MRS=-20 along Ray 1 , MRS=-15 along Ray 2 Draw this consumer’s budget constraint, BAB, andindifference curve. Be sure to label your graphcompletely. Ignore all other indifference curves and bundle ### Analysis of Economic Equilibrium**Graph Explanation:**This graph illustrates economic equilibrium between earnings (denoted as "ee" in thousands of dollars) and tools. The vertical axis represents the earnings in thousands of dollars (ranging from 35 to 60), while the horizontal axis represents the quantity of tools (ranging from 0 to 360).**Curves:**- There are three slightly curved lines plotted, representing different levels of economic equilibrium.- Points on each curve show specific equilibrium states where earnings and tools are balanced.**Data Points:**- Specific data points are marked with black dots, indicating equilibrium conditions under varying numbers of tools: - Earnings at 60, 54, 36, and 35 thousand dollars are shown for different tool quantities. - Tools at 200, 300, 333 1/3, 350, and 360 correspond to these earnings.**Labels:**- The labels #1 and #2 point to specific equilibrium curves.**Interaction:**- Vertical dashed lines indicate the position of the equilibrium points on the horizontal axis (tools).- Horizontal dashed lines show the correlation on the vertical axis (earnings).This graph serves as a visualization of how changes in tool availability affect economic earnings within different equilibrium states.

MRS=-20 along Ray 1 , MRS=-15 along Ray 2 Draw this consumer’s budget constraint, BAB, and indifference curve. Be sure to label your graph completely. Ignore all other indifference curves and bundle

MRS=-20 along Ray 1 , MRS=-15 along Ray 2 Draw this consumer’s budget constraint, BAB, and indifference curve. Be sure to label your graph completely. Ignore all other indifference curves and bundle

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: Given above are some of the indifference curves for a student who consumes Burritos and Pizzas and…

A: Since you have posted a question with multiple sub parts, we will provide the solution only to the…

Q: Exercise 2 Utility 1. Muhammad derives utility from only two goods, curry (Qc) and drinks (Qd).…

A: The information given is:- We have two goods:- Curry - Qc Drinks - Qd Income of Muhammad = RM240…

Q: 3. Consumer Optimization Utility Function: U = In (x) + 2*In (y) Budget Constraint: 50 = x + 2y Find…

A: A budget constraint addresses every one of the mixes of goods and services that a buyer might buy…

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: A utility maximizing consumer with preferences u(x, y)-x¹/2y1/2 allocates 60 dollars towards the…

A: Utility refers to the level of satisfaction a consumer obtains from the consumption of goods or…

Q: Suppose Tom has $60 in income and only buys cheese and tuna. Walmart charges $2 for a can of tuna…

A: # Tom's budget: - $60 in income - $2 for a can of tuna and $4 for a block of cheese # Initially…

Q: Q.4 Consumer attains his/her equilibrium at a point where the budget line: (a) Is below indifference…

A: Indifference curve: - it is the graphical representation of different combinations of two goods that…

Q: if there are 2 products, milk and yoghurt, how can we understand the satisfaction maximization…

A: In the context of consumer choice and satisfaction maximization, a budget line represents all…

Q: How does a rational consumer choose his optimal consumption bundle? Graphically show the…

A: The economics as a study is based upon the idea that the economies, and the societies around the…

Q: Consumer attains his or her equilibrium at a point where the budget line:- (1) is below indifference…

A: The consumers in an economy are considered to be one of the most important entities in the market.…

Q: 6. A consumer has an expenditure function given by E = Ū(²+¹). When the consumer has an income of…

Q: Which of the following indifference curves is not possible given the consumer's budget line? Utility…

A: An indifference curve is a graphical representation used to show the different combinations of two…

Q: 4. Yumi's utility for music downloads (M) and video games (V) is given by the function U(M,V)=24M²-…

A: We will use Lagrange :

Q: A consumer has an expenditure function given by E = Ū(P +Pr). When the consumer has an income of…

A: The maximum utility can be defined as the highest level of satisfaction, well-being, or benefit that…

Q: Explain the consumer’s Preferences and the Indifference Curv

A: Economics: It is the study of the manner of organizing money, business and industry.

Q: Becky likes going to the ballpark to watch baseball, and she also is fond of going to the theater to…

A: An indifference curve shows the various combinations of two goods that give the consumer equal…

Q: Using the income amount you just computed, complete the following table by finding the price of a…

A: Lattes is measured on Y-axis Scones is measured on X-axis. --------------------- Y-axis intercept of…

Q: BALLGAMES 8. Normal and inferior goods Larry likes going to the ballpark to watch baseball, and he…

A: The budget constraint is the graphical representation of the relationship between bundles of…

Q: 3.11. Consider a consumer who is demanding goods 1 and 2. When the price of the goods are (2, 4), he…

A: Demand: It refers to the things that people consume. The increase in demand makes the increase in…

Q: A consumer has a budget of $72 to consume X and Y, and Px-$2 and Py-$2. Suppose the consumer's…

A: Given information U=X0.5Y0.5 Px=2 Py=2 M=72 Budget constraint M=Px*X+py*Y

Q: A consumer's preferences for food (x) and clothing (y) are represented by the utility function ?x,y…

A: A consumer's preferences for food (x) and clothing (y) are represented by the utility function Ux,y…

Q: Question 10 If look at the indifference curves and budget constraint for two goods, X and Y, we can…

A: An indifference curve is a graphic representation of a collection of products that give consumers…

Q: Susan buys bagels and falafels. The price of a falafels is £1 and the price of a bagels is £3. Susan…

A: Price of F=1Price of B=3M=12Budget constraintPF*F+PB*B=<M1*F+3*B=<12

Q: Consider the utility function U(x, y) = xy + x. Which of the following bundles is not on the same…

A: We have to calculate the value of U for all (x,y). The bundle which gives the different result will…

Q: Draw a consumer’s indifference curves for pizza and coke. Describe and explain properties of these…

A: Indifference curves are graphical representation of consumer's preference. The consumer finds all…

Q: The figure shows two of Laura's indifference curves and three budget lines: B, when her income is $4…

A: In economics, the term "substitution effect" describes how changes in the relative costs of goods…

Q: For Daniel, Pepsi and pizza are complementary products. He consumes a Pepsi with two slices of…

A: Complementary goods are products that increase in price when the demand for relative merchandise…

Q: What are indifference curves?

