2. (Figure 4.3) Which of the following statements is FALSE? Baskets of tomatoes I 10- 7.85 6 4.89 4 1.76 = 0 A B C 4 1.47 3.26 5.05 D 6 8 6.53 • U₂ U₁ 10 Bags of carrots Oa. Bundle C is preferred to bundle D. Ob. Bundle A is preferred to bundle C. Oe. Indifference curve U₂ provides a higher level of utility than indifference curve U₁. Od. The consumer is indifferent between bundle A and bundle D.

2. (Figure 4.3) Which of the following statements is FALSE? Baskets of tomatoes I 10- 7.85 6 4.89 4 1.76 = 0 A B C 4 1.47 3.26 5.05 D 6 8 6.53 • U₂ U₁ 10 Bags of carrots Oa. Bundle C is preferred to bundle D. Ob. Bundle A is preferred to bundle C. Oe. Indifference curve U₂ provides a higher level of utility than indifference curve U₁. Od. The consumer is indifferent between bundle A and bundle D.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

2. Suppose a consumer has preferences that are represented by the utility function U(X,Y)=x¹²¹² Draw an indifference curve that goes through the point where x= 100 and y= 100. (Hint: Pick several other bundles of goods that give the same amount of utility.
18. Declining MRSXY implies that:(a) The total utility is decreasing along an indifference curve(b) The consumer’s preferences do not satisfy the more-is-better principle(c) The consumer is willing to give up more and more X for additional Y as the consumption of X increases along an indifference curve(d) The consumer is willing to give up less and less X for additional Y as the consumptionof X increases along an indifference curve
2
15. The assumption that preferences are complete requires the consumer:(a) To rank any two bundles(b) To say bundle C is preferred to bundle A if bundle B is preferred to bundle A andbundle C is preferred to bundle B(c) To rank a bundle with more units of all goods higher than a bundle with fewer unitsof all goods(d) To have a diminishing marginal rate of substitution
5) Consider indifference curves for the consumption of milk and chocolates (you may assume that both are 'goods'). The indifference curves are drawn with the number of chocolate bars on the horizontal axis and pints of milk on the vertical axis. Suppose that at every point, consumer A's indifference curve is flatter than consumer B's. What can you conclude about consumers A and B tastes and preferences?
4. Suppose the consumer's utility u: X → R is strictly conver-i.e. such that any x, y EX with ry and any 0 u(λx + (1 − A)y). (a) Show that the consumer will do one of the following: . Buy nothing. . Spend all their money on good 1. • Spend all their money on good 2. [Hint: The previous question could be helpful.] (b) Suppose that, in addition to behig strictly convex, u is increasing. Explain why the consumer will spend all their money on one good.
5. Maximum utility occurs when the marginal utility per dollar for both goods is equal. True True O False
Figure#4 Indiflereocetur
Letter B. Only.
4. The following questions refer to the following graph of a consumer's indifference curve. a. b. Quantity of Y 40 30 20 10 0 T I A 10 C B 1 20 30 40 Quantity of X X What is the consumer's marginal rate of substitution between points A and C? At point C, approximately what is the consumer's marginal rate of substitution at point?
15. Higher Indifference curve means: (a) Consumer has more income (b) Price of goods have reduced (d) All of the above (c) Higher utility level
3. Explain the law of diminishing marginal utility with the help of examples and also explain the assumption under which this law is applicable and what the exceptions are where this law does not hold.