considere a pure exchange economy with two connumeren, indexed byi-1.2, and two goods, indexed by l = 1.2. Consumers are endowed with goods.we = (40) fore connumere 1 and W₁ = (0.1) fare consumere 2. Preferences of eachConsumer are represented by the utility functions.AU₂ (xss X₂₂) = ln Rgs + ln £₁2U₂ (×₂₁, X₂=) = ln X₂₁ + 1/ ln X₂₂1 write down the budget comtraint fore connumeres in this problem. Inyour comtraint, let ty Are the price of good I and fo be the priceof good 2.2. Find the demand functions for both goods for comumer 1 andConsumen 2.- (2)- (4)3. Explain why the allocation (1₁, ₁2) = (0.5, 0.5) is Not farce toefficient.

A Pareto efficient allocation, also known as Pareto optimality or Pareto efficiency, is a state in…

considere a pure exchange economy with two connumeron, indered by i-1.2, and two goods, indexed by l=1.2. consumers are endowed with goods we (40) for Consumer 1 and w₁ = (0.1) fare consumere 2. Preferences of each Consumer are represented by the utility functions. A U₂ (X₁ X₂₂) = ln Xz₂ + ln % 12 - (2) - (4) 1 write down the budget comtreoint fore connumeres in this Amoblem. In your comtraint, let by be the price of good I and be the price of good 2.

considere a pure exchange economy with two connumeron, indered by i-1.2, and two goods, indexed by l=1.2. consumers are endowed with goods we (40) for Consumer 1 and w₁ = (0.1) fare consumere 2. Preferences of each Consumer are represented by the utility functions. A U₂ (X₁ X₂₂) = ln Xz₂ + ln % 12 - (2) - (4) 1 write down the budget comtreoint fore connumeres in this Amoblem. In your comtraint, let by be the price of good I and be the price of good 2.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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which answer is correct among the provided ones the answer i got is provided on the image which is incorrect
Ding Ding is a cat philosopher. He spends his time on two activities. Sleep and thinking. Both activities produce pleasure to Ding Ding. How effective Ding Ding is in each activity varies day by day. But on a given day, if he spend “s” effective hours in sleeping and “t” effective hours in thinking, his utility is u(s,t)=s^2+t. you can assume that time is continuous in answering the following question. (A) Let us first ignore that there are only 24 hours each day. Label “s” on the x-axis and “t” on the y-axis in a diagram. Draw two indifference curves u(s,t)=s^2+t=24^2=576, and u(s,t)= s^2+t=12^2=144. On each indifference curve, you have to mark at least the coordinates of four points to illustrate the shape of it. (B) Describe in words how these two indifference curves in (a) relate to each other.
Given the utility function U (x1, x2) = x³x2.7 select all that are true. a) 30% of the budget is spent on good 1. ○b) V (p, I) = 30.370.7 I 10 P1P2 c) If P2 = 2 and I = 60, then $18 is spent on good 21. d) If P1 = 9, P2 = 2, and I = 60 then the consumer enjoys 1.81 utils of utility. e) Half the budget is spent on good 1 and the other half is spent on 2.
As a consumer you have RM34 per month to spend for snack i.e. either pizzas which costs RM6 each or chicken burger which cost RM4 each. Suppose further that your preference is given by the following Total Utility Table Quantity 1 2 3 4 5 6 7 Pizza 60 108 138 156 162 166 166 Chicken Burger 44 76 100 120 136 148 152 First, graph the budget constraint with Pizzas on the horizontal axis and Chicken burger on the vertical axis. What are the intercepts at horizontal axis and vertical axis. Using the table, please show the Marginal Utility of Pizzas and Chicken Burger for every quantity demand. Using the utility maximizing rule to identify the consumer equilibrium, that is, combination of pizzas and chicken burger that will maximize your Total Utility. Confirm that the consumer equilibrium generates the highest combined total utility of any affordable combination of goods.
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1. Suppose a consumer's utility function is: U (x1, x₂) xx. Furthermore, suppose the con- sumer's disposable income is $80, and the prices of the two goods are: x₁ = 4 and 2 2. Obtain the optimal amounts of î₁ and î that the utility maximizing consumer would buy. =
. Answer all parts (a) (c) of this question. (a) Consider an agent whose preferences over any couple (x1, x2), where 2₁ ER+ and x2 € R+, e.g., apples and oranges, is such that she prefers the bundle that is closest to having the same number of apples and oranges. Write a utility function u: R² → R+ which represent these preferences. A politician remarks "Our recent increases in the wage rates of teachers has been a total suc- cess! The shortage of teachers has been reduced drastically. Another, similar wage increase should eliminate this shortage entirely" (b) Explain and illustrate in a diagram what is meant by "income effects" and "substitution effects" of a wage rate change. (c) Explain and illustrate how you would model the labour supply decision of a potential teacher. Do you agree that the wage increase will increase the labour supply in this case? Carefully outline the assumptions underlying your argument.
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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
will thumbs up solution, thank you :) Consider a consumer with an income of M = 200 in an economy with 2 goods. Let the prices be p1 = 7, and p2 = 12, respectively. Define the budget set facing the consumer. In a well labelled diagram, illustrate the budget set for the consumer. Find two bundles, (x1,x2) and (y1,y2) that the consumer can afford. Can the consumer afford the average of the two bundles in your example? Why or why not? Suppose the price of good 2 decreases to p2(prime) = 15. Can the consumer afford the two bundles you described before now? Why? Thank you
Ginny likes to eat Bertie Bott’s Every Flavour Beans (b), and Chocolate Frogs (f). Herpreferences over these lollies are Cobb-Douglas, and can be presented by the utility functionu(b, f) = 1/5(b − 2)(f + 3). Each Every Flavour Bean costs 25 Knuts and each Chocolate Frogcosts 12 Knuts. Ginny has 314 Knuts to spend. Assume that beans and frogs are both perfectlydivisible goods.(a) Find Ginny’s optimal bundle.(b) Suppose that Ginny is mugged by Draco on her way to the lolly cart, so that by the timeshe is there, she is left only with 75 Knuts. What is her optimal bundle now?(c) Now, consider the general case, where Ginny’s income is m, the price of Every FlavourBeans is pb, and the price of Chocolate Frogs is given by pf . In other words, treat ChocolateFrogs as the numeraire. Find Ginny’s demand for each good in terms of m, pb and pf .(d) Find the good on which Ginny will always spend more than half of her income.(e) Find the own-price, cross-price, and income elasticities of good 2…
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