On 6/2, you converted your pounds into euros.…
A: Foriegn exchange rate is the rate at which the nations currencies are traded in foreign exchange…
Q: 5. The market for loanable funds and government policy The following graph shows the market for…
A: Loanable funds market, is the market where funds are being borrowed and lent.Lending of funds is…
Q: A# man# is# planning# to# retire# in# 20# years.# He# can# deposit# money# for# his# retirement# at#…
A: The objective of the question is to find out the monthly deposit amount that the man needs to make…
Q: Due to the increase in the productivity of Omanis in the technology sector, the rate of exports of…
A: The selling of one good to another country is known as an export in international trade. The product…
Q: Show the likely effects on price- and/or wage- setting behaviour as reflected in the WS/PS diagram…
A: Labor economics delves into the intricacies of the job market, scrutinizing aspects like employment,…
Q: Explain the concept of GDP Deflator.
A: Gross Domestic Product (GDP): Imagine a giant basket containing all the final goods and services…
Q: pose two goods, X and Y, are perfect complements and U = MIN (X, Y). A consumer has $24 to spend.…
A: The perfect complements refer to goods that are used jointly in a fixed proportion to satisfy the…
Q: For a social welfare function W = W(U1(M1); ... ; UH (MH )), where Mh is income the ‘‘social…
A: Social Marginal Utility of Income:Measures the additional satisfaction gained by society from an…
Q: Real GDP Consumption Investment Purchases Net Exports $1,000 $100 $150 -$50 1,900 100 150 -50 2,800…
A: A sum of countries' final goods and services measured in a period of time is referred to as Gross…
Q: (a) Suppose the natural rate of unemployment for the economy is 5 percent and the economy is…
A: The objective of the first part of the question is to understand the impact of a higher unemployment…
Q: Give an account of the major types of unemployment witnessed in India.
A: This question focuses on identifying and explaining the major types of unemployment witnessed in…
Q: The following costs were estimated from steel operations in the US and Japan by Peter Marcus in…
A: Cost refers to the sum of money that is incurred in the process of the production of a good or the…
Q: Determine to the nearest percent the IRR of the following projects: a. An initial outlay of $10,000…
A: To determine the Internal Rate of Return (IRR) for each project, we need to find the discount rate…
Q: How can the price of a Big Mac in China shed light on U.S.-Chinese currency tensions? The Chinese…
A: The Big Mac Index, created by The Economist magazine, is a tool used to assess the relative value of…
Q: 16. The input-output (million dollar) table for a two-sector economy is given as follows: Output…
A: Demand pertains to the volume of a commodity or service that consumers are willing and capable of…
Q: Accountants and Economists differ in their calculations of profits in that; Select one: a.…
A: Implicit cost is the cost of using the factors of production that are already owned by the producer.…
Q: unemployment
A: Structural unemployment refers to unemployment arising from essential modifications in the shape of…
Q: Suppose labor productivity increased by 4% last year. If technological progress was 3%, by how" much…
A: We need to determine by how much the capital-to-labor ratio must have increased, given that labor…
Q: “Economics of Monopoly Power”Please respond to the following:From the first e-Activity, take a…
A: Taking business decisions and allocating resources in the face of challenges is part of business…
Q: Suppose you win the Powerball lottery this year, which is worth $500 million. You can choose to take…
A:
Q: Which best defines the situation by local governments in the American federal system? UG31 O They…
A: The question is asking to identify the correct statement that defines how local governments are…
Q: The entire economy consists of two industries, Industry 1 and Industry 2. Their production functions…
A: The production function is given as The price is given as P1 and P2, A2, K1 and K2 , and each of…
Step by step
Solved in 4 steps with 1 images
