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- How does a consumer maximizes their utility given that they experience a budget constraint? Explain with graphical illustrations. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.1. * Refer to the information provided in table below. MU/P for Number of Cinema Tickets Total Utility Marginal Utility Price of a Cinema Ticket Cinema Tickets 140 240 3 330 400 440 6. 470 MU/P for Number of Concert Tickets Total Utility Marginal Utility Price of a Concert Ticket Concert Tickets 240 440 3 600 720 800 6. 850 If the price of a cinema ticket is 20 TL, the price of a concert ticket is 40 TL and the a. income is 120 TL, draw the budget line. b. Find marginal utility for each consumption level for both products and show your work in Table. Find the utility maximizing level of consumption bundle if the income of the C. consumer is 120 TL. Show the utility maximizing level of consumption for each product on the table. Explain your answer by stating the utility maximizing rule.12) A consumer’s preferences are given by U(X,Y) = X0.6Y0.4. The price of X is 4, and the price of Y is 5. The consumer has an income of $2000.a) What is the utility maximizing choice of X and Y?b) How would the utility maximizing choice change if price of X falls to 3 because of a pricesubsidy?c) Given the answers to the previous parts plot a linear demand function for X.d) Show that the consumer would prefer the cash equivalent of the price subsidy in part b.
- 7. 3.1. Explain, with the aid of examples, the following economic concepts in terms of utility theory: 3.1.1 Total utility 3.1.2 Marginal utility 3.1.3 Weighted marginal utility 3.2 Assess how income elasticity of demand is used to define goods and services.19:32 Fri 6 Aug 91% Screenshot_20210806-193021_Office.jpg a) Choose X, and X, to max the utility fxn, UX,„X,)=chX;+(l-a}hX; st: M - P, X + P,X ; a) Write down the demand functions for goods 1 and 2 b) Consider a price decrease for good 1 from P, toP" . Write down the demand functions for good 1 when prices are P, and when prices drop from R toP c) What is the compensating income, M associated with the price change? Obtain the SE and IE associated with the price change 2414.3 (0) Quasimodo consumes earplugs and other things. His utility function for earplugs x and money to spend on other goods y is given by u(x, y) = 100x 2:² 2 +y. (a) What kind of utility function does Quasimodo have? (b) What is his inverse demand curve for earplugs?. (c) If the price of earplugs is $50, how many earplugs will he consume? (d) If the price of earplugs is $80, how many earplugs will he consume? (e) Suppose that Quasimodo has $4,000 in total to spend a month. What is his total utility for earplugs and money to spend on other things if the price of earplugs is $50?
- Refer to the information provided in Figure 6.10 below to answer the questions that follow. Kyle's demand curve Price per unit 8 0 5 7 9 Number of turkey sandwiches per week Figure 6.10 29) Refer to Figure 6.10. The current price of a turkey sandwich is $6. If Kyle is currently buying maximizing utility because the marginal utility five turkey sandwiches a week, he than its price. A) is; from the fifth sandwich is greater B) is; from the fifth sandwich is less C) is not; gained from the fifth sandwich is less. D) is not; gained from the fifth sandwich is greater Demand Answer: D Diff: 3 Topic: The Basis of Choice: Utility Skill: Conceptual 30) Refer to Figure 6.10. The current price of a turkey sandwich is $6. If Kyle is currently buying nine turkey sandwiches a week, he maximizing utility because the marginal utility than its price, A) is; from the ninth sandwich is greater B) is; from the ninth sandwich is less C) is not; gained from the ninth sandwich is less D) is not; gained from…12. What are the mathematical steps in deriving demand and indirect utility?6. Suppose that a fast-food junkie derives utility from three goods - softdrinks (x), 0.5 hamburgers (y), and ice cream sundaes (z) – according to the Cobb-Douglas utility function U(x, y, z)=x5y5 (1+z)05. Suppose also that the prices for these goods are given by p=0.25, p, = 1, and p. = 2 and that this consumer's income is equal to 2. a) How much will this consumer buy of each good to maximize utility? b) Show that the utility function is maximized (Use |H₂| to identify whether it is a maximum or a minimum). c) What is the maximum utility of the fast-food junkie?
- TOTAL AND MARGINAL UTILITY Reset E UTILITY CALCULATIONS Total Utility Quantity Consumed 70 Total Marginal Utility Utility 60 50 40 22 30 22 20 18 10 40 14 4 6. 8 54 Quantity Consumed Marginal Utility 10 20 4 64 6. 10 5 70 1 3 4 2 -10 72 -20 -2 Quantity Consumed 70 Quantity Consumed -6 64 1 6. 8.21:45 Sat 7 Aug 26% O Screenshot_20210807-213016_Office.jpg 21:30 a) Choose X, and X, to max the utility fxn, U(X,X) =ahX;+(l-a)\n X, st: M = P, X 1 + P,X , a) Consider a price decrease for good 1 from P, toP . Write down the Demand functions for good 1 when prices are P, and when prices drop from PtoP b) What is the compensating income, M° associated with the price change? C) Obtain the SE and IE associated with the price change II10:55 Sun 8 Aug 30% Screenshot_20210808-073803_Office.jpg a) Choose X, and X, to max the utility fxn, UX,X)=chX;+(l-a)hX, st: M = P, X, + P¿X ; a) Consider a price decrease for good 1 from P toP" . Write down the Demand functions for good 1 when prices are P, and when prices drop from R toP" b) Obtain the SE and IE associated with the price change
