Use a general utility function and general prices and income to derive the equal marginal principle.  Using an indifference curve and budget constraint graph to illustrate reallocation when the equal marginal principle does not hold.

Q: Mrs. Rochester earns $4500 a week and spends her entire income on computers and pastries, since…

A: a )  Mrs. Rochester insist that for every computers she buys, she must also buys a pastry's. This…

Q: Further assume that the price of good x, px = $6, the price of good y, py = $8 and the individual…

A: Utility: It refers to the maximum satisfaction which a consumer gets from the purchase of the goods…

Q: Why does the optimal consumption bundle occur where the budget line is tangent to the indifference…

A: Answer: Introduction: A consumer maximizes his/her consumption where the slope of the budget line is…

Q: Celine won the prize at the end-of-year party and she had to choose between a $100 Amazon gift card…

A: The budget line is a graphical representation of all possible combinations of the two commodities…

Q: Suppose that you have an income of $20 to spend on sticky hands and gumballs. Both cost $1.00.…

A: Answer: The new budget constraint is given below: Let the sticky hands is shown on y-axis and…

Q: Does a Budget constraint has only one individual indifference curve? Does every isocost line has a…

A: Budget constraint represent the amount or combination of goods that is affordable with the given…

Q: Create a diagram with axes representing the quantities of XA and XB. Plot the original and new…

A: Substitution effect measures the change in the quantity of the commodity when the price of the…

Q: indifference curve at utility level equal to 20 is?

A: Utility means the satisfaction that a consumer gains from consuming a product or service. Utility…

Q: Sally loves to drink her coffee with two teaspoons of sugar. The unit price of coffee is $3 and the…

A: The budget line shows the different combinations of two goods that a consumer can consume given the…

Q: draw a graph of indifference curves and budget line. including explain the meaning of the marginal…

A: The MRS of X for Y is defined as the amount of Y which can be given up by the consumer to gain an…

Q: Suppose a consumer’s preferences for goods Y and X can be represented by the utility function,…

A: It is said that a consumer maximizes utility at that point where the slope of its indifference curve…

Q: The diagram below shows one of Popeye's indifference curves (relating bottles of pure olive oil to…

A: Utility is the satisfaction derived from the consumption of goods.  Marginal utility is the utility…

Q: Decompose the change into income and substitution effects

A: The price of pillows has increased from $35 to $40 per pillow, while the price of sodas remains…

Q: Saima works as a free-lance worker at a software house in Rawalpindi. Suppose she keeps awake for…

A: We are going to discuss Consumption-Leisure tradeoff to answer this question. Note:  We are going to…

Q: Draw a budget constraint for an individual where if all income is dedicated to consumption of good…

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

Q: Philip's quasilinear utility function is U = 4√/91 +92. His budget for these goods is Y = 10.…

A: is

Q: Using a graph, draw a set of indifference curves that are not locally non- satiated. Explain in…

A: An indifference curve refers to a graphical depiction of a combined product that offers a buyer a…

Q: What are the three properties of indifference curves for two goods?

A: An indifference curve is a graph that displays possible pairings of two goods or commodities that,…

Q: Consider the following figure showing three budget lines corresponding to a change in income (with…

A: Income elasticity of demand: - Income elasticity of demand measures the responsiveness of change in…

Q: Mrs. Griffiths earns $5000 a week and spend her entire income on dresses and handbags. Since these…

A: The indifference curve shows the combination of two goods and services that gives the same…

Q: a & c have already been answered, mainly looking for help on b, d, e and f. Thank you so much!…

A:

Q: Suppose that the indifference curves drawn between Pizza and burgers are concave to the origin.…

A: The indifference curve is concave to the origin in a situation where the marginal rate of…

Q: Use the image 2.2 below to answer this question. The slope of the indifference curve is given by…

A: Marginal utility describes the benefits or utility obtained from consumption of a commodity. It is…

Q: The price of coke is $1.50 (y axis); the price of burger is $4.50 (x axis). Suppose that Ahmed does…

A:

Q: Explain what is meant by the Income and Substitution Effects? With the help of standard Indifference…

A: The interaction between the income and substitution effects will determine how the quantity required…

Q: a) In words describe what the Marginal Rate of Substitution represents. b) Explain why two…

A: a) The marginal rate of substitution is referred to the amount of a particular good that a consumer…

Q: Suppose that the following utility function is given U(X,Y) = x2+Y Which of the following is…

A: A utility function is said to be convex utility preference if its quasi concave which implies the…

Revealed Preferences and Budget Constraint Analysis

Revealed means “Let Out,” and Preference means “Choice”; Choice Reveals Preference.