Microeconomics
5th Edition
ISBN: 9781118572276
Author: David Besanko
Publisher: WILEY
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Chapter 3, Problem 3.11P
To determine
To draw:
Indifference curve considering the curvature of the indifference curve is clearly depicted.
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What would be the MRS on his in difference curve between one and two containers of rice pudding?
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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…
Draw a consumer’s indifference curves for pizza and coke. Describe and explainproperties of these indifference curves.
Chapter 3 Solutions
Microeconomics
Ch. 3 - Prob. 1RECh. 3 - Prob. 2RECh. 3 - Prob. 3RECh. 3 - Prob. 4RECh. 3 - Prob. 5RECh. 3 - Prob. 6RECh. 3 - Prob. 7RECh. 3 - Prob. 8RECh. 3 - Prob. 9RECh. 3 - Prob. 10RE
Ch. 3 - Prob. 11RECh. 3 - Prob. 3.1PCh. 3 - Prob. 3.2PCh. 3 - Prob. 3.3PCh. 3 - Prob. 3.4PCh. 3 - Prob. 3.5PCh. 3 - Prob. 3.6PCh. 3 - Prob. 3.7PCh. 3 - Prob. 3.8PCh. 3 - Prob. 3.9PCh. 3 - Prob. 3.10PCh. 3 - Prob. 3.11PCh. 3 - Prob. 3.12PCh. 3 - Prob. 3.13PCh. 3 - Prob. 3.14PCh. 3 - Prob. 3.15PCh. 3 - Prob. 3.16PCh. 3 - Prob. 3.17PCh. 3 - Prob. 3.18PCh. 3 - Prob. 3.19PCh. 3 - Prob. 3.20PCh. 3 - Prob. 3.21PCh. 3 - Prob. 3.22PCh. 3 - Prob. 3.23PCh. 3 - Prob. 3.24PCh. 3 - Prob. 3.25PCh. 3 - Prob. 3.26P
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- Yungin always gets twice as much satisfaction from an extra burger as he does from an extra Boost juice. Draw (for yourself) three indifference curves for him on a graph - passing through the bundles (2 juices, O burgers), (4 juices, O burgers) and (5 juices, O burgers) respectively. Qburgers 3 2 5 Qjuice The graph above includes two budget lines with different slopes to help you answer the following question. Which conclusions can you draw about Yunqin's utility maximising choices? Select all that applies. 01 2 3 Yungin would never consume both burgers and juice at the same time Yungin always consumes only juice if Yungin' budget line is flatter than his indifference curves, then he consumes only juice if the ratio of the price of burger to the price of juice is smaller than 2, then Yunqin consumes only burgersarrow_forwardYunqin always gets twice as much satisfaction from an extra burger as he does from an extra Boost juice. Draw (for yourself) three indifference curves for him on a graph - passing through the bundles (2 juices, O burgers), (4 juices, 0 burgers) and (5 juices, O burgers) respectively. Qourger 2 1 1 2 3 4 5 Qjuice The graph above includes two budget lines with different slopes to help you answer the following question. Which conclusions can you draw about Yunqin's utility maximising choices? Select all that applies. Yunqin would never consume both burgers and juice at the same time Yunqin always consumes only juice if Yunqin' budget line is flatter than his indifference curves, then he consumes only juice if the ratio of the price of burger to the price of juice is larger than 2, then Yunqin consumes only juicearrow_forwardUsing the figure and prompt below, what is Owen's optimal consumption bundle? Figure: Consumer Equilibrium I The figure shows three of Owen's indifference curves for pizza and soda per week. Owen has $180 per month to spend on the two goods. The price of a pizza is $20, and the price of a soda is $1.50. Quantity of soda 180 160 140 120 100 80 60 40 20 0 4 pizzas and 150 sodas 6 pizzas and 40 sodas 8 pizzas and 40 sodas 14 pizzas and 20 sodas 2 4 6 8 10 12 14 16 Quantity of pizzaarrow_forward
- 8. Sara’s income is $12 a week. The price of popcorn is $3 a bag and the price of cola is $1.50 a can. The figure below shows Sara’s indifference curves for popcorn and cola. In the picture popcorn is on y-axis and cola on x-axis. a. What quantity of popcorn and cola does Sara buy to maximize her well being? What is Sara’s marginal rate of substitution at the point at which she consumes? b. Suppose that the price of cola rises from $1.50 to $3.00 a can while the price of popcorn and Sara’s income remain the same. What quantities of cola and popcorn does Sara now buy? c. What are two points on Sara’s demand curve for cola? Draw Sara’s demand curve.arrow_forwardTim consumes only apples and bananas. He prefers more apples to fewer, but he gets tired of bananas. If he consumes fewer than 29 bananas per week, he thinks that 1 banana