Consumeri's direct utility function is of the form: %3D where 1, x2 > 0 and a is a parameter. Assume that the consumer's preferences are convex and monotonic. (a) What restrictions must there be on the value of parameter a for the preferences to satisfy the convex and monotonicity properties of the utility function? Explain.
Q: • An engineer has a talent t in {1,2} with equal probability (prob=1/2), and the value of t is…
A: A Bayesian Nash equilibrium is a concept from game theory that extends the traditional Nash…
Q: Foreign Trade Zones Cajas, Inc, is considering opening a new warehouse to serve the Southwest…
A: Definition: A tariff is a tax on goods and services imported into a country. It is typically used to…
Q: 3. In a t-account show the bank balances for a $5000 deposit with a 10% reserve ratio. What is the…
A: Part 1 Deposit = 5,000 reserve ratio = 10% Part2 If reserved ratio is lowered to 2% Deposit is same…
Q: 4) The demand for labor by an industry is given by the curve L = 1200 - 10w, where L is the labor…
A: ***Since the student has posted multiple questions, hence, the expert is required to solve only the…
Q: Using the model of Aggregate Demand and Supply, explain the impact of Brexit on the Irish Economy,…
A: With increased global integration of trade and economic activities, it is more important than ever…
Q: Mike Carlton, financial analyst at MVR Corporation, is examining the behavior of quarterly utility…
A: Total Cost: The term total cost refers to the cost that includes the total variable cost and the…
Q: Businesses in the nation of Islandia have been accumulating cash because they have a pessimistic…
A: GDP is the gross domestic product. GDP is the money value of all goods and services produced in an…
Q: 5. Consider a new environmental economic indicator that's being promoted by an NGO looking to earn…
A: An environmental economic indicator is a metric that measures the relationship between the…
Q: Explain the three characteristics of utility.
A: The economics as a study is based upon the idea that all the societies in the world tend to face a…
Q: Consider an economy where Banks can invest in one of two projects, G and B. Project G pays G if…
A: The profit for investing in Project G:The profit for investing in Project B:And
Q: 13. In Avengers: Infinity War the character Thanos seeks to use the power of the infinity stones to…
A:
Q: Consider the neoclassical growth model. Suppose in the current period a country's saving per worker…
A: The Solow–Swan model, sometimes known as the exogenous growth model, is a long-run economic growth…
Q: 4. If a drought destroys tea crops causing an increase in the price of tea the (demand/quantity…
A: The only demand demand determinant that affects quantity demanded is the own price, while other…
Q: bank deposits held at the fed =$300. Checkable bank deposits =$1000. Currency held by public =$200.…
A: The monetary base refers to the total amount of money in circulation in an economy, including…
Q: The new classical critique of activist fiscal policy is theoretically different from the…
A: The equilibrium interest rate in the loanable funds market is determined at a point where the demand…
Q: According to given (linear) demand function for central bank reserves, assume that CB wants to…
A: Monetary base, also known as high-powered money, is the total amount of currency in circulation and…
Q: Suppose individual K consumes two goods and two goods only, good X and good Y. Using a graph with…
A: Substitution effect and income effect are two concepts used in economics to describe the change in…
Q: An economy with no government is described by the following: • Marginal propensity to consumer = 0.8…
A: An inflationary output gap refers to the macroeconomic concept which measures the difference between…
Q: 1, A corporation sold an issue of 20 year bonds, having a total face value of P10M for P9.5M. The…
A: The annual cost of redemption of a bond is calculated by the following formula: A=F(1+i)n−Fi where,…
Q: Describe the type of benefit received in each scenario. Either the scenario describes a…
A: 3 If the family receives the new Child Care Benefit Child Care benefit Service funded by tax…