A: The utility is a want satisfying power of a commodity. Marginal utility is the additional utility…

Q: 3. Sam has set aside $480 for entertainment this month, which is golf (x) and/or bowling (z). A…

A: Given utility function is form of perfect substitute utility function, perfect substitute goods…

Q: What information is contained in an indifference curve? Why are such curves (a) Downward sloping and…

A: The indifference curve consists of a set of points that represents a different combination of…

Q: With use of graphical illustration discuss the optimal consumption bundle of an consumer

A: The graph that depicts different combinations or bundles of consumption for two commodities or goods…

Q: At last time you have answered my question ,but I still have some problems want to ask you and there…

A: To understand the concepts of the Indifference Curve and Budget Line, let us first understand the…

Q: Discuss the income and substitution effect of consumer equilibrium with indifference curve. Also…

A: Indifference curve: It refers to a curve that shows the set of goods and services the consumer has…

Q: Alex has a monthly budget of $72 to spend on commuter train trips and organic pasta. Each train trip…

A: “Since you have posted a question with multiple sub parts, we will provide the solution only to the…

Q: 5. Becky plays the cello as part of a string duo and advertises booking opportunities using…

A: The optimal combination is that combination of two goods that when consumed gives the maximum…

Q: Suppose the state government establishes a program to subsidize public transportation for commuters,…

A: The possible combinations of two commodities that might maximize the consumer's utility are analyzed…

Q: Abby likes tangerines and oranges. For every 4 tangerines, Abby is equally happy to consume 2…

A: We need to find combinations of x and y (number of tangerines and oranges, respectively) that give…

Q: What would happen to the utility maximising bundle due to income decreasing... (ceteris paribus) ?

A: Utility maximizing:- People and organizations pursue utility maximisation as a strategic strategy…

Q: Given above are some of the indifference curves for a student who consumes Burritos and Pizzas and…

A: The utility function refers to all those commodity bundles that derive the same amount of utility…

Q: A consumer has an expenditure function given by E = Ū (²² +). When the consumer has an income of…

A: The expenditure function provides the minimum cost that a consumer incurs to achieve a certain level…

Q: Emily is a utility maximizer. Her income is $100, which she can spend on cafeteria meals and on…

A: A budget line is a graphical illustration of all feasible combinations of goods that can be…

Concept explainers

Marginal Rate of Technical Substitution

MRTS reaches a manufacturer when a part of the product is lowered to sustain the manufacturing level when the other part is extended. It is the level of the quantity that is lowered when one extra volume is used, and the output is unchanged.

Preferences and Utility Analysis

Before understanding what is preference and utility analysis, it is very important to understand the terms preference and utility separately.

Question

MRS=-20 along Ray 1 , MRS=-15 along Ray 2

Draw this consumer’s budget constraint, BAB, and

indifference curve. Be sure to label your graph

completely. Ignore all other indifference curves and bundle

### Analysis of Economic Equilibrium

**Graph Explanation:**

This graph illustrates economic equilibrium between earnings (denoted as "ee" in thousands of dollars) and tools. The vertical axis represents the earnings in thousands of dollars (ranging from 35 to 60), while the horizontal axis represents the quantity of tools (ranging from 0 to 360).

**Curves:**
- There are three slightly curved lines plotted, representing different levels of economic equilibrium.
- Points on each curve show specific equilibrium states where earnings and tools are balanced.

**Data Points:**
- Specific data points are marked with black dots, indicating equilibrium conditions under varying numbers of tools:
- Earnings at 60, 54, 36, and 35 thousand dollars are shown for different tool quantities.
- Tools at 200, 300, 333 1/3, 350, and 360 correspond to these earnings.

**Labels:**
- The labels #1 and #2 point to specific equilibrium curves.

**Interaction:**
- Vertical dashed lines indicate the position of the equilibrium points on the horizontal axis (tools).
- Horizontal dashed lines show the correlation on the vertical axis (earnings).

This graph serves as a visualization of how changes in tool availability affect economic earnings within different equilibrium states.

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 by step

Solved in 2 steps with 1 images

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

What information is contained in an indifference curve? Why are such curves (a) downsloping and (b) convex to the origin? Why does total utility increase as the consumer moves to indifference curves farther from the origin? Why can’t indifference curves intersect?
5
b. Explain the relationship between the budget constraint and indifference curve at consumer optimum.
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?
Examine and show with a graph how a consumer attains equilibrium under the Indifference curve analysis.
Subpart 7 only
Define A consumer prefers a higher indifference curve to a lower one.
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
Draw a budget constraint and indifference curves for two goods-cheese and wine. Show what happens to the budget constraint and the consumer's optimum when the there is an increase in income tax by 10 percent.
I have completed question 4 but need help with question 5. Data needed to answer 5 in included in question 4