Maria has a fixed weekly budget which she has been spending on goods A, B, and C.Her utility function exhibits a diminishing marginal rate of substitution. She uses theequi-marginal principle to decide how much to purchase of each product. Suppose thatfor Maria's current consumption bundle it holds thatMUAMUBMUCPAРвPCYou may assume that she has spent her entire budget. If Maria wishes to maximiseutility, next week, she shouldA) buy product A only.B) buy products B and C only.C) buy less of A and more of B and C.D) buy more of A and less of B and C.

The marginal rate of substitution refers to a consumer's willingness to swap one good for another as…

Her utility function exhibits a diminishing marginal rate of subs equi-marginal principle to decide how much to purchase of each For Maria's current consumption bundle it holds that MUA MUB MUC РА PB PC You may assume that she has spent her entire budget. If Mar itility neyt week she should

Her utility function exhibits a diminishing marginal rate of subs equi-marginal principle to decide how much to purchase of each For Maria's current consumption bundle it holds that MUA MUB MUC РА PB PC You may assume that she has spent her entire budget. If Mar itility neyt week she should

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Explain the relationship between the budget constraint and indifference curve at consumer optimum.

A: Consumer optimum is the point of consumer's equilibrium where they get maximum level of…

Q: Given this consumption bundle, the marginal rate of substitution is equal to included ) your alssRE

A: Marginal rate of substitution (MRS) is the rate of substitution of one good for another good while…

Q: Refer to the information provided in Figure 6.5 below to answer the questions that follow. Oel's…

A: 23. Given Oels budget constraint CD. If her income increases, Oel can consumer more of both the…

Q: Is it pessible fek matginal utility to be negative and yet tola wWility to be pessitive hy of why…

A: Utility refers to the satisfaction which an individual receive from the consumption of a good, or…

Q: Suppose s consuming troo gods.coffee land beerShe spendo all her income on a combination. 6f coffee…

A: We are going to discuss the Utility maximization problem in case of Perfectly Substitutes Case to…

Q: 56. When Marginal Utility is positive, Total Utility A. O Increases B. O Decreases C. O Remains…

A: To find: What happens to total utility when marginal utilities will be positive.

Q: Adwoa purchases only pasta and salad with her income of ghc 160 a month. Assume the price of pasta…

A: Here we are given consumer's budget which includes price of both the goods and the income. And hence…

Q: If a consumer starts at point A, and then receives an income in current income, this would appear as…

A: Budget constraint refers to a a graphical representation of all possible combination of two goods…

Q: Income S60 - 60 Peola 51 Pizza Income $60 Ppizza $10 5. Refer to Scenario#1. If the price of cola…

A: A Complementary good is any good or service that adds value to another. In other words, two goods…

Q: Suppose Ming spends his entire income on two goods, X and Y, has "standard-looking" indifference…

A: Here, the information is given about Ming who spends his income on two goods, X and Y, and the price…

Q: Suppose Ming spends his entire income on two goods, X and Y, has "standard-looking" indifference…

A: An indifference curve is a graphical representation of the level of utility that a consumer derives…

Q: Harry consumes 2 goods, and he spends Nobo r month The of per is N$4 and the price price good Yis…

A: According to the question given that U(X, Y) = 0.5XY Px = N$4 Py = N$10 I = N$60 So the budget line…

Q: Rachel plans to hold a pizza party for her friends. Below is data on Rachel's utility for pizza in…

A: Answer to the question is as under:

Q: Caleb has an Income of $100 and a utility function u(x.y)-2x 4y. Say that the price of x is $4 and…

A: Utility: It refers to the level of the satisfaction. The more satisfaction will help the consumer to…

Q: plans to hold a pizza party for her friends. Below is data on Rachel's utility for pizza in terms of…

A: Answer to the question is as follows:

Q: Question 3 Quantity Total Utility Marginal Utility 150 2 320 3. 450 4 520 5 550 6. 550 7. 430 8 300…

A: We are going to use concepts such as budget constraints, Utility maximisation to answer this…

Q: explain the principles, concepts , and theories underlying individual cosumers beahvaiour with…

A: A rational consumer is going to be in equilibrium when his utility is maximized within a given…

Q: Pls help with thsi question I am stuck Given the image attatched: 1.Given the above Marginal…

A: Optimal consumption bundle: The optimal consumption bundle is such that at that bundle the…

Q: Soru 23 Which of the following is FALSE? Henüz cevaplanmadı Lütfen birini seçin: 4 üzerinden O A. If…

A: Answer - Need to find- Which statement is false Evaluating the options :- A.If the money income of…

Q: Utility function = min tc, +2C,, 2C, +6 } a) At uhat price ouly Consume G and no C.? b) de uhat…

A: The perfect complements would result in the goods which are complement to each other. The perfect…

Q: What combination of units of products U, W, X, Y, and Z will maximize total utility for a person…

A: A consumer consumes goods and services because it provides the utility of the consumer. The utility…

Q: There ore two difarnt goods. (0 Budget Line (", 0) Whot can we say about consumer's optimal bundle?