Q: Prepare a product-by-value analysis for the following products, and given the position in its life…
A: Product value analysis means a systematic analysis of the product related to its production, per…
Q: Insurance Diagram Total Utility E U(W-L) B W-L P(W-L)+(1-p)W Expected If an insurance company…
A: * ANSWER :- By using given data the matching are given below
Q: 14. (continued) What happens to the labor productivity, which is the output per unit of labor, Y/L,…
A:
Q: A company plans to assign six salesmen to six cities in which it operates. The estimates o sales…
A: Salesman City C1 C2 C3 C4 C5 C6 total S1 42 48 50 38 50 54 282 S2 50 34 38…
Q: 3- For each game below, determine and justify if the game is perfect recall. If the game features…
A: Given, 2 Players : I and II Player I has two strategies : a and b Player II has six strategies : x,…
Q: Given the following information, S= -200 + 0.3Y I= 100 a. Calculate the national income equilibrium…
A:
Q: 5. Suppose the market shown below. a. Suppose now that the government decides to introduce a price…
A: The laws enforced by the government in order to regulate the price are referred to as price controls…
Q: 5. If a new study shows that eating dark chocolate promotes a healthier lifestyle, the…
A: Change in demand occurs due to change in non price factors like expectation of future prices, change…
Q: The People's Republic of China has an estimated $101.54 trillion of capital with a depreciation rate…
A: The contribution of capital is 0.4 and it would affect the GDP accordingly. The rise in capital…
Q: 3. The Cobb-Douglas production function F(x) = 0.2ln(x1) + 0.8ln(x2) is subject to dimin- ishing…
A:
Q: the demand and supply functions for a commodity be Qd = D(P, YO) (Dp 0) Qs = S(P, TO) (Sp 0) Where…
A: This question pertains to the equilibrium condition between the demand and supply functions of a…
Q: What Happens When... ? Directions: For each scenario, determine if there will be an increase or…
A: When analyziy the supply of an output, it can be seen that the change in the price of a product will…
Q: Assume that the export price of a Toyota Corolla from Osaka, Japan is ¥2,100,000. The exchange rate…
A: The value of one currency in respect to another is known as an exchange rate. It shows the cost…
Q: A 176.
A: Aggregate demand is the sum of consumption, investment, government spending and net export.…
Q: Pear Phone |Year Price (S) Quantity Price (S) Quantity 2015 3 210 450 54 2016 4 200 500 50 4.…
A: Nominal GDP is the value of goods and services calculated at current prices produced in the domestic…
Q: Use the graphs to answer the questions that follow. Cups of Coffee $6 $5 $4 $3 Demand $2 Supply $1…
A: The equilibrium is established where the demand and supply are equal.
Step by step
Solved in 2 steps
- Consider an economy with two goods, consumption c and leisure 1, and a representative consumer. The consumer is endowed with 24 hours of time in a day. A consumer's daily leisure hours are equal to 1 = 24-h where h is the number of hours a day the consumer chooses to work. The price of consumption p is equal to 1 and the consumer's hourly wage is w. The consumer faces an ad valorem tax on their earnings of 7 percent. The con- sumer also receives some exogenous income Y that does not depend on how many hours she works (e.g. an inheritance). The consumer's preferences over consumption and hours of work can be represented by the utility function U(c, h) = c-3h¹+, where 3 > 0 and p > 0 are parameters. 1+pA consumer has preferences over bundles of two goods with indifference curves defined by X2 = for k>0. (a) Find a utility function representing these preferences assuming that the consumer's pref- erences are monotone. (b) Give an example of a utility function representing non-monotone preferences with the same indifference curves. (c) Show that indifference curves of the form x2 = x + k for k € R cannot arise from monotone preferences.How does a consumer maximizes their utility given that they experience a budget constraint? Explain with graphical illustrations. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.
