Consider the diagram below:Julia'sendowment.→100-FF(10% interest rate)FF (78% interest rate)MRS = MRTJulia's IC (higher utility)Julia's ICJulia's IC (through point F)Julia's IC (lower utility)565891Consumption now ($)Select one:Given an annual interest rate of 20% Julia's maximum consumption now is $80.а.O b. at point F the marginal rate of transformation is greater than Julia's marginal rate of substitution.O c. The higher the interest rate, the bigger Julia's feasible set becomes.O d. At an interest rate of 10%, Julia's utility is maximised at point E.Consumption later ($)

Indifference Curve shows the equal satisfaction derived by the consumption of two goods by a…

Consider the diagram below: FF(10% interest rate) Julia's endowment.»100- FF (78% interest rate) MRS = MRT Julia's IC (higher utility) Julia's IC Julia's IC (through point F) Julia's IC (lower utility) 5658 91 Consumption now ($) Select one: O a. Given an annual interest rate of 20% Julia's maximum consumption now is $80. O b. at point F the marginal rate of transformation is greater than Julia's marginal rate of substitution. O c. The higher the interest rate, the bigger Julia's feasible set becomes. O d. At an interest rate of 10%, Julia's utility is maximised at point E. Consumption later ($)

Consider the diagram below: FF(10% interest rate) Julia's endowment.»100- FF (78% interest rate) MRS = MRT Julia's IC (higher utility) Julia's IC Julia's IC (through point F) Julia's IC (lower utility) 5658 91 Consumption now ($) Select one: O a. Given an annual interest rate of 20% Julia's maximum consumption now is $80. O b. at point F the marginal rate of transformation is greater than Julia's marginal rate of substitution. O c. The higher the interest rate, the bigger Julia's feasible set becomes. O d. At an interest rate of 10%, Julia's utility is maximised at point E. Consumption later ($)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

