Px Suppose that a consumer consumes at a point on the Budget line where MRS,y In order to PY increase total utility, what adjustment should consumer make? Buy more X and less Y Nothing can be done since income is not sufficient. Buy more Y and less X Buy more X and Y.

Consumer Theory Daniel spends all his money on only two goods: chocolates (good 1) and milkshakes (good 2). We have information about his purchases, income and prices for 4 weeks: A, B, C and D. For each week, the budget line and the goods bought are shown on the graph below. a)  Suppose that Daniel’s preferences are transitive and satisfy "more is better". Shade all the bundles that you are certain are worse for Daniel than bundle A in one colour, and all the bundles that you are certain are better for Daniel than bundle A in a different colour. (You can use different patterns instead of colours.) Indicate which is which. Explain.

How does the law of diminishing marginal utility relate to changing income? Select one: a. The marginal benefit of an extra dollar of income rises as income rises. b. The marginal benefit of an extra dollar of income falls as income rises. c. The total utility gained from a small income is higher than the total utility gained from a high income. d. The total utility gained from a high income is higher than the total utility gained from a low income.

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…

A consumer currently spends a given budget on two goods, X and Y, in such quantities that the marginal utility of X is 15 and the marginal utility of Y is 8. The unit price of X is $3 and the unit price of Y is $2. The utility-maximizing rule suggests that this consumer should Multiple Choice a. decrease consumption of product X and increase consumption of product Y. b. increase consumption of product X and increase consumption of product Y. c. decrease consumption of product Y and increase consumption of product X. d. stick with the current consumption mix because it yields maximum utility.