7. An individual's utility function is given by U =1000x, +450x, +5 x,x, -2x – x where x, is the amount of leisure measured in hours per week and x, is income earned measured in cedis per week. Determine the value of the marginal utilities, when x = 138 and x, = 500. Hence estimate the change in utility if the individual works for an extra hour, which increases earned income by GH¢15 per week. Does the law of diminishing utility hold for this function?

7. An individual's utility function is given by U =1000x, +450x, +5 x,x, -2x – x where x, is the amount of leisure measured in hours per week and x, is income earned measured in cedis per week. Determine the value of the marginal utilities, when x = 138 and x, = 500. Hence estimate the change in utility if the individual works for an extra hour, which increases earned income by GH¢15 per week. Does the law of diminishing utility hold for this function?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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P2
3. Consider the following utility function: X2 if: 1 2 u(x1, x2) X1 if: 1< x2 < 2 X2 + x1 otherwise Answer the following questions. (a) What is the Walrasian demand for this utility function?
Suppose a consumer has a monthly income of m = 100 which she spendson two commodities: french fries (x1) and beef jerky (x2). The price offrench fries is p1 = 2 and the price of beef jerky is p2 = 5.(a) Write down the consumer’s budget constraint (equation).(b) What is the maximal consumption of french fries (this is calledthe real income in french fries).(c) Find the maximal consumption of beef jerky (real income interms of beef jerky).
A9
The graph given below indicates Marshall's marginal utility for two products, A and B. Marginal utility 24 20 16 12 8 4 0 (1) Quantity 1 2 3 4 5 6 2 (2) Product A MU 4 Quantity of A: Quantity of B: 6 8 Quantity per period (3) Product A (4) MU per $ Product B (at $2) MU 10 Product A Product B 12 a) From the graph above, complete columns 2 and 4 of the table above. Round your answers to whole numbers. b) If the price of both products is $1, what quantity of each good would Marshall purchase if his budget was $8? Quantity of A: Quantity of B: c) Suppose that the price of product A increases to $2. Complete column 3 of table above. d) If Marshall's budget remained the same, what quantities of each good would he now purchase?
pls explain step by step
2. Utility maximization - Trading off labor and leisure The indifference curves on the following graph show Amy's preferences for leisure and consumption for increasing levels of utility, such that her utility increases in both consumption and leisure. Assuming that Amy spends 68 hours each week sleeping, she has a maximum of 100 hours available to her for leisure if she does not work at all. Initially, she works 45 hours (and thus has 55 hours of leisure) and earns $250 per week. Use the grey point (star symbol) to indicate Amy's initial leisure/consumption bundle. Dashed drop lines will automatically extend to both axes. CONSUMPTION (Dollars per week) 1000 900 800 700 600 500 400 300 200 100 0 0 + 10 20 30 40 50 60 70 80 LEISURE (Hours per week) 90 U3 100 110 Initial bundle + $200 Unemployment Benefits Equivalent Bundle, $100 Unemployment Benefits Equivalent Bundle ?
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Q43
QUESTION 2 Which of the following is NOT a correct statement about marginal rate of substitution between leisure and consumption? MRS between leisure and consumption increases as leisure increases and consumption falls. MRS between leisure and consumption is the units of consumption goods needed to compensate a consumer when he is asked to work one unit of time so that he is as happy as before. MRS between leisure and consumption is the slope (absolute value) of indifference curves.