- 2. A consumer has a utility fuinction given by a) Derive an expression for the two marginal utilities: MU (x1, 22) and MU2 (21, r2). Since AMRS = -YU use these marginal utilities to derive a simple expression for the MRS (r1, 22). b) Optimal choice on the part of the consumer implies MI RS = -. Suppose M 20, p1 = p2 = 1. Show the optimal choice in this case on a well-labelled graph of the budget set. Include an indifference curve consistent with these preferences. c) Now keep income at 20, and pi = 1, but set p2 - 2. Show the optimal choice in this case on a well-labelled graplh of the budget set. Inclnde an indifference curve consistent with these preferences.Hi, I need some help with the attached question. It is taken from an optimisation problem set in my intermediate maths for economists course.(c) If the preferences are concave, will the consumer ever consume both of the goods together?
- (a) Suppose we have preferences U(X, Y) = 10X²/³ Y¹/3, Create a table and graph/sketch the indifference curve through the bundle X = 30 and Y = 30.< (b) The Marginal Rate of Substitution is MRSxy=-2Y/X. For the bundle (X= 30, Y = 30), calculate and then interpret what the value of the MRS means.< (c) Cobb-Douglas preferences are strictly convex. What does this imply about the MRS as we move along the indifference curve? Explain/discuss (you may want to draw a picture). < (d) What are the two conditions (equations) that identify the optimum given these preferences and the consumer's budget constraint? Sketch this in a figure and explain.< (e)_From (d) we can show that optimal demands are: X=½ M/PX and Y = ½ M/Px. (you do not have to derive these, just use the equations I have given you.) Calculate optimal demands (X*, Y*) and utility if Px = 10, Px= 5 and income M = 1200. < (f)_Suppose Px falls to Px = 8 but Py and M are unchanged (Px = 5 and M = 1200). Calculate the new optimal demands…A9Hella the Greek's preferences can be described by the utility function U(x, y) = (x^1/2 + 3^1//2)^2. (a) What is the indifference curve for a utility of 49? (b) By how much does utility increase when Hella increases consumption of good y by one (small) unit, when initially U = 49 and x = 1? (c) Holding utility constant at 49, if initially x = 1, how many additional (small) units of y does Hella have to consume if her consumption of x drops by 6 (small) units?
- 1. For each of the three utility functions below, find the substitution effect, the income effect, and the total effect that result when prices change from p = (2,1) to p' = (2,4). Assume the consumer has income I = 20. (a) Before doing any calculation, make an educated guess about the relative magnitude of the three substitution effects and the three income effects to be found below. (b) u(x1, x2) = x1 + x2. (c) u(x1, x2) = x1x2. (d) u(x1,x2) = min {x1,x2). (e) Rank the substitution effects and the income effects found above by their magnitude. To what extent do they conform to your guess?2. Supose that a consumer has utility function U with U (₁,22) = x1426, where ₁ and ₂ are demand of commodity 1 and 2. Suppose that the price of commodity 1 and 2 is $3 and $5, respectively. This consumer has money m = 12 to spend and wants to maximize utility with constraint the money. (a) Write the Lagrangian function. (b) Find the critical point using first order condition. (c) Find the Hessian matrix to check whether the critical point is maximiser or minimiser. (d) Find the maximum utility.1. A standard model of choice under risk is Expected Utility Theory (EUT) in which preferences over lotteries that pay monetary prizes (x₁, x2, ..., xs) with probabilities (P1, P2, ..., Ps) with Eps = 1 are represented by the function L S (a) What does it mean to say that a function represents the consumer's prefer- ences? Σpsu(xs) Choice 1 8=1 (b) State and briefly comment on the axioms required for the EUT representation. (c) Consider the following experiment of decision making under risk in which sub- jects are asked which lottery they prefer in each of the following two choices: Lottery B 0 with prob. 0.01 10 with prob. 0.89 50 with prob. 0.10 Lottery D Choice 2 Lottery A 0 with prob. 0 10 with prob. 1 50 with prob. 0 Lottery C 0 with prob. 0.90 10 with prob. 0 50 with prob. 0.10 Suppose that the modal responses are Lottery A in Choice 1 and Lottery D in Choice 2. Assume that utility of zero is equal to zero and illustrate why it is not possible to reconcile these experimental…