Using graphical analysis show how the following demand curves can be derived from indifference curve approach to understanding consumer behavior: What are the main assumptions for each of these demand curves? a) Marshallian demand curve b)Hicksian demand curve
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Using graphical analysis show how the following demand curves can be derived from indifference curve approach to understanding
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- The horizontally oriented definition of DEMAND states that "demand is the quantitites of a good that buyers are willing and able to buy at various prices in a given time interval." Which of the following statements are TRUE? If I really like a good, it does not matter how much I am able to afford to spend on it. The demand for a good is a specific amount. Demand is a behavioral relationship expressing what quantities buyers would want and be able to buy at various prices. If I can't afford to buy a product at today's available prices, I do not have a demand. The demand is all the possible price quantity combinations Demand depends on the availability of supply. Demand is a relationship between price as a variable and quantity demanded as a variable. Demand is a flow and requires a time interval be be fully understood.How does the utility-maximization model help highlight the income and substitution effects of a price change. Provide an example please.Discuss four (4) factors that affect an individual demand curve.
- Explain graphically how indifference analysis can be used to derive a demand curve.Consider that there are two goods, good X and good Y, which are perfect substitutes. The consumer has the utility function given by: U(X,Y)= X + aY The prices of the goods are given by px = 3 and py = 6, respectively. The income of the consumer is given by I = 100. a) Choose a value for parameter "a" by yourself. Graphically illustrate the budget line of the consumer and draw some example indifference curves. Then, find the consumption bundle that maximizes the consumer's utility. b) List the possible outcomes for different values of parameter "a".Discuss how the utility-maximization model helps highlight the income and substitution effects of a price change.
- First, graphically illustrate a doubling of income without price changes in the indifference curve model. Next, on the same graph, show a situation in which the person whose indifference curves you are drawing buys considerably more of good B than good A after the income increase. What can you conclude about the relative coefficients of the income elasticity of demand for goods A and B.This module considers important concepts in economics: Total Utility, Marginal Utility, Diminishing Marginal Utility, and Utility Maximization within a budget constraint. These tools can be applied to personal decision making, particularly the consumption choices we make. Microeconomics often considers rational optimizing behavior by individuals, including consumers. Use the Law of Diminishing Marginal Utility to discuss why Market Demand has to have a downward slope. In other words, in order for consumers to demand a higher quantity of an item, its price must fall. Also use the Law of Diminishing Marginal Utility to explain why consumers often prefer to purchase a variety of goods and services (in other words, we are unlikely to fill a grocery cart with many units of the exact same product). Finally, use the utility optimizing condition that the ratio of Marginal Utility to Price for any good has to be the same across all goods to justify why it may be rational behavior to buy an…Economics Suppose that an individual receives utility from two goods X and Y and his utility function is given by: u = -1/X –1/Y. a) Derive the Marshallian and Hicksian demand functions for X and Y. b) How would you determine whether X and Y are gross substitutes or gross complements? c) How would you determine whether X and Y are net substitutes or net complements?
- Explain how non-convexity in choice can result in multiple optimal choices. Provide a graphical solution.Based on the graphical representation in Figure 1, calculate the price elasticity of demand for ibuprofen. Address the following questions when crafting your answer: What impact would a price increase have on the demand for ibuprofen and on consumer surplus given the price elasticity of demand depicted in Figure 1? What factors usually influence a resource’s price elasticity of demand? In the real world, you might expect the consumption choices of ibuprofen to be affected by brand-name versions of ibuprofen, such as Advil. Would you expect the brand-named products to have the same elasticity of demand as generic ibuprofen?What is a willingness to pay? How does this relate to the concept of demand? When determining the cost of manufacturing a product, what considerations are included in the cost? Provide an example of a product and explain each consideration in relation to your example. When purchasing construction materials for a home renovation, what factors should a homeowner consider? Provide an example of a green building product—a sustainable alternative construction material—and explain each factor in relation to your example. Address how the choice of using this particular green building product might influence and be influenced by supply and demand. What assumptions do economists make? Why does each assumption matter in environmental economics? Is the environment an economic asset? Is the environment a social asset? How does global demand for fish affect marine natural resource economics? How is the supply of forest goods influenced by privately and publicly owned forests? Why has supply and…
