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 andpints of milk on the vertical axis. Suppose consumer A has a flatter indifference curve than consumer B. Inthis case, we can conclude that:a.Consumer A likes chocolate more than consumer B.b.The price of milk relative to the price of chocolates is higher for consumer Athan for consumer B.с.The indifference curves of the two consumers cannot cross.d.Given the same amount of chocolates, consumer A is willing to swap one barof chocolate for a smaller amount of milk than consumer B.

Answer - Option - d Given the same amount of chocolates, consumer A is willing to swap one bar of…

Answered: Consider indifference curves for the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose an individual has the following utility function: U(x,y)=−4(x−5.5)^2 −2(y−3.5)^2 Further assume that the price of good x, px = $6, the price of good y, py = $8 and the individual has an income m = $65 a) Draw an indifference curve (one IC is enough) that represents this person’s prefer- ences. Please label the graph properly including values for x and y. b) Intuitively, and without formally solving, can you guess the maximized values x* and y*for the above utility function. Explain your answer. c) Derive the optimal values x*and y*by formally solving the above utility function subject to the above constraint. You can use any of the utility maximization techniques we learned in class. d) Compare your answers in parts b) and c). Based on the utility function that is given in this problem as well as the budget constraint, can you explain the differences between the answers you found in parts b) and c) (if any). Be as detailed as possible with your explanation.
assume that the data in the following table are an indifference curve for a consumer: what is the value of the MRS and the slope (Px/Py) at consumer equilibrium? explain and draw graphs to derive demand curve for x. Choice Unit x Unit y A 10 2 B 6 4 C 4 6 D 2 12
1. Jim's preferences for pears and apples can be summarized by the following utility function: U(Xa,Xp)=XaXp where xa is the quantity of apples and xp is the quantity of pears. a) Draw an indifference curve for Jim by calculating a series of bundles that all produce the same level of "utility" and plotting them. Interpret the slope of the indifference curve (the marginal rate of substitution). b) Calculate the formula for Jim's marginal rate of substitution, as a function of apples and pears consumed.¹ c) What happens to the numeric value of Jim's marginal rate of substitution along an indifference curve (i.e., holds his utility constant) as he increases the number of pears he consumes and decreases the number of apples? For example, compare his MRS for a bundle consisting of 9 apples and 4 pears to his MRS for a bundle consisting of 9 pears and 4 apples and interpret the change. d) Suppose something increases Jim's desire for apples (for example, apples are found to reduce the risk of…
Caroline recently moved to San Francisco, where they developed a taste for drinking Americanos and eating danishes. Assume throughout this problem that the price of an Americano is held constant at $4. On the following graph, the purple curves (₁ and ₂) describe two of Caroline's indifference curves. The lines BC, and BC₂ represent two budget constraints. Points X and Y show Caroline's optimal consumption bundles subject to the budget constraints. AMERICANOS 18 16 4 2 0 D 10 DANISHES 12 14 16 18 20 ? Given the preceding graph and knowing the price of an Americano is $4, Caroline's available income for Americanos and danishes is $ Using the income amount you just computed, complete the following table by finding the price of a danish when BC₁ represents Caroline's budget constraint and when BC₂ represents her budget constraint. Then indicate the quantity of danishes consumed in each of those scenarios. Price When Caroline's budget constraint is... (Dollars per danish) BC₁ BC₁₂…
Emily is a utility maximizer. Her income is $100, which she can spend on cafeteria meals and on notepads. Each meal costs $5 and each notepad costs $2. At these prices Emily chooses to buy 16 cafeteria meals and 10 notepads. a) Draw a diagram that shows Emily’s choice using an indifference curve and her budget line, placing notepads on the vertical axis and cafeteria meals on the horizontal axis. Label the indifference curve, I1, and the budget line BL1. Make sure you calculate the endpoints of the budget constraint. b) The price of notepads falls to $1; the price of cafeteria meals remains the same. On the same diagram, draw Emily’s budget line with the new prices and label it BL2. c) Lastly, Emily’s income falls to $90. On the same diagram, draw his budget line with this income and the new prices and label it BL3. Is she worse off, better off, or equally as well off with these new prices and lower income than compared to the original prices and higher income?
10. Assume an individual's preferences are represented by the following indifference map and he has an income of S400. Which of the following is shown when the price of Good I is $20 and the price of Good 2 increases from $10 to S16? Note: Even though the price of Good 2 is increasing, the steps to determine the income and substitution effects are the same. 50 45 40 35 30 25 20 15 10 10 15 20 25 30 35 40 45 50 Good 1 Good 2 is a normal good. Good 2 is an inferior good, but not a Giffen good. Good 2 does not satisfy the Law of Demand. • Ignoring the Income Effect, the Substitution Effect will cause the individual to consume more of Good I. A. B. 21 C. 3 None of the above statements are true. D. Good 2
Tessa likes both ice-creams and pies. However, if she eats too much of them, she gets sick. That is, cating ice-creams or pics beyond a certain amount lowers Tessa's utility. Draw a set of indifference curve which might represent Tessa's preferences for ice-creams and pies.
Which of the FF. statements is correct regarding the preference of the consumers when the income of the consumer can only be spent between apples and oranges? Assume that apples are written on the vertical axis while oranges are written on the horizontal axis A. when the consumer has few oranges, he is willing to trade more apple to get another orange B. when the consumer has so many oranges already, he will only exchange less apples for an orange C. the declining slope of the indifference curve shows the marginal value of oranges is declining D. all are correct E. none is correct
Solve the following task on paper, sign your solution and upload your result. Maria consumes oranges and bananas. Both are normal goods to her. Which effect does a falling price for oranges have on her demand for both goods? Conduct a graphical indifference analysis and explain in detail. Put oranges on the X-axis of your diagram. Show SE, IE, and TE for both goods.
Define A consumer prefers a higher indifference curve to a lower one.
Please don't provide handwritten solution ...

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