The figure shows three indifference curves and a budget constraint for a consumer named Hannah. When young, Hannah works and earns Consumption when Old 50,000 income. When old, she is retired and earns no income. 25,000 D 20,000 40,000 Consumption when Young At two of the four labeled points, Hannah is equally happy. Identify those two points. Of the four labeled points, which is (are) affordable to Hannah? Hannah's optimum is at point How much income does Hannah earn when she is young? What is the value of the interest rate that Hannah earns on her saving? If Hannah chose to spend $30,000 on consumption when young, then how much could she spend on consumption when old? Hannah could afford to be at point A if the interest rate were to

NIVERSITY DURAI Consider the following data describing the change in Nora's utility when she consumes various levels of Nuts and chocolate per week, the price per portion for the considered goods are respectively AED 20 and AED10. Nora has a budget equal to 160 per day to spend on her snack. Q Nuts Total UtilityQ Chocolate Total Utility ChocolateMU Nuts MU ChocolateMU/ AEDMU/AED MRS Chocolate Nuts Nuts 40 1 28 72 52 100 3. 72 4 124 88 144 5. 102 160 6. 114 7 172 122 1. Complete the table above by calculating the marginal utility, the marginal utility per dollar spent and marginal rate of substitution for each good. 2. Identify the potential set of equilibrium points Where MUI/P1=MU2/P2 Nuts Chocolate Income 2. 2. 6.

Explain the consumer equilibrium point by using Indifference Curve Approach andthe Budget Line. What is the necessary condition for the consumer equilibrium? Explain whyconsumer is not in equilibrium if this condition does not fulfil

ceriuppose that Isaiah has a weekly fixed budget and spends it all on haircuts and ice cream. At his current combination arof consumption, the marginal utility of the last dollar spent on haircuts is greater than the marginal utility of the last dollar spent on ice cream. Has Isaiah maximized his utility? A C E Yes, because changing his current consumption combination will reduce his total utility B No, because he can increase his total utility by purchasing more haircuts and D fewer ice creams Yes, because he has purchased 2 goods in proportion so that he can get- the maximum utility from each Yes, because he purchased the maximum possible with a limited budget No, because he can increase his total utility by purchasing fewer haircuts and more ice creams

7. Bob receives utility from days spent traveling on vacation domestically (D) and daysspent traveling in a foreign country (F) as given by the utilityU(D; F) = DFThe price of a day spent traveling domestically is 160 pounds and in a foreigncountry 200 pounds. Bobís annual budget for traveling is 8000 pounds. (a) Find Bobís utility maximising choice of days traveling domestically and of daystravelling in a foreign country. Find also his utility level from consuming thatbundle.  Suppose that the price of domestic traveling increases to 250 pounds per day.Denoting his budget for traveling x, (suppose by now that it is unknown) findthe demand for D and F under the new prices as a function of x.

1. What will be her total utility from both leisure and income when working 25 hours per week?   2. Does it make sense from the perspective of utility for Terry to increase her work hours? (Think about the total utility calculations.). Why or Why not?

Terry decides to increase her work hours from 20 to 25 hour per week.   1. What would be her marginal utility loss from having less leisure time?  2. What would be her marginal utility gain from having additional income?

You are in the market for a new couch and havefound two advertisements for the kind of couchyou want to buy. One seller notes in her ad that sheis selling because she is moving to a smaller apartment, and the couch won’t fit in the new space.The other seller says he is selling because the couchdoesn’t match his other furniture. Which seller doyou expect to buy from? Why? ( Hint: Think whowould be the more motivated seller.)

The total utility schedule of Sharon is given below for the number of shoes she consumes. i. Calculate Sharon’s marginal utility schedule. ii. Plot a graph of total and marginal utility. iii. What is the maximum number of shoes that Sharon will consume? Explain  Number of Shoes          Total Utility                                    Marginal Utility1                                        100    2                                        2003                                        2754                                        3255                                        3506                                        3607                                        3608                                        355 b. Assume that Mania has $1,200 per month to spend between dinners at a Japanese restaurant and evenings at Cru, a local bar. Assume that going to Cru costs $25 and eating at the restaurant costs $14. a. Draw Mania’s budget constraint with restaurants on the horizontal axis.b. Suppose…

5.2 David gets $3 per week as an allowance to spend any way he pleases. Because he likes only peanut butter and jelly sand- wiches, he spends the entire amount on peanut butter (at $0.05 per ounce) and jelly (at $0.10 per ounce). Bread is pro- vided free of charge by a concerned neighbor. David is a par- ticular eater and makes his sandwiches with exactly 1 ounce of jelly and 2 ounces of peanut butter. He is set in his ways and will never change these proportions. a. How much peanut butter and jelly will David buy with his $3 allowance in a week? b. Suppose the price of jelly were to increase to $0.15 an ounce. How much of each commodity would be bought? c. By how much should David's allowance be increased to compensate for the increase in the price of jelly in part (b)? d. Graph your results in parts (a) to (c). e. In what sense does this problem involve only a single commodity, peanut butter and jelly sandwiches? Graph the demand curve for this single commodity. f. Discuss the…