(Table) Refer to the table which shows the total utility and marginal utility for ice cream cone consumption. The value for consuming the fifth ice cream cone is: TU MU 1 25 2 30 3 53 4 63 71 OA. 8. B. 6. OC.7. OD.9.
3. [In class, we noted that the consumer will spend all their money if they have in- creasing preferences. Here, we give a calculus-based condition for the consumer to spend all their money, that doesn't assume more is always better. The con- dition is a stronger version of what is sometimes called "local non-satiation".] Let E X, and let MU, denote the marginal utility for good i € {1,2} at r. (a) Suppose some good i has MU, #0 (it could be positive or negative), and suppose the consumer is not spending all her money at bundle x (that is pr 0 if MU; <0. Argue that the consumer would not optimally choose r. x (b) Suppose MU₁(x) = MU₂(x) = 0, the good is affordable (p ≤ m), and u is concave. Explain why r is optimal.
Garfield enjoys pizzas and hanging out (leisure). He sleeps 8 hours per day. Of the remaining16 hours, for each hour he chooses to work he gets paid 2 pizzas. Garfield must pay 6 pizzas intaxes but receives dividends equivalent to 6 pizzas.1. Draw Garfield’s budget constraint (put consumption on the vertical axis and leisure of thehorizontal). Make sure to show the vertical and horizontal intercepts as well as the slope.b. Now suppose that Garfield chooses to work 10 hours per day. Find how many hoursof leisure and how many pizzas he will consume.c. Using your answer from b, show Garfield’s optimal point on the budget line and drawthe indifference curve passing from that point.4. Suppose that Garfield’s wage falls to 1 pizza per hour. Draw Garfield’s new budgetconstraint. Make sure to show the value of any intercept that has changed.5. Suppose that in response, Garfield decides to work for 6 hours per day. How much leisurewill he take, and how much pizza will he consume?6. Use an…
Suppose a consumer has a monthly income of m = 100 which she spendson two commodities: french fries (x1) and beef jerky (x2). The price offrench fries is p1 = 2 and the price of beef jerky is p2 = 5.(a) Write down the consumer’s budget constraint (equation).(b) What is the maximal consumption of french fries (this is calledthe real income in french fries).(c) Find the maximal consumption of beef jerky (real income interms of beef jerky).
Garfield enjoys pizzas and hanging out (leisure). He sleeps 8 hours per day. Of the remaining16 hours, for each hour he chooses to work he gets paid 2 pizzas. Garfield must pay 6 pizzas intaxes but receives dividends equivalent to 6 pizzas.1. Draw Garfield’s budget constraint (put consumption on the vertical axis and leisure of thehorizontal). Make sure to show the vertical and horizontal intercepts as well as the slope.b. Now suppose that Garfield chooses to work 10 hours per day. Find how many hoursof leisure and how many pizzas he will consume.c. Using your answer from b, show Garfield’s optimal point on the budget line and drawthe indifference curve passing from that point.4. Suppose that Garfield’s wage falls to 1 pizza per hour. Draw Garfield’s new budgetconstraint. Make sure to show the value of any intercept that has changed.5. Suppose that in response, Garfield decides to work for 6 hours per day. How much leisurewill he take, and how much pizza will he consume?6. Use an…
The graph given below indicates Marshall's marginal utility for two products, A and B. Marginal utility 24 20 16 12 8 4 0 (1) Quantity 1 2 3 4 5 6 2 (2) Product A MU 4 Quantity of A: Quantity of B: 6 8 Quantity per period (3) Product A (4) MU per $ Product B (at $2) MU 10 Product A Product B 12 a) From the graph above, complete columns 2 and 4 of the table above. Round your answers to whole numbers. b) If the price of both products is $1, what quantity of each good would Marshall purchase if his budget was $8? Quantity of A: Quantity of B: c) Suppose that the price of product A increases to $2. Complete column 3 of table above. d) If Marshall's budget remained the same, what quantities of each good would he now purchase?
3. Based on each scenario in this question, indicate whether the following statements is true or false, and briefly explain your reasoning. You may also want to use a graph in your explanation if you think it's necessary. a) Mike makes $500 per week and spends all her income on books and tea. Books cost $25 each, and Mike buys 16 each week. Tea costs $5 per cup, and Mike buys 20 cups. When Mike's income falls to $450 per week, he cuts his consumption of books by 3 books and purchases 5 more cups of tea. Based on Mike's consumption behaviors, books are an inferior good and Tea is a normal good. b) Lucy consumes food and clothing. For incomes near her current income, her income expansion path is negatively sloped. Assume that food is measured along the horizontal axis and clothing is measured along the vertical axis. Therefore, at current income levels, both food and clothing must be inferior good. c) For any normal goods, the income and substitution effects work in the same direction.…
Suppose that you have utility function U(x, y) = x2y2, What happens to the share of income spent on each good (, ) when the 1/2 P.X P,y price of x increases? O a. Share spent on x increases O b. Share spent on y increases O c. Both shares stay the same O d. Both shares decrease O e. Not enough information ge Next page
Q 1 5. Refer to the following intertemporal budget constraint of a respective consumer: a. How would this budget constraint change if individual becomes more presented oriented (he discounts future heavily)? b. How would this budget constraint change if individual faces a borrowing constraint in second period?
(Table) Referring to the table, which shows the total utility and marginal utility for ice cream cone consumption, the marginal utility for consuming the third ice cream cones will be: TU MU 25 2 30 53 63 71 O A. 11. ОВ. 12. O C. 14. O D. 23. 345
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
5. (12) Max is stocking up on ice cream and cookies; ice cream costs $2 and cookies cost 50 cents ($.50). The marginal utility gained from each treat is given in the table below. If Max is a rational utility maximizer and has $8 to spend, how many of each treat will they purchase, and in what order? Show your work. Qice cream MU of ice Qcookies MU of cream cookies 1234567 40 1 9 32 2 9 26 3 7 18 4 5 8 5 3 6 6 3 4 7 1