Question 31Clothing(units per week)Figure 3.1.2Food(units per week)Refer to Figure 3.1.2. The shape of an indifference curve like the one in this figure:violates the assumption that more is preferred to less.has market baskets that represent different levels of utility.represents more realistically the preferences of a rational consumer.implies that consumer preferences are not complete.

Indifference curve refers to the graphical representation of all possible combination of two goods…

Question 31 Clothing (units per week) Figure 3.1.2 Food (units per wook) Refer to Figure 3.1.2. The shape of an indifference curve like the one in this figure: O violates the assumption that more is preferred to less. 1:00 quels of utilit

Question 31 Clothing (units per week) Figure 3.1.2 Food (units per wook) Refer to Figure 3.1.2. The shape of an indifference curve like the one in this figure: O violates the assumption that more is preferred to less. 1:00 quels of utilit

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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7) A consumer has to choose the optimal amount of cheese and crackers to purchase. He or she has drawn his or her budget constraint (BC) and indifference curves on a graph with the amount of cheese (in ounces) on the horizontal axis and the amount of crackers (in packages) on the vertical axis. Which of the following statements is true if the price of crackers declines? The BC shifts to the left (down). The BC shifts to the right (up). The BC rotates such that it intersects the horizontal axis at the same point as before and intersects the vertical axis at a lower point. The BC rotates such that it intersects the horizontal axis at the same point as before and intersects the vertical axis at a higher point.
Question 4 Which of the following is NOT true about indifference curves? O They are downward sloping O They do not cross O The one is closer to the origin is preferable to indifference curves further from the origin O They are bowed in toward the origin
Emily is a utility maximizer. Her income is $100, which she can spend on cafeteria meals and on notepads. Each meal costs $5 and each notepad costs $2. At these prices Emily chooses to buy 16 cafeteria meals and 10 notepads. a) Draw a diagram that shows Emily’s choice using an indifference curve and her budget line, placing notepads on the vertical axis and cafeteria meals on the horizontal axis. Label the indifference curve, I1, and the budget line BL1. Make sure you calculate the endpoints of the budget constraint. b) The price of notepads falls to $1; the price of cafeteria meals remains the same. On the same diagram, draw Emily’s budget line with the new prices and label it BL2. c) Lastly, Emily’s income falls to $90. On the same diagram, draw his budget line with this income and the new prices and label it BL3. Is she worse off, better off, or equally as well off with these new prices and lower income than compared to the original prices and higher income?
rosses Suppose a consumers budget set car be written as $200 = $5x + $10y (a) Draw the graph with an indifference curve showing that the consumer is in equilibrium and identify where the budget set cross both.x and Y axis. (b) Now, if there is an increase in the price of good.x, and both x and y are normal goods, graphically show the effect of the increases in P and identify what part of it is due to the substitute effect, and what part is due to the income affect. X
12 2 4 6 8 Water (bottles per day) The figure above shows three of a consumer's indifference curves. Which point is most preferred? Point Conly Point Gonly Point Jonly Points Cand G are tied for the most preferred. More information is needed to determine which point is most preferred. 2.
In your own words, explain what indifference curves are. Give 4 properties of indifference curves.