Indifference curves for a hypothetical individualconsuming only X and Y goods are represented by Ui(X, Y).i= 1, 2, 3. . .n When ul (а) Р. . X< X.ОР. 1—соnstant> 0(b) Pr ↑, X.> |X-ОР. u-соnst.(c) I †, X-Xe> [X.OPx \u=const.

The purpose of this question is to represent the curves represent the different combinations of two…

Answered: Indifference curves for a hypothetical…

Indifference curves for a hypothetical individual consuming only X and Y goods are represented by (X, Y). i = 1, 2, 3. . .n When ul

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A utility function is given as U = √MB where B represents the quantity of books consumed and M represents magazines. This uülity is shown via indifference curves in the diagram to the right. Holding the number of magazines constant at 20 units, as we increase our consumption of books from 5 units to 10 to 15 and to 20 units, marginal utility with respect to books. is CIES Magazines (Y) 50- 45 40 35 30 25- 20- 15- 10- 5 0- 10 15 RSTV a quie 10 15 20 25 30 35 40 Books (X) 45 5 eboo SCOR scor scor score score
28) When measuring the substitution effect, one uses the change along A) the new indifference curve. C) the old indifference curve. B) the budget constraint. D) either the old or the new indifference curve.
True or false. A change in prices or income can alter preferences and thus the indifference curves can shift.
(a)_Suppose we have preferences U(X, Y) = X² Y².. What is the utility at the bundle X = 5 and Y = 20? Create a table then graph/sketch the indifference curve through (5, 20). Interpret the MRS (with MRS = Y/X) at this bundle. < (b) _Let prices be Px = $5, Py = $5 and income M = $1000. Draw/sketch the budget constraint. Explain what the slope of the budget line means in economic terms.< (c) State the consumer's utility maximization problem and express this in words. What are the two conditions (equations) that identify the optimum? Sketch this in a figure and explain.< (d) Use the information in (a) and (c) to show that demands are: X = ½ M/PX and Y = ½ M/PY.< (e) For the income and prices in (b), what is optimal X, Y, and utility? Show your work. (f) Suppose Px falls to $4 and Py rises to $7 but income stays at $1000. Does consumer utility rise or fall? Show and explain. < (g) Calculate the Compensating Variation that ensures the consumer is no worse off nor better off with these price…
Consider a consumer with M = $120 to spend (income) and faces prices PX = $15 and PY =$5 for goods X and Y. Her utility function is U(X, Y) = X1/2 + Y1/2.a Carefully. express the consumer’s choice problem, using the given information (this is whereyou write out the max operator, the choice variables, the objective function, and the budget constraint). b. Compute the absolute value of the consumer’s marginal rate of substitution, and inspect it todetermine the shape of the consumer’s indifference curves: C-shaped, linear, )-shaped, or some other shape.To show your work, neatly use the arrow argument, increasing X (↑) and decreasing Y (↓) to see whether|MRS(X, Y)| is diminishing along an indifference curve. c. If the indifference curves are C-shaped write out the budget line and the equal slopes conditionthat characterize an interior solution to the consumer’s choice problem. Use the particulars for the givenconsumer. Solve these conditions to find the interior solution. On the other…
Suppose your only source of income is work and that you are paid $20 per hour. This determines a budget constraint. You can buy free time at the expense of your income by working less. Likewise, you can get more income at the expense of your free time by working more. Suppose that you can choose how many hours you work. How do you decide exactly on which point of your budget constraint you will choose? Explain this by referring to your indifference curves.
Page of 3 > Due November 1, 2 Press Esc to exit full screen A. Jack enjoys a cup of cappuccino every morning, which is made with equal parts of steamed milk (m) and espresso(e). Suppose Jack's utility function U(m, e) = min(m, e). Graph Jack's indifference curves when U = 4 and U = 8. B. Leslie buys 2 goods: z and y. His utility function is U(z,y) = 5x+3y. 1. Plot this consumer's indifference curves when U = 15 and U = 20. What is the shape of Leslie's indifference curves? 3. For Leslie, how are these two goods related? C. Leslie's friend Tim has a different utility function for the same goods U(x, y) = √zy. 1. Plot this consumer's indifference curves when U = 15 and Ū = 20. 2. What is the shape of Tim's indifference curves? D. A consumer's utility function for goods 2 and y is U(z,y) = x+2y. 2. 1. Calculate the consumer's marginal utility for each good at (2,2) (Hint: marginal utility represents the amount of utility the consumer gains by consuming one more unit of this good. You can…
George has a fixed income and can afford at most 7 units of X if he spends his entire income on X. Alternatively, if he spends all his income on Y, he can afford at most 6 units of Y. Draw George's budget line and an indifference curve such that George chooses to buy 4 pieces of X. Martha has the same income and faces the same prices, yet she chooses to buy 2 pieces of X. In equilibrium, what is George's subjective value of X in terms of Y? What is Martha's? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
The utility-maximizing bundle of x and x2may, in some instances, be found at a point of tangency between the budget line and an indifference curve. In other instances, the utility-maximizing bundle will be found at a corner point-that is, where the quantity consumed of one good is zero. For which types of indifference curves shown below will the utility-maximizing bundle definitely be found at a corner point? Choose one or more: A. B. "C. D.
You consume music (M) and concert tickets (C). Your utility function is U(M, C) = M1/4C3/4. The marginal utility for concert tickets, MUC is MUC =3/4C-1/2M1/4 and the marginal utility for music, MUM is MUm = 1/4C3/4M-3/4 (a) Calculate MRSMC using only the given marginal utilities. (b) Solve for the utility of bundle A where M = 16 and C = 16. Solve for your utility at bundle B where M = 128 and C = 8. Are the utilities the same? (c) Calculate MRSMC at bundle A and at bundle B. Are they the same? (d) Are your indifference curves convex? Draw the ICs. Make sure to label the quantities of the consumption bundles, the axis, and the MRS at those bundles.
Suppose you have a $20 gift card and want to buy Blue and Red yarn. The utility function from yards of blue (B) and red (R) yarn can be expressed as follows: U(B,R) = 3B+R Red yarn costs $4 per yard. blue yarn costs $4 per yard. A) Graph the budget constraint and the indifference curves that can be reached. How many yards of each type of yarn will he purchase at these prices with his gift card?
Suppose that the only items you consume are bread and wine. If the price of bread were to increase tomorrow, and if simultaneously your income were to increase by just enough so that you were equally as happy tomorrow as today, what would happen to the level of your consumption of bread ? Illustrate your answer with indifference curves