- Michael and Kelly consume food and clothing. In particular, Michael currently consumes 23 units of food and 19 units of clothing and Kelly currently consumes 17 units of food and 21 units of clothing. At these levels of consumption, Michael's MRS of food for clothing is 0.40 and Kelly's MRS of food for clothing is 2.50. Illustrate with an Edgeworth box. 1.) Using the three-point curved line drawing tool, draw an indifference curve for Michael when consuming 23 units of food and 19 units of clothing. Label this curve UM. 2.) Using the three-point curved line drawing tool, draw an indifference curve for Kelly when consuming 17 units of food and 21 units of clothing. Label this curve Uk. Carefully follow the instructions above, and only draw the required objects. Next, fill in the missing information in the following table. For simplicity, assume the consumers have the option of trading one unit of food (F) for one unit of clothing (C). Fill in the following table. (Enter your responses…Norman and Gina consume food and clothing. In particular, Norman currently consumes 4 units of food and 6 units of clothing and Gina currently consumes 6 units of food and 4 units of clothing. At these levels of consumption, Norman's MRS of food for clothing is 0.50 and Gina's MRS of food for clothing is 2.00. Illustrate with an Edgeworth box. 1.) Using the three-point curved line drawing tool, draw an indifference curve for Norman when consuming 4 units of food and 6 units of clothing. Label this curve UN 2.) Using the three-point curved line drawing tool, draw an indifference curve for Gina when consuming 6 units of food and 4 units of clothing. Label this curve UG- Carefully follow the instructions above, and only draw the required objects. Next, fill in the missing information in the following table. For simplicity, assume the consumers have the option of trading one unit of food (F) for one unit of clothing (C). Fill in the following table. (Enter your responses using integers.)…Norman and Gina consume tood and clothing. In particular, Norman currently consumes 5 units of food and 5 units of clothing and Gina currently consumes 5 units of food and 5 units of clothing. At these levels of consumption, Norman's MRS of food for clothing is 0.50 and Gina's MRS of food for clothing is 2.00. Illustrate with an Edgeworth box. Noman 1.) Using the three-point curved line drawing tool, draw an indifference curve for Norman when consuming 5 units of food and 5 units of clothing. Label this curve UN. 2.) Using the three-point curved line drawing tool, draw an indifference curve for Gina when consuming 5 units of food and 5 units of clothing. Label this curve UG: UG 5 Carefully follow the instructions above, and only draw the required objects. Next, fill in the missing information in the following table. UN For simplicity, assume the consumers have the option of trading one unit of food (F) for one unit of clothing (C). Fill in the following table. (Enter your responses…
- EXERCISE 4 Milo spends £27 on stamps (S) and maple candy (C). His preferences for these goods are given by the following utility function: . Suppose that price per unit of S is £1.1 and the price per unit of C is £2.1. Write down Milo’s budget equation and draw the corresponding budget line. Clearly label the axes and calculate the coordinates of the points of intersection of the budget line with each axis. In your graph, indicate the consumption bundle of 12 stamps and 6 maple candies. Can Milo afford this bundle? Explain. Find Milo’s optimal consumption bundle, both algebraically and graphically. Explain your reasoning. If the price of a stamp increases to £1.4, how should Milo’s income change for him to be as well off as before this change in prices? Discuss the implications of the price change from c) on Milo’s optimal choice. In your discussion, include the analysis of the substitution and income effects as well as Milo’s demand for stamps and/or maple candy.John has preferences for food F and clothing C described by a utility function . Suppose that food costs $1 a unit and that clothing costs $2 a unit. John has $12 to spend on food and clothing. On a graph, draw indifference curves corresponding to , , . Make sure to label coordinates clearly. Using the graph, find the optimal choice of food and clothing. Let the amount of food be on the horizontal axis and the amount of clothing be on the vertical axis. What is the marginal rate of substitution of food for clothing at his optimal basket? Show this graphically and algebraically. Suppose John decides to buy 4 units of food and 4 units of clothing with his $12 budget. Would his marginal utility per dollar spent on food be greater than or less than his marginal utility per dollar spent on clothing? What does this tell you about how he should substitute food for clothing if he wanted to increase his utility without spending any more money?8) A consumer has to choose the optimal amount of cheese and crackers to purchase. He or she has drawn his or her budget constraint (BC) and indifference curves on a graph with the amount of cheese (in ounces) on the horizontal axis and the amount of crackers (in packages) on the vertical axis. Which of the following statements is true if the price of cheese increases? The BC rotates such that it intersects the vertical axis at the same point as before and intersects the horizontal axis at a higher quantity of cheese. The BC shifts to the left (down). The BC rotates such that it intersects the vertical axis at the same point as before and intersects the horizontal axis at a lower quantity of cheese. The BC shifts to the right (up).
