5. Marginal versus average effectsConsider the nonlinear function shown by the blue curve on the following graph. The grey line is tangent to this curve at point A.Use the grey line (star point) to answer the following question. (Note: You will not be graded on your placement of this line.)>10987A64321Tangent Linef(x)0++++++012345678910XThe marginal effect of X on Y at point A isThe average effect of X on Y at point A isTrue or False: For this graph, the marginal effect decreases as X increases.TrueFalseScratch Line(?)

5.Define marginal Effect:-A measurement that demonstrates the impact of changing one independent…

Answered: 5. Marginal versus average effects…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4. The BestElect electronics store is having a sale on November 8th on any new electronics purchased. Every customer will receive $50 off their purchase of a new electronic item. They are also offering a student discount on every item in the store for the whole month of November. If you can prove you are a student, you will receive 15% off any item. Let x be the price of any new electronic item in the store. a. Write a function P(x) that represents the price of a new electronic item on November 8th for any customer. b. Write a function D(x) that represents the price you will pay for an item after the student discount is applied during any day in November. Now, we have two functions P and D that depend on the price of the item, x. P is a rule that says "take the price of the item, then subtract $50." D is a rule that says "take the price, then take 85% of it." If you want to take advantage of both sales, a composition of functions is necessary! But is there a difference between P(D(x))…
PART D E
In the derivation of AVC, to find its minimum, you need Multiple Choice O O the minimum-slope ray out of the origin to the TC. the minimum-slope ray out of the origin to the A. the minimum-slope ray out of the origin to the TVC. the flattest slope on the TC.
Question 4. Discuss difference between weak axiom of revealed preferences and strong axiom of revealed preferences by the help of graph. Answer without graphical explanation will not be considered.
[Nonlinear Budget Constraints] Suppose that Simone has preferences that are represented by the utility function U(x, y) = V(xy), and she has an income I = 20. (a) Suppose that px = 1 and py = 2. What is Simone's MRSX,y? What is her optimal bundle? %3D (b) Suppose now that Simone is subject to rationing. What is her optimal bundle when the maximum amount of x she can purchase is 15? When it's 10? When it's 5? (c) Suppose that the store where Simone does her shopping has a sale going on, where the x is half-off, up to 4 units. Algebraically, px = 0.5 for x 4. That is, the price per unit, up to four units of x is 1, but then increases to 2. The price of good y is py = 2. What is her new optimal bundle? (Note: it may be helpful to plot the budget set. What are the possibilities for what a solution would look like for this budget set?)
7. Solve the following maximization problem: u(x1, X2 ) = In(x, ) + x, X1, X2 max 8. s.t. 2 x, + x,=10
1
As a consumer you have RM34 per month to spend for snack i.e. either pizzas which costs RM6 each or chicken burger which cost RM4 each. Suppose further that your preference is given by the following Total Utility Table Quantity 1 2 3 4 5 6 7 Pizza 60 108 138 156 162 166 166 Chicken Burger 44 76 100 120 136 148 152 First, graph the budget constraint with Pizzas on the horizontal axis and Chicken burger on the vertical axis. What are the intercepts at horizontal axis and vertical axis. Using the table, please show the Marginal Utility of Pizzas and Chicken Burger for every quantity demand. Using the utility maximizing rule to identify the consumer equilibrium, that is, combination of pizzas and chicken burger that will maximize your Total Utility. Confirm that the consumer equilibrium generates the highest combined total utility of any affordable combination of goods.
4 - : What is the slope of a nonlinear function at its maximum point? a) -2nd B) 2nd NS) 0 D) -one TO) one
3. [Sometimes, it's useful to think about what fraction of a consumer's money they spend on each good, rather on how many units they buy. (a) Show that every x EX(p,m) can be written as x = f1(m/p₁,0) + f2(0, m/p2 ) + (1-f1-f2)(0,0) for some numbers f1,f2 20 with f1 + f2 ≤1. (b) Let f1 and f2 be as in part (a). Give an expression, in terms of f1 and f2, for the fraction pix₁/m of the consumer's money that they spend on good 1. (c) Let f1 and f2 be as in part (a). Give an expression, in terms of f1 and f2, for the fraction p2x2/m of the consumer's money that they spend on good 2
3. Cost of living will become more expensive fuelled by increases in food and electricity bill. Suppose the utility function for a customer in the rural area is estimated to be U=F05E0.5 where Fis the amount of food consumed and E represent electricity usage. If the consumer income is $10,000 per week and the price of food is $500 and the electricity cost $200. a) Calculate the optimal bundles when the electricity rate increases to $250 b) What is the income and substitution effect of the price increase? c) Illustrate the income and substitution effect on a well labeled diagram,
9. Behavioral economics Indicate whether each of the following examples of behavior is consistent with the way the traditional economic framework suggests people should act, or if it is reserved for behavioral economists to examine. Example Some people would be willing to pay money to lower the incomes of others. Some people treat $60 they earn differently from $60 they win in a random drawing. Some people sacrifice disposable income to help their children pay for college. Some people would turn down a new, higher-paying job if it meant spending less time with their family. Consistent with the Predictions of Traditional Economic Models Reserved for Behavioral Economics

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