Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Chapter 6.A, Problem 9SQ
To determine
The consumer equilibrium in the economy.
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Consider a consumer whose utility function is (screenshot)
Assume the consumer has income $120 and initially faces the prices px=$1 and py=$1. How much x and y would they buy? Draw the budget constraint and the demands.
10) If indifference curves are concave to the origin, then at equilibrium:
A) The indifference curve is tangent to the budget constraint.
B) The consumer buys one good.
C) The consumer buys a basket of goods.
D) None of the above.
Given above are some of the indifference curves for a student who consumes Burritos and Pizzas and the relevant budget line. Equilibrium is defined as the maximum utility or satisfaction given the consumer’s budget. The consumer has more indifference curves above I3, below I1, and between I1 and I2 and between I2 and I3. Out of all the indifference curves the consumer has, only I1, I2, and I3 are shown.
The given budget line touches I2 at the point where I2 touches the y-axis (Burritos axis).
(a) What is the point of consumer equilibrium in the above graph where the consumer is maximizing utility (satisfaction) given the budget line. Please show the point and label it as “A”.
(b) At the equilibrium point how much Pizza does the student consume?
(c) If the price of Pizzas decreased and the price of Burritos remained unchanged, would the quantity of Pizzas consumed at equilibrium increase or decrease compared to the equilibrium point A in the graph given above?
(d) If the…
Chapter 6 Solutions
Micro Economics For Today
Ch. 6.1 - Prob. 1YTECh. 6.1 - Prob. 2YTECh. 6.2 - Prob. 1YTECh. 6.A - Prob. 1SQPCh. 6.A - Prob. 2SQPCh. 6.A - Prob. 3SQPCh. 6.A - Prob. 1SQCh. 6.A - Prob. 2SQCh. 6.A - Prob. 3SQCh. 6.A - Prob. 4SQ
Ch. 6.A - Prob. 5SQCh. 6.A - Prob. 6SQCh. 6.A - Prob. 7SQCh. 6.A - Prob. 8SQCh. 6.A - Prob. 9SQCh. 6.A - Prob. 10SQCh. 6.A - Prob. 11SQCh. 6.A - Prob. 12SQCh. 6.A - Prob. 13SQCh. 6.A - Prob. 14SQCh. 6.A - Prob. 15SQCh. 6 - Prob. 1SQPCh. 6 - Prob. 2SQPCh. 6 - Prob. 3SQPCh. 6 - Prob. 4SQPCh. 6 - Prob. 5SQPCh. 6 - Prob. 6SQPCh. 6 - Prob. 7SQPCh. 6 - Prob. 8SQPCh. 6 - Prob. 9SQPCh. 6 - Prob. 10SQPCh. 6 - Prob. 1SQCh. 6 - Prob. 2SQCh. 6 - Prob. 3SQCh. 6 - Prob. 4SQCh. 6 - Prob. 5SQCh. 6 - Prob. 6SQCh. 6 - Prob. 7SQCh. 6 - Prob. 8SQCh. 6 - Prob. 9SQCh. 6 - Prob. 10SQCh. 6 - Prob. 11SQCh. 6 - Prob. 12SQCh. 6 - Prob. 13SQCh. 6 - Prob. 14SQCh. 6 - Prob. 15SQCh. 6 - Prob. 16SQCh. 6 - Prob. 17SQCh. 6 - Prob. 18SQCh. 6 - Prob. 19SQCh. 6 - Prob. 20SQCh. 6 - Prob. 21SQCh. 6 - Prob. 22SQCh. 6 - Prob. 23SQCh. 6 - Prob. 24SQCh. 6 - Prob. 25SQ
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- Given above are some of the indifference curves for a student who consumes Burritos and Pizzas and the relevant budget line. Equilibrium is defined as the maximum utility or satisfaction given the consumer’s budget. The consumer has more indifference curves above I3, below I1, and between I1 and I2 and between I2 and I3. Out of all the indifference curves the consumer has, only I1, I2, and I3 are shown. The given budget line touches I2 at the point where I2 touches the y-axis (Burritos axis). a) If the price of Pizzas decreased and the price of Burritos remained unchanged, would the quantity of Burritos consumed at equilibrium increase or decrease compared to the equilibrium point A in the graph given above? (b) If the price of Pizzas increased and the price of Burritos remained the same, would the consumer equilibrium point be different from point A or the same as point A in the graph given above?arrow_forwardQuestion 10 If look at the indifference curves and budget constraint for two goods, X and Y, we can find a new points on a consumer's demand curve for good X by Group of answer choices shifting the budget constraint so that both intercepts change. pivoting the budget constraint so that the Y-intercept stays put, but the X intercept changes. pivoting the budget constraint so that the X-intercept stays put, but the Y intercept changes. keeping the budget constraint the same, but changing the indifference