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- A decrease in the price of good Y will have what effect on the budget line on a normal X-Y graph? Select one: OA. Parallel outward shift of the line OB. Parallel inward shift of the line OC. Decrease the horizontal intercept COD. Increase the vertical interceptc) From the following budget line and the utility function, calculate the amount of two commodities that maximizes satisfaction. What is the maximum amount of satisfaction? 2500= 20X + 30Y U = 300 X0.6Y0.7Suppose Lorenzo has a weekly budget of $48 to spend on ranch dressing and peanut butter. Ranch dressing is priced at $4 per bottle, and peanut butter is priced at $6 per jar. If Lorenzo spends his entire $48 on ranch dressing, he can buy jars of peanut butter. buy Use the blue line (circle symbol) to plot Lorenzo's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of ranch dressing and peanut butter that are affordable for Lorenzo. Finally, place the black point (plus symbol) on the point on Lorenzo's budget constraint that corresponds to a scenario in which Lorenzo spends $24 on each good. Note: Dashed drop lines will automatically extend to both axes. PEANUT BUTTER (Jars) 24 22 20 18 2 0 + 0 2 4 12 14 16 18 20 22 bottles of ranch dressing. If he spends his entire $48 on peanut butter, he can 6 8 RANCH DRESSING (Bottles) O True False BC, ($48) O Affordable Region $24 on Each What does the slope of…
- On the graph below, the consumer begins at L1. The relative prices change to L2. Complete the table and the sentence below. (Hint: The dashed line is a reference line to show us the income effect. Point B shows only the income effect. The change from A to B is the income effect. The change from B to C is the substitution effect.) Porcupines consumed at 'A' Grenades consumed at 'A' Porcupines consumed at 'C' Grenades consumed at 'C' Will consumption of Grenades increase or decrease due to the income effect? Quantity change in Grenades due to income effect Will consumption of Grenades increase or decrease due to the substitution effect? Quantity change in Grenades due to substitution effect Will consumption of Porcupines increase or decrease due to the income effect? Quantity change in Porcupines due to income effect Will consumption of Porcupines increase or decrease due to the substitution effect? Quantity change in Porcupines due to…Define the law of diminishing marginal utility. Given an individual’s income and the prices of two or more goods, explain and demonstrate how an individual chooses between the two or more goods in order to maximize total utility. Define the equimarginal principle and explain the logic behind it. Explain how the equimarginal principle can be used to determine the optimal amount of security guards versus helicopters to employ to prevent illegal border crossings.pats >125 per week to spend on peanut butter and carrots in the fixed ratio of 1 pound of peanut butter to 4 pounds of carrots. Peanut butter costs $1 per pound and carrots cost $0.5 per pound Suppose the price of carrots were to rise from $05 to $1 per pound. By how much will Tom have to reduce his consumption of carrots
- II. Your preferences are represented by the utility function U(x₁, x₂) = (x² − x²)0.5 for x₁ > 0, x₂ > 0, and x² > x².minimum of 200 words pleaseElizabeth makes $200 a week at het summer job and spends her entire weekly income on new running shoes and jeans, since these are only two items that provide utility to her. Furthermore,Elizabeth insists that for every pair of jeans she buys, she must also buy a pair of shoes. (without the shoes, the new jeans are worthless). Therefore, she buys the same number of pairs of shoes and jeans in any given week. a) If jeans cost $20 and shoes cost $20 , how many will Elizabeth buy of each?b) Suppose that the price of jeans rises to $30a pair , how many shoes and jeans will she buy?c) To what effect (income or substitution) do you attribute the change in utility levels between part a and part b
- 3We have determined that Jenny's satisfaction from eating a Snickers bar is 30 utils, whereas Sarah's satisfaction from eating a Snickers bar is 15 utils. We also know that Jenny prefers Snickers bars over Milky Way bars. Which of the following statements can we say for sure are true? Drag the true statements to the box. Items (7 items) (Drag and drop into the appropriate area below) Jenny likes Snickers bars twice as much as Sarah does. Sarah likes Snickers bars more than Jenny likes Milky Way bars. Sarah likes Snickers bars more than Jenny does. Jenny likes Snickers bars more than Sarah does. Jenny's satisfaction from consuming a Milky Way bar must be less than 30 utils. There is not enough information to determine who likes Snickers bars the most. The price of the Snickers bar is needed in order to find out who likes it the most.