is a perfect substitute for 1 apple. But you would have to pay him 1 apple for each banana beyond 29 that he consumes. The indifference curve that passes through the consumption bundle with 30 apples and 39 bananas also passes through the bundle with A apples and 21 bananas, where A equals 25 28 34 36 None of the above.arrow_forwardThe marginal utility for shoes and coffee is given below for five individuals. A pair of shoes costs $2, and a cup of coffee costs $1. Which of these consumers are optimizing over their choices? Explain For those who are not, how should they adjust their spending? Explain “Pasta is Miguel’s favorite meal therefore the law of diminishing marginal utility does not apply”. Do you agree with this statement? It is known that the indifference curve is convex. What does this tell you about the relationship between the goods? The income effect and the substitution effect work in the same direction for a normal good. Explain how this differs for an inferior good.arrow_forward
- A9arrow_forwardMichael and Kelly consume food and clothing. In particular, Michael currently consumes 19 units of food and 23 units of clothing and Kelly currently consumes 21 units of food and 17 units of clothing. At these levels of consumption, Michael's MRS of food for clothing is 1.50 and Kelly's MRS of food for clothing is 0.50. Illustrate with an Edgeworth box. 1.) Using the three-point curved line drawing tool, draw an indifference curve for Michael when consuming 19 units of food and 23 units of clothing. Label this curve UM. 2.) Using the three-point curved line drawing tool, draw an indifference curve for Kelly when consuming 21 units of food and 17 units of clothing. Label this curve Uk. Carefully follow the instructions above, and only draw the required objects. Clothing OK Kelly 19 21 Food Michael OM 23arrow_forwardMichael and Kelly consume food and clothing. In particular, Michael currently consumes 23 units of food and 19 units of clothing and Kelly currently consumes 17 units of food and 21 units of clothing. At these levels of consumption, Michael's MRS of food for clothing is 0.40 and Kelly's MRS of food for clothing is 2.50. Illustrate with an Edgeworth box. 1.) Using the three-point curved line drawing tool, draw an indifference curve for Michael when consuming 23 units of food and 19 units of clothing. Label this curve UM. 2.) Using the three-point curved line drawing tool, draw an indifference curve for Kelly when consuming 17 units of food and 21 units of clothing. Label this curve Uk. Carefully follow the instructions above, and only draw the required objects. Next, fill in the missing information in the following table. For simplicity, assume the consumers have the option of trading one unit of food (F) for one unit of clothing (C). Fill in the following table. (Enter your responses…arrow_forward
- A college students has two options for meals;eating at the dining hall for $6per meal or eating a Cup O' Soup for $1.50per meal.Her weekly food budget is $60.a.Draw the budget constraint showing the trade-off between dining hall meals and Cups O'Soup.assuming that she spends equal amount on both goods,draw an indifference curve showing the optimum choice.Label the optimum as point A.b.Suppose the price of a Cup O' Soup now rises to $2.Using your diagram from part(a),show the consequences of this change in price.assume that are students now spends only 30percent of her income on dining hall meals.Label the new optimum as point B.c.What happened to the quantity of Cup O 'Soup consumed as a result of this price change?What does this result say about the income and substitution effects?Explain.d.Use points A and B to draw a demand curve for Cup O'Soup.What is this type of good called?arrow_forwardDraw two indifference curves that represent Tom's preferences for sweet tea and burgers, given that he insists on consuming exactly one sweet tea for every two burgers that he eats. Then, using an arrow, show the direction in which utility is increasing. Q burgers Q sweet teaarrow_forwardAlex wants to maximize his utility. At his current level of consumption, Alex's marginal utility from an aditional cup of coffe is 15 utils, and his marginal utility from an additional can of soda is 11 utils. If the price of a cup of coffee is $3 and the price of a can of soda is 32. Alex Should:arrow_forward
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