8. Suppose both the consumption good and leisure are normal goods any graphs what will happen to the household's choice if there is without (a) an increase in dividend income ;1o IshoM hoino 1-50 TI (b) an increase in wage w. inforior Ronont
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- Would you expect total utility to rise or fall with additional consumption of a good? Why?Is it possible for total utility to increase while marginal utility diminishes? Explain.Edna is living in a retirement home where home where most of her needs are taken care of, but she has some discretionary spending. Based on the basket of goods in Table 22.5, by what percentage does Ednas cost of living increase between time 1 and time 2
- The rules of politics are not always the same as the rules of economics. In discussions of setting budgets for government agencies, there is a strategy called closing the Washington Monument. When an agency faces the unwelcome prospect of a budget cut, it may decide to close a high-visibility attraction enjoyed by many people (like the Washington Monument). Explain in terms of diminishing marginal utility why the Washington Monument strategy is So misleading. Hint: If you are really trying to make the best of a budget cut, should you cut the items in your budget with tile highest marginal utility or line lowest marginal utility? Does the Washington Monument strategy cut the items with the highest marginal utility or line lowest marginal utility?If people do not have a complete mental picture of total utility for every level of consumption, how can they find their utility-maximizing consumption choice?7. Consider a generic consumption/leisure choice. How will the follow ing events/policies affect either the consumer's choice of hours worked and labor supply, if at all? Be specific as possible about income and substitution effects and if there are multiple cases, consider them all (a) A raise in the wage rate (b) A labor income tax on all income. (c) A labor income tax on all labor income beyond the first 20 hours.
- D E B 04 What does point D on this graph represent? O An optimal choice O A choice on the budget constraint O An impossible choice given the income O A choice that would result in income left overMy Moodle My Favou tion 6 An individuals utility function is given by ret rered U = 340x1 + 960x2 + 2x1x2 – 2a- a/2, ed out of when the weekly amount of leisure is x1 132 and earned income is 12 = 760 answer the following: 1. The marginal utility of x1 is ag tion 2. The marginal utility of x2 is 3. Use the small increments formula to estimate the change in the utility when r1 decreases by 1 and x2 increases by 4. The change = 4. Does the law of diminishing marginal utility hold? 5. The MRCS at a given values is Enter non-integer numerical values as decimals to at least 3 decimal places. Note: you must use a. and not , for a decimal point. Next page revious page Mock paper ► - Working from video in SVG Jump to... formatPrice per arginal Utility Fron Current Consumption Product Unit $ 10 20 20 30 The table shows the marginal utite derived trom curent consumpton leves of three new products. A B and C at are being sold in the maet at the prces isted The contumer can imniediately gan the most extra total utity by winching spending from Mnple Choce ANE
- Pls help with thsi question I am stuck Given the image attatched: 1.Given the above Marginal Utilities and prices to form the optimality condition for utilitymaximization. According to this optimality condition, what must be the ratio of Films toBooks in an optimal consumption bundle? 2. Given your answer to Q9, what must be the household’s optimal consumption of F & Bgiven their income (m)? 3. Suppose that the price of Films changed from $2 to $4. What would need to happen tothe MRS according to the optimality condition in Q9 if the household wanted to keepmaximizing its utility?. An individual's utility function is given by u = 1000 x, + 450 x. + 5x, 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. Det er mine the value of the marginal utilities, when x, = 138 and x= 500. Hence est imate the change in utility if the individual works for an extra hour, which increa ses earned income by GH¢ 15 per week. Does the law of diminishing ut ility hold for this function? %3DTable A – Faris Daily Consumption Dozens of Oysters Total Utility Marginal Utility per Day 1 60 104 3 134 4 152 5 160 Number of Total Utility Marginal Utility Root Beers per Day 1 40 70 3 94 4 114 5 128 Refer to Table A shows Faris's consumption on the oysters and root beers per day for a total five days; i. Compute Faris's marginal utility of for consumption of dozens of oyster and number of root beers per day ii. At what units per day Faris's Diminishing Marginal Utility sets in for consumption of dozens of oyster and number root beers per day. iii. Please briefly explain why Faris will experience the Diminishing Marginal Utility as he consumes more unit of oysters and root beers.