A: In a market, when talking about consumer's welfare it can be said that an individual will always try…

Q: MUJ If the current bundle of food (f) and clothing (c) to be purchased by a consumer is such that Pf…

A: Utility maximizing consumption bundle is when marginal utility per dollar spent on the good is equal…

Q: of 3 ZOOM 3. Draw a graph with an indifference curve and a budget line for two goods, movies…

A: Indifference curves are defiend as the locus of all the points with equal level of satisfaction.Some…

Q: 4 ...... Lightbulbs 25 24 BL1 20 BL2 16 -IC 2 10 15 Batterie The graph shows Maddy's budget and one…

A: Consumer will maximise its utility at a point where the slope of a budget line is equal to the slope…

Q: Bucdset linc Siven y AB Indiffurence Curies are Circular Arrows point tawards better Lundles is…

A: Indifference Curve is defined as a curve which shows a combination of two goods which gives a…

Q: whitity function O Ue total derivat ive to ferive Mes ŏ let a (2,, Xx)=x,+22,, be gmasther uEility…

A: Given Utility function ux1,x2=x1+2x22 ........... (1) We know that MRS=MUx1MUx2

Q: U = 340x1 +960x2 + 2x1x2 – 2x – /2, when the weekly amount of leisure is x1 = 132 and earned income…

A: Since you have posted a question with multiple subparts, we will solve only first three subparts for…

Q: What price you understand by and budget Consumer has do line? line that Assuming monthly he Spends…

A: A budget is defined as an estimation of revenue and expenditures over a period of time. Revenue…

Q: Troy has preferences for laptops (L), and drones (D). Laptops costs $750 a unit and drones costs…

A: GIVEN Troy has preferences for laptops (L), and drones (D). Laptops costs $750 a unit and…

Concept explainers

Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.

Question

Maria has a fixed weekly budget which she has been spending on goods A, B, and C.
Her utility function exhibits a diminishing marginal rate of substitution. She uses the
equi-marginal principle to decide how much to purchase of each product. Suppose that
for Maria's current consumption bundle it holds that
MUA
MUB
MUC
PA
Рв
PC
You may assume that she has spent her entire budget. If Maria wishes to maximise
utility, next week, she should
A) buy product A only.
B) buy products B and C only.
C) buy less of A and more of B and C.
D) buy more of A and less of B and C.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

K Paul consumes only books and DVDs. At his current consumption bundle, his marginal utility from DVDS is 25 and from books is 3. Each DVD costs $13, and each book costs $2. Is he maximizing his utility? Explain. Let MUB be the marginal utility of books, MUD be the marginal utility from DVDs, PB be the price of books, Pp be the price of DVDs, and MRS be the marginal rate of substitution. Paul is OA. maximizing his utility because MUB PB = MUD PD MUB MUD OB. not maximizing his utility because < PB PD MUB OC. maximizing his utility because MRS = MUD MUB MUD OD. maximizing his utility because < PB PD MUB O E. not maximizing his utility because MRS < MUD If he is not, how can he increase his utility while keeping his total expenditure constant? Paul could increase utility while keeping total expenditures constant by consuming more and fewer
Maya divides her income between coffee andcroissanls (both of which arc normal goods). An earlyfrost in Brazil causes a large increase in the price ofcoffee in the U nitcd Stites.a. Show the eflcct ol the frost on Maya's budgetconstraint.b. Shm" the effect ol the frost on Maya's optinu,loonsumption bwl<ile assunling that the substitutioneflcct outweiglls the income effect for croiss:mls.c. Show the eflcct of the frost on Maya's optimalconsumption bw,dle assuming that the incomeeffect outweighs the substitution effect forcroissants
Marginal utility is negative only when quantity demanded is negative. Select one: O a. True Ob. False Clear my choice 4
Amadea spends all her income on pizza,chocolate milk, and music streams. The price of pizza is $4 per slice and price ofchocolate milk $2 per bottle. At Amadea's current consumption level, her marginalutility for pizza is 50 units per slice and for music 100 units per stream. Assuming thatAmadea is a utility maximizer, how much is (a)her current marginal utility for a bottleof chocolate milk, and (b) the price of streams she buys. Show your work. [Hint: Ch 6:Utility-maximizing formula)
pls solve asap
Suppose a student has monthly income of Rs 20,000. He consumes only two commoditiesSandwich and Shawarma. The cost of Sandwich is Rs 100 each, and the cost of Shawarma isRs 200 each.a) Draw the student’s budget constraint. What is the slope of his budget constraint?b) Suppose student gets a raise, so his income increases from Rs 20,000 to Rs 24,000. Showwhat happens to consumer optimal consumption choice if both Sandwich and Shawarmaare normal goods. Now show what happens if Sandwich is an inferior good.c) Suppose consumer income decreases to Rs. 16,000. Show what happens if both Shawarmaand Sandwich are normal goods. Now show what happens if Sandwich is an inferior good.
ê Suppie Concumer bes a utility function 4 x, (x,+2=) and facer a M. 'Derive and giet ber dem and for goed 2.
Please assist wirh question d and e
None