A consumer is choosing between magazines and books. His indifferencecurves and budget constraint are shown on the graph to the right.50-45-The utility-maximizing point is Point-B40Suppose that the price of books falls.35....1.) Use the line drawing tool to draw a new budget constraint (still tangent to30-one of the indifference curves). Label this line 'L225-2.) Use the point drawing tool to locate the new utility-maximizing point.Label this point 'T20-Carefully follow the instructions above, and only draw the required objects.15-10-5-22.50-352025Books15404550étv15MacBook Air80DIIescF2F3F5F6F7F8F1!@$146.789QWEITYtabAFつKcaps lockZCVshiftfncontroloptioncommandつMagazinesNリ

A consumer is choosing between magazines and books. Here the utility-maximizing point is Point B.…

Answered: A consumer is choosing between…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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?
Time left Thomas has utility U = min{3C, T) over cookies and tea. Suppose the price of cookies declines by 1 dollar. How much of the change in demand for tea is a substitution effect? In other words, what is (change h7/change gr)? O a. 0 O b. 1/4 O c. 1/3 O d. 2/3 O e. 3/4 O f. 1 Clear my choice Which of the following utility functions does not represent the same preferences as U(x, y) = x2y/2? O a. U(x, y) = xy O b. U(x, y) = In(x) + In(y) O c. U(x, y) = In(x y) O d. U(x, y) = x2 + yl/2 Clear my choice (we haven" this and yo not expect BOANIT 8
hurry up its urgent
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?
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.
What is the present value of $100 a year from now if the interst rate is 5%?
In the graph, demonstrate the short-run effect of an increase in the growth rate of the money supply, assuming all else remains equal. What happens in the long run? LRAS O As expectations adjust to the increase, all curves shift back to their original locations. SRAS The SRAS curve shifts to the left, and the inflation rate increases, with no change in the growth rate. The AD curve shifts to the right, and both the real growth rate and inflation rate increase. The LRAS curve shifts to the right, and the real growth rate increases, with no change in the inflation rate. AD Real GDP growth rate Inflation rate (T)
3. Juliette spends $48 each month on Oreo cookies (which cost $2 per package) and salt and vinegar chips (which cost $3 per bag). a) Suppose that the price of chips falls to $2 per bag and Juliette increases her chip consumption to 8 bags each month. Draw Juliette's new budget constraint and indicate her chosen bundle with an appropriately drawn indifference curve. Label her utility-maximizing bundle with the letter B. (Be sure to determine the right quantities of both chips and Oreos!) -LJ-J-1. IIII IIII J-L--- -1-1-L -LJ-J- 1- --+-+ --1-1 - IIII ת - ד -ר IIII III I IIII IIII L -1-L----1-1-L-- L--L- -LJ-J-1- IIII -LJ-J- 1- IIII IIII -+--- --+-+
12) A consumer’s preferences are given by U(X,Y) = X0.6Y0.4. The price of X is 4, and the price of Y is 5. The consumer has an income of $2000.a) What is the utility maximizing choice of X and Y?b) How would the utility maximizing choice change if price of X falls to 3 because of a pricesubsidy?c) Given the answers to the previous parts plot a linear demand function for X.d) Show that the consumer would prefer the cash equivalent of the price subsidy in part b.

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