5.3 What is the slope (value) of Mrs. Bain budget line? 5.4 In theory, what is the slope (value) of the indifference curve at Mrs. Bain's utility maximization point? Justify your answer. W 7 Ms. Bain maximizes 6. utility (given her budget constraint) at point X, skiing 2 days and spending 3 days horseback riding. 5 4 Budget liņe 3 Curve B 2 Y Curve A 1 v Curve C 1 2 3 4 5 6 Days of horseback riding per semester Part II Graph Days of skiing per semester N

5.3 What is the slope (value) of Mrs. Bain budget line? 5.4 In theory, what is the slope (value) of the indifference curve at Mrs. Bain's utility maximization point? Justify your answer. W 7 Ms. Bain maximizes 6. utility (given her budget constraint) at point X, skiing 2 days and spending 3 days horseback riding. 5 4 Budget liņe 3 Curve B 2 Y Curve A 1 v Curve C 1 2 3 4 5 6 Days of horseback riding per semester Part II Graph Days of skiing per semester N

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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ECON Questions 5, 6, 7, and 8 How to solve and answer these economics questions showed in the screenshot?
Q4-From the blow table discuss the following with the help of graph. a) Trend of total utility b) Trend of marginal utility c) Law of diminishing marginal utility Units of X Total Utility Marginal Utility 1 10 10 2 18 8 3 24 6 4 28 4 5 30 2 6 30 0 7 28 -2
Bags of potato chips Total utility Candy bars Quantity Total utility Quantity 1 10 1 8 2 16 2 14 3 18 3 18 4 19 4 21 20 23 Liz consumes two goods, candy bars and potato chips. Her budget is $4 per day. The price of a candy bar is $1.00 and the price of a bag of chips is 50 cents. Her utility is in the table above. For Liz to maximize her utility, what combination of candy bars and potato chips should she eat? O A. 2 candy bars and 4 bags of potato chips O B. 4 candy bars and 0 bags of potato chips OC. 1 candy bar and 5 bags of potato chips O D. 3 candy bars and 2 bags of potato chips O E. None of the above answers are correct.
4. Tim wants to maximise his utility given his utility function of U(A, B) = A²B4. He faces the following prices and income: PA = 25; PB = 20; M = 250. However, a change in the price of good A to PA = 22 will change his optimal bundle. If he is only interested in being able to consume his original bundle of goods, how much income would he need after the price change? (a) Tim would require £54 less income (b) Tim would require £18.33 more income (c) Tim would require £10 less income (d) Tim would require £16.66 more income (e) Tim would require £16.66 less income
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Question 2 David spends his budget on chocolate and chip. His utility function is given by ?(?1,?2)= 2?1?2, where ?1 is the number of chocolates he consumers per week, and ?2 is the number of chips he buys per week. A chocolate costs 10 SEK, and a chip costs 20 SEK. David’s weekly budge for consuming on these two goods is 120 SEK. (1) What is David’s budge line? Draw the budget line on a graph with chocolate amounts on the horizontal axis and chip amounts on the vertical axis. Write explicitly at which points budget line crosses the axis. (2) What is David’s marginal utilities for the two goods, respectively? What is his marginal rate of substitution between the two goods? (3) What is David’s optimal choice? Calculate the numerical answer for the optimal bundle. Also draw an indifference curve for David on the same graph as question(1) and show the optimal bundle.
I. You only consume two goods and your preferences are represented by utility function 2 U(x₁, x₂) = (x1.5 + x2.5) for x₁ > 2 and x₂ > 0.