- Suppose that Lynn enjoys sugar in her coffee. She has very particular preferences, and she must have exactly three spoonfuls of sugar for each cup of coffee. Let C be the number of cups of coffee, and S be the number of spoonfuls of sugar. Also, let PC be the price of a cup of coffee. Suppose Lynn has $12 to spend on Coffee and Sugar. Also, the price of Sugar is $.20 per spoonful. Graph Lynn’s Price consumption curve for prices, PC = $.60, PC = $.90, and PC = $1.80. Please put the number of cups of coffee (C) on the horizontal axis, and the number of spoonfuls of Sugar (S) on the vertical axis. Be sure to graph each budget constraint associated with each price of Coffee, identify Lynn’s optimal bundle on each budget constraint, and make sure your graph is labeled carefully and accurately.Joe is currently in consumer equilibrium by consuming cheese and crackers, such that the last cracker consumed yielded 8 utils and the last piece of cheese consumed yielded 12 utils. Assume the price of crackers is two cents per cracker and the price of cheese is three cents per piece. If the price of crackers increases to four cents, Joe should his consumption of crackers and his marginal utility from crackers will and also his consumption of cheese and his marginal utility from cheese will (Assume he is in the downward sloping portion of the MU curve.) Ο Ο Ο decrease; increase; increase; decrease increase; increase; increase; increase increase; decrease; increase; decrease increase; increase; decrease; decreaseSuppose Jeff has a perfect substitute preferences for watching movies (M) and TV (T) shows. Jeff's MRSTM is such that he is always indifferent between watching one movie and five TV shows independent of the amount of goods consumed. Which of the following statements is true? If Jeff had a choice between 1 movie and 1 TV show before bed, he would choose to watch the movie. If Jeff has already watched 3 movies and no TV shows, then he would prefer to watch a TV show next. He is indifferent between watching 1 TV show or 1 movie before bed. Jeff would prefer watching 2 TV shows and no movies over watching 2 Movies and no TV shows.
- Question 2 Matt considers Butter (B) and Sour Cream (S) as substitutes. His utility function has the form u(B, S) = βB + S, where β > 0. Suppose the price of Butter is PB = 3, the price of Sour Cream is PS = 2, and Matt has an income of M = 100 dollars to spend between Butter and Sour Cream. (a) In a well labelled diagram, draw Matt’s indifference map, putting Butter on the x-axis and Sour Cream on the y-axis. Make sure to indicate the direction in which the indiffference curves increase. (b) In a well labelled diagram, draw Matt’s budget set indicating the intercepts with the axes and the slope of the budget line. (c) Obtain the Marginal Rate of Substitution between Butter and Sour Cream. What would happen to the MRS if Matt doubles his consumption of Butter and Sour Cream? (d) Obtain Matt’s optimal bundle when: – β > 3/2 – β < 3/2 – β = 3/2 (e) Now, suppose that the price of butter changes, whereas the price of sour cream and Matt’s income remain the same. The new price of…Question 3 Lucy consumes only scoops of ice-cream (x) and cones (y). Moreover, she insists on consuming these two goods in the combination of 1 scoop of ice-cream and 1 cone. If there are more scoops of ice-cream than cones, she throws the extra ice-cream away. If there are more cones than scoops of ice-cream, she throws the extra cones away. Her utility function for ice-cream and cones is given by U(x, y) = min {x,y}. (The function min {x,y} returns the smaller number between x and y. In other words, if x y, min {x,y} = y; and if x = y, min {x,y} = x = y.) (a) Draw a couple of indifference curves for Lucy. Put ice-cream on the horizontal axis. (Hint: Draw the 45° line. Choose a point on the line. If you increase the amount of x but not y from that point, how would Lucy's utility change? If you increase the amount of y but not x from that point, how would Lucy's utility change?) (b) Suppose each scoop of ice-cream costs $2, and each cone costs $1. Lucy has an income of $6. Draw her…Joon has preferences over two goods only-beer and pizza, both of which he loves. His initial budget line goes through bundles A and B; he chooses A. When prices change such that he faces budget line through bundles B and D, Joon chooses B. Qpizza a f b B h g D I Qbeer We want to determine which bundles are better for Joon than bundle B and which bundles are worse. For each of the areas on the graph, labeled from (a) to (j) we can say, given the information provided, that