8. (Continuing with the situation described in the preceding question.) Consider the economic model of an individual's labor-leisure choice with the following components: good w represents the hourly wage rate Y represents nonlabor income T represents total time available U(C, L) represents the individual's utility function MUC denotes the marginal utility of consumption MUL denotes the marginal utility of leisure Unless otherwise instructed, assume that consumption and leisure are normal goods. Whenever graphing the model, put C on the vertical axis and L on the horizontal axis. The individual maximizes his utility by choosing the optimal consumption bundle C*=90, L*=15, and H*=9. At this consumption bundle, MUC=4 and MUL=12. If p=2, what is w? 04 06 C represents units of the consumption good L represents hours of leisure H represents hours of paid work p represents the unit price of the consumption 8 10 O There is not enough information to determine w.

8. (Continuing with the situation described in the preceding question.) Consider the economic model of an individual's labor-leisure choice with the following components: good w represents the hourly wage rate Y represents nonlabor income T represents total time available U(C, L) represents the individual's utility function MUC denotes the marginal utility of consumption MUL denotes the marginal utility of leisure Unless otherwise instructed, assume that consumption and leisure are normal goods. Whenever graphing the model, put C on the vertical axis and L on the horizontal axis. The individual maximizes his utility by choosing the optimal consumption bundle C=90, L=15, and H*=9. At this consumption bundle, MUC=4 and MUL=12. If p=2, what is w? 04 06 C represents units of the consumption good L represents hours of leisure H represents hours of paid work p represents the unit price of the consumption 8 10 O There is not enough information to determine w.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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2. Utility maximization - Trading off labor and leisure The indifference curves on the following graph show Amy's preferences for leisure and consumption for increasing levels of utility, such that her utility increases in both consumption and leisure. Assuming that Amy spends 68 hours each week sleeping, she has a maximum of 100 hours available to her for leisure if she does not work at all. Initially, she works 45 hours (and thus has 55 hours of leisure) and earns $250 per week. Use the grey point (star symbol) to indicate Amy's initial leisure/consumption bundle. Dashed drop lines will automatically extend to both axes. ? CONSUMPTION (Dollars per week) 1000 900 800 700 600 500 400 300 200 100 0 0 10 20 30 40 50 60 70 80 LEISURE (Hours per week) 90 100 110 Initial bundle $200 Unemployment Benefits Equivalent Bundle, $100 Unemployment Benefits Equivalent Bundle Now, suppose that Amy is laid off, but she is eligible to collect unemployment benefits of $200 per week. Use the black point…
Pls help with thsi question Consider an Individual who buys films (F) and books (B) with the following utility function:?(?, ?) = 5? + 2?This individual also has the following incomes (m) and prices (pF and pB):? = $50, ?f= $5, ?b= $10Given the above:1) Draw the utility functions for utility levels of 10 and 20. Draw these with films on the x-axis and books on the y-axis. 2) What is the MRS for these utility functions? Assume that films remain on the x-axis andbooks remain on the y-axis. 3) What is the consumption bundle that delivers the highest level of utility that is alsoaffordable?
[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?)
Suppose the following transactions occur during the current year: 1. Kevin orders 50 cases of mezcal from a Mexican distributor at a price of $90 per case. 2. A U.S. company sells 300 spark plugs to a Korean company at $5.00 per spark plug. 3. Rajiv, a U.S. citizen, pays $900 for a TV he orders from Cosmart (a U.S. company). Complete the following table by indicating how the combined effects of these transactions will be reflected in the U.S. national accounts for the current year. Hint: Be sure to enter a “0” if none of the transactions listed are included in a given category and to enter a minus sign when the balance is negative. Amount (Dollars) Consumption Investment Government Purchases Imports Exports Net Exports Gross Domestic Product (GDP)
3. [30+10] A consumer who consumes two goods and has the following utility function: U(x₁, x₂) = log(x₁ + 1) + log(x2 + 1), where ₁ and ₂ denote the monthly consumption of two goods. The consumer maximizes her utility subject to the following constraints: P₁x1 + P₂x2 ≤m, x₁ ≥ 0, X₂ ≥ 0, where p₁ > 0, p2 > 0 and m > 0. [Hint: Note that log f(x) = f(df (2).] 1_df f(x) dx (a) Write down the Kuhn-Tucker conditions for a point (x₁, x2) to solve the problem, and find all points that satisfy the conditions. Do any of those points solve the problem? (b) Show the above results by drawing indifference curves and budget set on the x₁x2 plane.
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2. Utility maximization - Trading off labor and leisure The indifference curves on the following graph show Amy's preferences for leisure and consumption for increasing levels of utility, such that her utility increases in both consumption and leisure. Assuming that Amy spends 68 hours each week sleeping, she has a maximum of 100 hours available to her for leisure if she does not work at all. Initially, she works 45 hours (and thus has 55 hours of leisure) and earns $250 per week. Use the grey point (star symbol) to indicate Amy's initial leisure/consumption bundle. Dashed drop lines will automatically extend to both axes. CONSUMPTION (Dollars per week) 1000 900 800 700 600 500 400 300 200 100 0 0 + 10 20 30 40 50 60 70 80 LEISURE (Hours per week) 90 U3 100 110 Initial bundle + $200 Unemployment Benefits Equivalent Bundle, $100 Unemployment Benefits Equivalent Bundle ?
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11. (Originally #7 on Homework #3) Consider a consumer with the following information: At the optimal consumption bundle this consumer consumes 3 boxes of apples and 3 boxes of oranges. If the Marginal Rate of Substitution of Apples for Oranges is 6 at the optimal consumption bundle (MRSA0= 6), and the price of a box of Oranges is $1.80, what is the price of a box of Apples? Show how you found your answer.
Principles of Economics 1 | S1 21/22 Time left 0:5) When the price of one good increases and the price of the other good and income are held constant, the budget line Select one: shifts parallel to the original budget line so that the new budget line is farther from the origin O b. shifts parallel to the original budget line so that the new budget line is closer to the origin rotates so that the intercept is farther from the origin on the axis representing the good that has experienced an increase in price O a. O c. O d. rotates so that the intercept is closer to the origin on the axis representing the good that has experienced an increase in price Next page