curve.arrow_forwardA consumer currently spends a given budget on two goods, X and Y, in such quantities that the marginal utility of X is 15 and the marginal utility of Y is 8. The unit price of X is $3 and the unit price of Y is $2. The utility-maximizing rule suggests that this consumer should Multiple Choice a. decrease consumption of product X and increase consumption of product Y. b. increase consumption of product X and increase consumption of product Y. c. decrease consumption of product Y and increase consumption of product X. d. stick with the current consumption mix because it yields maximum utility.arrow_forward
- Consider a consumer with the utility function u(x1,x2) = x11/3 x22/3. a. Find the Marginal Utility for each good. b. Find the slope of one of this consumer's indifference curves c. Write down the consumer's budget constraint. d. What is the slope of this consumer's budget constraint? Show how you derived your answerarrow_forwardAdvertisement is one of the factors that influence customers to increase demand for a specific good. Explain how the budget line shift due to price change of good Y when the price of good X remains the same.arrow_forwardA consumer has preferences over two goods, coconuts and fish. The consumer prefers more of each good to less and has a diminishing marginal rate of substitution between the two goods. Draw a diagram showing indifference curves and the budget constraint of the consumer. Explain how the optimal consumption choice is found.arrow_forward
- i) Derive consumer's budget constraint ii) Derive the marginal utility X and marginal utility Y iii) Find out the consumer optimum combination of good X and Y at the market.arrow_forwardU(x, y) = xayb A consumer maximises utility subject to a budget constraint M = Pxx+Pyy Where px is the price of good x, py is the price of good y and M is the budget available. a. Derive an expression for the marginal utility of x. Under what condition is the marginal utility diminishing. b. Derive an expression for the marginal utility of y. Under what condition is the marginal utility diminishing.arrow_forwardIf good X plotted on the x-axis, and good Y plotted on the y-axis, an increase in the price of good X AND a decrease in income will lead to what shift in the budget constraint? The budget constraint will pivot inwards, and the shift right (outwards) b. The budget constraint will pivot outwards, and the shift left (inwards) c. The budget constraint will pivot outwards, and the shift right (outwards) d. The budget constraint will not change e. The budget constraint will pivot inwards, and the shift left (inwards)arrow_forward
- The following statement is true for consumer preferences: a) The axiom of weak monotonicity implies that the marginal utility of every good must always be positive. b) The axiom of weak convexity implies that the marginal utility of every good must always be positive. c) The axiom of strict convexity implies that the indifference curve exhibits diminishing MRS. d) The axiom of weak monotonicity implies that the MRS must always be negative. e) All of the above.arrow_forwardConsider the indifference curve map and budget constraint for two goods, X and Y. Suppose the good on the horizontal axis, X, is normal. When the price of X increases, the substitution effect a) and income effect both cause an increase in the consumption of X. b) causes a decrease in the consumption of X, and the income effect causes an increase in the consumption of X. However, the substitution effect is greater than the income effect. c) causes an increase in the consumption of X, and the income effect causes a decrease in the consumption of X. However, the substitution effect is greater than the income effect. d) and income effect both cause a decrease in the consumption of X.arrow_forwardThe points located at the intersection of the budget line with the y axis means: a) these are points impossible to reach by the consumer b) the consumer spends absolutely nothing c) the consumer spends all his income for only one good d) the consumer does not spend all his incomearrow_forward
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