2. Use indifference curves and budget lines to derive the demand for good X graphically provided that the demand for X is very inelastic but not perfectly inelastic. You need to show this using two graphs: in one on the left show the appropriate indifference curves and budget lines, in the other show the derived demand. Label the axes, prices, quantities, optimal consumption bundles appropriately so the relationship between the graphs becomes evident.

2. Use indifference curves and budget lines to derive the demand for good X graphically provided that the demand for X is very inelastic but not perfectly inelastic. You need to show this using two graphs: in one on the left show the appropriate indifference curves and budget lines, in the other show the derived demand. Label the axes, prices, quantities, optimal consumption bundles appropriately so the relationship between the graphs becomes evident.

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

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.
4. Depict in separate graphs indifference curves for the following utility functions i. U(x1,x2) = min(x1,x2) ii. U(x1,x2) = max(x1, x2) iii. Are the goods in both cases substitutes or complements?
Suppose that a household has a weekly budget of $200 a week for its weekly shopping trip when it spends its weekly budget on toilet paper priced at $0.50 per roll and other goods. a. Draw a large diagram showing the household's weekly budget constraint for rolls of toilet paper and $ of other goods. Label the axes, the intercepts, the budget constraint and give the diagram a title. b. If the toilet paper and other goods are perfect complements and the household is observed to buy 24 rolls of toilet paper per week, draw an indifference curve that indicates this situation. Label the household's demands for toilet paper rolls and other goods and its indifference curve. C. Suppose a quota is introduced limiting purchases of toilet paper to 12 rolls per weekly shop. On the diagram from a. and b., draw the household's budget constraint and the highest indifference curve the household can reach. Label the household's budget constraint, demand for toilet paper rolls and other goods and the…
Utility maximization under constraint, substitution and income effect, CV and EV Josh gets utility (satisfaction) from two goods, A and B, according to the utility function U(A, B) = 4[A-4 + B-4-4 + 40. While Josh would like to consume as much as possible he is limited by his income. a. Maximize Josh's utility subject to the budget constraint using the Lagrangean method b. Suppose PA increases. Show graphically the income, substitution effect and total effect and explain c. Suppose PA increases. Show the graphs for CV and EV and explain. One graph for CV and one graph for EV
rosses Suppose a consumers budget set car be written as $200 = $5x + $10y (a) Draw the graph with an indifference curve showing that the consumer is in equilibrium and identify where the budget set cross both.x and Y axis. (b) Now, if there is an increase in the price of good.x, and both x and y are normal goods, graphically show the effect of the increases in P and identify what part of it is due to the substitute effect, and what part is due to the income affect. X
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?
3. Suppose Product X is a normal good and its price (Px) decreases. Graphically illustrate its Substitution and Income Effects using individual's budget and indifference curves
Help me