et line. Now suppose price of canned tuna decreases to $6. Draw the new budget line. Draw two indifference curves. The first should be tangent to the old budget line and the second should be tangent to the new budget line (tangency points represent the two points of consumption for John where utility is maximized before and after the price ch

Q5. Jason has preferences defined over novels (good x) and DVDs (good y) described by the utility function U(x,y)= x2y2. He has an income of $120; novels cost $5 each, while DVDs are priced at $15 each. [Hint: MUx=2xy2, MUy=2x2y]    a) Sketch Jason's budget constraint, indifference curves and the interior solution in a graph. b) Calculate Jason's optimal consumption bundle, and his maximized utility level.   Suppose the price of novels increases to $7.5, while the price of DVDs and income are unchanged.   c) Calculate his new optimal bundle, show it in the same graph from a), and interpret the Marginal Rate of Substitution (MRS) at this new optional bundle (point).

Emily is a utility maximizer. Her income is $100, which she can spend on cafeteria meals and on notepads. Each meal costs $5 and each notepad costs $2.  At these prices Emily chooses to buy 16 cafeteria meals and 10 notepads. a) Draw a diagram that shows Emily’s choice using an indifference curve and her budget line, placing notepads on the vertical axis and cafeteria meals on the horizontal axis. Label the indifference curve, I1, and the budget line BL1.  Make sure you calculate the endpoints of the budget constraint. b) The price of notepads falls to $1; the price of cafeteria meals remains the same. On the same diagram, draw Emily’s budget line with the new prices and label it BL2.  c) Lastly, Emily’s income falls to $90. On the same diagram, draw his budget line with this income and the new prices and label it BL3. Is she worse off, better off, or equally as well off with these new prices and lower income than compared to the original prices and higher income?

Troy has preferences for laptops (L), and drones (D). Laptops costs $750 a unit and drones costs $2000 a unit. Troy has $15000 to spend on both goods. 1. It is known that the indifference curve is convex. What does this tell you about the relationship between the goods?

The figure below shows two of Josie's indifference curves between peaches and cream, as well as her budget constraint (the straight line). Josie, with an income of $32, faces prices of $4 for both peaches and cream. She is currently maximizing utility by consuming 4 peaches and 4 creams. Highlight Josie's current bundle. Then, show what happens to her utility maximizing bundle when Josie's income falls to $20 by drawing a new budget constraint and placing a point Josie's new bundle. Segment • Point * Undo * Redo x Reset 10 8 5. 4 3 2 1 10 Peaches

Question 3: Samantha has $3,000 to spend on two goods: sandwiches and beer. The price of a sandwich is $6 and price of a beer is $5. a) Draw Samantha's budget line. Put beer on the horizontal axis. b) If Samantha's optimal consumption bundle contains 400 sandwiches, how many beer does her optimal consumption bundle contain? Show her optimal consumption in the graph above. c) Draw Samantha's indifference curve crossing her optimal consumption bundle.

3. You have an income of $24 per week and the only two goods you consume are apples (x1) and orange juice (x2). The price per apple is $4 and the price of a bottle of orange juice is $3. Suppose that your weekly optimal consumption bundle is 4 bottles of orange juice and 3 apples . a. Illustrate this in a graph using indifference curves and budget lines. Be sure to fully label the graph. b. Write down the conditions for utility maximization and relate this to the graph that you drew. c. Now suppose that the price of apples falls to $2, and I take enough money away from you such that you are just as well off as you were before, will you buy more of fewer bottles of orange juice? Explain why or why not in words and with a graph. (Hint: think about income and substitution effects

Page of 3 > Due November 1, 2 Press Esc to exit full screen A. Jack enjoys a cup of cappuccino every morning, which is made with equal parts of steamed milk (m) and espresso(e). Suppose Jack's utility function U(m, e) = min(m, e). Graph Jack's indifference curves when U = 4 and U = 8. B. Leslie buys 2 goods: z and y. His utility function is U(z,y) = 5x+3y. 1. Plot this consumer's indifference curves when U = 15 and U = 20. What is the shape of Leslie's indifference curves? 3. For Leslie, how are these two goods related? C. Leslie's friend Tim has a different utility function for the same goods U(x, y) = √zy. 1. Plot this consumer's indifference curves when U = 15 and Ū = 20. 2. What is the shape of Tim's indifference curves? D. A consumer's utility function for goods 2 and y is U(z,y) = x+2y. 2. 1. Calculate the consumer's marginal utility for each good at (2,2) (Hint: marginal utility represents the amount of utility the consumer gains by consuming one more unit of this good. You can…

Suppose that the only items you consume are bread and wine. If the price of bread were to increase tomorrow, and if simultaneously your income were to increase by just enough so that you were equally as happy tomorrow as today, what would happen to the level of your consumption of bread ? Illustrate your answer with indifference curves

Illustrate and explain how consumer equilibrium is achieved using the indifference curve?