10) If prices and income in a two-good model double, what will happen to the budget line?A) The intercepts of the budget line will increase.B) The intercepts of the budget line will decrease.C) The slope of the budget line may either increase or decrease.D) There will be no effect on the budget line.E) Insufficient information is given to determine what effect the change will have on the budgetline.

The budget line shows the spending of a consumer on the two goods when the prices of the 2 goods and…

Answered: 10) If prices and income in a two-good…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the single-good utility function u(x) = 3x². du(x) a) Find the marginal utility of x, MUx = dx b) Plot the utility function and marginal utility function on two separate graphs. c) Does this utility function satisfy the law of diminishing marginal utility? Explain.
Suppose we are able to model the total utility function for the consumption of two goods, good x and good z. The utility function is structured as U(x, z) = 3x2 + z2 - 2xz. The consumer is faced with the prices of goods x and z. The price for each unit of good x and z is $1 each. The consumer has an income $1 (in thousands). How many units of each good should the consumer consume so as to maximize his/her utility?
A consumer has an income of $400 and is deciding between two products: X and Y. Assume that the X product is the horizontal axis product. The price of X is $10 and the price of Y is $2. Assume the consumer currently wants to consume 50 units of product Y to maximize his utility. a) Write out the equation to this consumers budget line. What is the slope to this budget constraint? b) How much of X and Y will the consumer consume to maximize his utility subject to his budget constraint. C) Now assume the price of X changes to $5 and price of Y and Income stays the same. At the new price, the consumer wants to buy 60 units of product X to maximize her utility given her budget. How much X and Y will the consumer consume to maximize utility. g in the before and after the change of the budget constraint and indifference graph on the same graph space. Show all necessary points. Label clearly. ead oubstitutiofs. Draw d) Write out the expression of the utiiity maximizing ruie here.?
Describe and graph your own example of a budget constraint using two goods (don’t forget to label your axes). In your example, make sure to state what the budget is, the price of the two goods, what the slope of the budget constraint equals (make sure to include the correct sign), and interpret what the slope represents.
A consumer has a budget of £12 to split between two goods: good 1 has a price of 2, good 2 has a price of 3. Write the consumer’s budget constraint algebraically. Convert this budget constraint into the formula for the budget line. Show this line on a suitably labelled graph. The consumer’s budget increases to £24. Show the effect of this change graphically. A consumer dislikes good 1, and dislikes good 2. Show these preferences on a suitably labelled graph with an indifference curve. Label the graph: which areas would be preferred to those on the line?
A consumer consumption bundle contains good X and Y. Suppose the price of good X goes up and a consumer goes on consuming the exact same amount of X as before. Check the correct statement(s).A) Both X and Y are inferior. B) X is an inferior good.C) In the special case where X is Leisure, and Y is "all other goods", X is an inferior good.D) The consumption of Y decreases.E) It is impossible that the consumption of X remains unchanged when the price of × goes up.F) The substitution effect is negative
Explain whether the following statement is true, false, or uncertain. A consumer consumes two categories of goods x and y. If an increase in the price of y does not increase the consumer's consumption of x, then this consumer must consider x to be an inferior good.
Consider Gary's utility function: U(X,Y) = 5 XY, where X and Y are two goods. If the individual consumed 10 units of X and received 250 units of utility, how many units of Y must the individual consume? 5 25 0 10
There are two goods, x and y. The consumers' utility is U=4x6y³. The price of x is Px=5, the price of y is Px=10. At interior optimum, the relationship between x and y is: options: y=2x y=0.25x y=0.5x y=x
Parts d-h please!
Allen has a utility function U=xy², where x is the consumption of apples and y is the consumption of bananas. Price of apple is 1 and price of bananas is 4. Allen has 30 dollars in his pocket, so how many apples and bananas will he purchase to maximize his utility? options: 10 apples and 5 bananas. 3 apples and 10 bananas. 30 apples only. none of above.
True/ False Marginal utility decline with the increase in the unit of consumption of a good.

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