EBK MICROECONOMICS
5th Edition
ISBN: 9781118883228
Author: David
Publisher: YUZU
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Question
Chapter 4, Problem 4.21P
To determine
To evaluate:
The revealed preference analysis andexplain the way the individual ranks her initial and later baskets.
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Students have asked these similar questions
Explain why it is that as the consumer purchases more of a good, her marginal utility falls while her total utility rises.
Ray buys only hamburgers and bottles of root
beer out of a weekly income of
$100. He currently consumes 20 bottles of root
beer per week, and his marginal
utility of root beer is 6. The price of root beer is $2
per bottle. Currently, he also
consumes 15 hamburgers per week, and his
marginal utility of a hamburger is 8.
Is Ray maximizing utility at his current
consumption basket? If not, should he buy
more hamburgers each week, or fewer?
Brian spends his entire monthly income of $1200 on shoes (S) and pizzas (P). The price of a pair of shoes is $60, and the price of a pizza is $20. If he consumes 10 pairs of shoes and 30 pizzas, his MRS is 2P/1S. (A quantity of shoes is measured along the x-axis, and a quantity of pizza is measured along the y-axis.) His choice is optimal.
True
False
Chapter 4 Solutions
EBK MICROECONOMICS
Ch. 4 - Prob. 1RECh. 4 - Prob. 2RECh. 4 - Prob. 3RECh. 4 - Prob. 4RECh. 4 - Prob. 5RECh. 4 - Prob. 6RECh. 4 - Prob. 7RECh. 4 - Prob. 8RECh. 4 - Prob. 9RECh. 4 - Prob. 10RE
Ch. 4 - Prob. 4.1PCh. 4 - Prob. 4.2PCh. 4 - Prob. 4.3PCh. 4 - Prob. 4.4PCh. 4 - Prob. 4.5PCh. 4 - Prob. 4.6PCh. 4 - Prob. 4.7PCh. 4 - Prob. 4.8PCh. 4 - Prob. 4.9PCh. 4 - Prob. 4.10PCh. 4 - Prob. 4.11PCh. 4 - Prob. 4.12PCh. 4 - Prob. 4.13PCh. 4 - Prob. 4.14PCh. 4 - Prob. 4.15PCh. 4 - Prob. 4.16PCh. 4 - Prob. 4.17PCh. 4 - Prob. 4.18PCh. 4 - Prob. 4.19PCh. 4 - Prob. 4.20PCh. 4 - Prob. 4.21PCh. 4 - Prob. 4.22PCh. 4 - Prob. 4.23PCh. 4 - Prob. 4.24PCh. 4 - Prob. 4.25PCh. 4 - Prob. 4.26PCh. 4 - Prob. 4.27PCh. 4 - Prob. 4.28PCh. 4 - Prob. 4.29PCh. 4 - Prob. 4.30P
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- When Sam has an income of $1,000, he consumes 30 units of good A and 50 units of good B. After Samâs income increases to $1,500, he consumes 60 units of good A and 40 units of good B. Which of the following statements is correct? Both goods A and B are inferior goods Both goods A and B are normal goods Good A is a normal good, and good B is an inferior good Good A is an inferior good, and good B is a normal goodarrow_forwardSuppose Jeff has a perfect substitute preferences for watching movies (M) and TV (T) shows. Jeff's MRSTM is such that he is always indifferent between watching one movie and five TV shows independent of the amount of goods consumed. Which of the following statements is true? If Jeff had a choice between 1 movie and 1 TV show before bed, he would choose to watch the movie. If Jeff has already watched 3 movies and no TV shows, then he would prefer to watch a TV show next. He is indifferent between watching 1 TV show or 1 movie before bed. Jeff would prefer watching 2 TV shows and no movies over watching 2 Movies and no TV shows.arrow_forwardQuestions 6 (Demand). When the price of x1 is $8 and the price of x2 is $5, Jenny consumes 20 units of x1 and 10 units of x2. Suppose that when the price of xX2 increases to $7, Jenny consumes 25 units of x1. a) What type of goods are x1 and x2? b) How many units of x2 does Jenny consume after its price increases? Hint: Calculate her income with the first allocation of goods. Questions 7 (Slutsky Equation and Consumer Surplus). Robert's utility function for x and xa is:arrow_forward
- If we consume an additional unit of goods when utility is maximum, the utility we get from this additional unit is (positive, negative or zero)? Choose one why?arrow_forwardUse the information below to answer the following questions. Fact 9.3.1 Marc has an income of $20 and spends it on two goods, root beer (measured on the vertical axis) and chips (measured on the horizontal axis). The price of root beer is $1 a can. The price of chips is $0.50 a bag. Initially, Marc chooses to consume 10 cans of root beer and 20 bags of chips. Then the price of root beer rises to $1.50 per can and the price of chips falls to $0.25 a bag. Refer to Fact 9.3.1. Mare's initial marginal rate of substitution was OA equal to 2 cans of root beer given up for each bag of chips gained. OB. equal to 10 cans of root beer given up for each bag of chips gained. OC not calculable with the information given. OD equal to 1 can of root beer given up for each bag of chips gained. OE. equal to 1/2 can of root beer given up for each bag of chips gained.arrow_forwardCarlos is originally consuming his optimal consumption bundle of cell phones and gasoline when the price of gasoline falls. Assume that both gasoline and cell phones are normal goods. How will a decrease in the price of gasoline affect your consumption of cell phones and gasoline? Explain using the substitution and income effects.arrow_forward
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