7. Suppose U = x₁x2 and the budget constraint is given as x₁ + 1 = B, solve for x and1-α8. Suppose U = xx and our budget is given as p₁x₁+P2x2 = m, where m is our income.Solve for solve for x and x₂.9. Suppose now we want to minimize our expenditure while achieving a certain amount ofutility. So say our budget is given as P₁x₁ + P2x2, which we want to minimize, while ourutility x and x = u, where u is the level of utility we would like to achieve. Solve forx and x₂.

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. Suppose U = x₁x2 and the budget constraint is given as x₁ + 1 = B, solve for x and x₂.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Concept explainers

Revealed Preferences and Budget Constraint Analysis

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

Question

7. Suppose U = x₁x2 and the budget constraint is given as x₁ + 1 = B, solve for x and
1-α
8. Suppose U = xx and our budget is given as p₁x₁+P2x2 = m, where m is our income.
Solve for solve for x and x₂.
9. Suppose now we want to minimize our expenditure while achieving a certain amount of
utility. So say our budget is given as P₁x₁ + P2x2, which we want to minimize, while our
utility x and x = u, where u is the level of utility we would like to achieve. Solve for
x and x₂.

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Answer question 2
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A decrease in the price of good Y will have what effect on the budget line on a normal X-Y graph? Select one: OA. Parallel outward shift of the line OB. Parallel inward shift of the line OC. Decrease the horizontal intercept COD. Increase the vertical intercept
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7) A consumer has to choose the optimal amount of cheese and crackers to purchase. He or she has drawn his or her budget constraint (BC) and indifference curves on a graph with the amount of cheese (in ounces) on the horizontal axis and the amount of crackers (in packages) on the vertical axis. Which of the following statements is true if the price of crackers declines? The BC shifts to the left (down). The BC shifts to the right (up). The BC rotates such that it intersects the horizontal axis at the same point as before and intersects the vertical axis at a lower point. The BC rotates such that it intersects the horizontal axis at the same point as before and intersects the vertical axis at a higher point.
Consumer Theory Daniel spends all his money on only two goods: chocolates (good 1) and milkshakes (good 2). We have information about his purchases, income and prices for 4 weeks: A, B, C and D. For each week, the budget line and the goods bought are shown on the graph below. a) Suppose that Daniel’s preferences are transitive and satisfy "more is better". Shade all the bundles that you are certain are worse for Daniel than bundle A in one colour, and all the bundles that you are certain are better for Daniel than bundle A in a different colour. (You can use different patterns instead of colours.) Indicate which is which. Explain.
will thumbs up solution, thank you :) Consider a consumer with an income of M = 200 in an economy with 2 goods. Let the prices be p1 = 7, and p2 = 12, respectively. Define the budget set facing the consumer. In a well labelled diagram, illustrate the budget set for the consumer. Find two bundles, (x1,x2) and (y1,y2) that the consumer can afford. Can the consumer afford the average of the two bundles in your example? Why or why not? Suppose the price of good 2 decreases to p2(prime) = 15. Can the consumer afford the two bundles you described before now? Why? Thank you
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Answer question 3
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