Q39. Create your own question according to the information below. Using the budget constraint, Px*X+ Py*Y 1, assume that income is 100 TL. There is a pivoting to outwards which takes us from budget constraint I, to budget constraint I. a) Choose Y, Y3 and X, by yourself. According to these numbers, what will Px and Py be? Y 2 Y% = Y2 = Then, for , what is Px = Py = Then, for , what is Px = Py = X 1

Q39. Create your own question according to the information below. Using the budget constraint, PxX+ PyY 1, assume that income is 100 TL. There is a pivoting to outwards which takes us from budget constraint I, to budget constraint I. a) Choose Y, Y3 and X, by yourself. According to these numbers, what will Px and Py be? Y 2 Y% = Y2 = Then, for , what is Px = Py = Then, for , what is Px = Py = X 1

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 6 Burritos 9 8 7 6 5 4 3 2 1 1 3 4 5 6 7 Assume Kerri's budget constraint is represented in the graph shown. If Kerri's income to spend on these two items increases, her budget constraint will: shift in, maintaining the same slope. shift out and become flatter. shift out and become steeper. shift out, maintaining the same slope. OOOO Salads 2
Q4 Michael spends all of his money on yams and pudding. His utility function is y.5 2p.5, p.5 24.5) Op = = O p Op = = = Using the typical budget constraint (I = Pyy + Ppp) which of the following is his demand function for pudding? Reminder: 5 = √√√x 2P₂ U=p5y5 (MUp = Pp O None of the above MU, =
3. Assume that the set of alternatives is X = R2. Consider the family of budget sets B = {B(1,1),2, B3,4), B(4,2).} and suppose that the choice rule C(-) is such that C(B(1,1),2)= {(1, 1)}. (Remember that the budget set B(pipa).w has associated prices (P1, P2) and in- come w) (a) If the choice rule C() is such that the consumer demands more than 1 unit. of good 1 under B(3,4)., show that the choice structure (B, C(-)) does not satisfy WARP. (b) If the choice rule C() is such that the consumer demands less than 1 unit of good I under B(3,4), and more than 1 unit of good 1 under B(2). show that the choice structure (B, C(-)) satisfies WARP.
B.3 Marie has preferences over two goods, cake q₁ and bread q2. She chooses quantities to consume so as to best satisfy these preferences subject to the budget constraint p1q1 + P292 y where p₁ and P2 are prices and y is total budget. Suppose that Marie's preferences are represented by utility function u(q1, 92) = 91 + In (bq1 +92) where b≥ 0 is a preference parameter. Assume that p1/bp2 ≥ y/ (P1 - bp2) ≥ 1. (a) Show that Marie's indifference curves are downward sloping and that her weakly preferred sets are convex for all possible values of b. (b) Show that her Marshallian demand for cake gi is Y fi (y, P1, P2) 1 P1-bp2 and find her Marshallian demand for bread, f2 (y, P1, P2). Discuss the shape of Engel curves for the two goods. (c) Explain why Marshallian demand curves for normal goods slope down. Are there any values of b for which either cake or bread could be a Giffen good for Marie? Discuss. (d) Find the form of the indirect utility function and expenditure function and hence…
(c) Now suppose that the relevant budget constraint is I2. Would the individual choose B? Why? 3. Suppose that bundle A in the following figure is chosen by a rational individual (who respects the revealed preferences axiom) when the relevant budget constraint is Ij. (a) Is A revealed preferred to B? (b) Suppose that the relevant budget constraint is I3. Would the individual choose B? Why?
Assume that you are on an island where there are only two commodities—coconuts and pineapples—and you can spend your income only on these two foods. If the price of coconuts is Pc and the price of pineapples is Pp and your income is I, draw a budget constraint, carefully labelling the points on the two axes and where the attainable and unattainable portions of consumption are. Note: you can choose any Pc and Pp that you like—they do not have to be equal. What is the slope of this budget constraint? What is the economic interpretation of the slope? Now, let’s bring a little more structure to this diagram. Let I=£200, Pc=£1 per coconut and Pp=£2 per pineapple. Draw a new diagram using these numbers. Consider these questions: How many coconuts can you buy if you do not buy any pineapples? How many pineapples can you buy if you do not buy any coconuts? What is the slope and what economic information does it give us? Show the point of 100 coconuts and 100 pineapples on your diagram. Can…
I am not sure how to start solving the M'. Need some guidance on this so I can also plot in a graph. TY
a. Create a graph with X on the horizontal axis and Y on the vertical axis. The equation of the budget constraint is: 5X + 10Y = 500 We can rearrange this to solve for Y: Y = (500 - 5X)/10 b. Plot a graph with the point (50, 25), where they spend half their income on each good. c. If the household income doubles to Rs. 1,000, the new budget constraint would be: 5X + 10Y = 1000 Rearranging for Y: Y = (1000 - 5X)/10 d. If after the change the household spends Rs. 200 on Y and Rs. 800 on X, we can plug these values into the budget constraint to solve for X and Y: 5X + 10Y = 1000 5(800) + 10(200) = 1000 This equation is not satisfied, so we can conclude that the household cannot spend Rs. 800 on X and Rs. 200 on Y with the new budget constraint.
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Use the following information to answer questions 1 through 8: A student has a monthly budget of $120 to spend on either burritos, which cost $6 each, or sodas, which cost $4 each. 1. What is the largest number of burritos that the student could afford to purchase in one month? 2. What is the largest number of sodas the student could afford to purchase in one month? 3. Draw the student's budget constraint. Put burritos on the x-axis and sodas on the y-axis. 60+ -50 40 -30 -20 -10+ 10 20 30 40 50 60
If the consumer's budget constraint is given by 4P + 2B = 50 where P is Pizza and B is Burgers, the following bundles of Pizza and Burger would be on the budget constraint: P = 5; B = 10 P = 2; B = 21 P = 10; B = 20 %3D P = 2; B = 24
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