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

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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
3) Joshua is a utility maximizer and likes ice cream. He likes vanilla ice cream, but wouldhappily switch to chocolate ice cream if offered 1 scoop of chocolate ice cream for everyscoop of vanilla ice cream he has to give up. He has $5 of income to spend on ice cream.If vanilla ice cream costs $1 per scoop and chocolate ice cream costs $2.5 per scoop,Joshua will consume ______ scoops of chocolate and ______ scoops of vanilla ice creamper day.A) 0; 5B) 5; 0C) 2; 0D) 0; 2E) None of the above.
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3. Over a two-year period, an individual exhibits the following consumption behavior: P, P, Year 1 3 3 5 Year 2 4 2 Is this behavior consistent with the weak axiom of revealed preference?
5. Maximum utility occurs when the marginal utility per dollar for both goods is equal. True True O False
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…
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QUESTION 32 The optimal consumption point in an economy with two goods A and B is where: O a. The marginal utility of product A over its price is equal to the marginal utility of product B over its price O b. the marginal rate of substitution of both goods is equal O c. The price of good A is equal to the price of B Od. The marginal utility of product A is equal to the marginal utility of product B
4. What kind of preferences are represented by a utility function of the form u(r1, r2) = VI1 + x2? WWhat about the utility function v(r1,r2) = 13.r, + 13.r2? %3D %3D