Suppose an individual has the following utility function:U(x, y) = -4(x – 5.5)? – 2(y - 3.5)?Further assume that the price of good x, Prindividual has an income m = $65$6, the price of good y, Py = $8 and the%3D%3!a)enčes. Please label the graph properly including values for x and y.Draw an indifference curve (one IC is enough) that represents this person'sefer-b)and y* for the above utility function. Explain your answer.Intuitively, and without formally solving, can you guess the maximized values r*Derive the optimal values z* and y* by formally solving the above utility functionc)subject to the above constraint. You can use any of the utility maximization techniques welearned in class.d)is given in this problem as well as the budget constraint, can you explain the differencesbetween the answers you found in parts b) and c) (if any). Be as detailed as possible withyour explanation.Compare your answers in parts b) and c). Based on the utility function that

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Answered: Suppose an individual has the following…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Briefly Explain why convex preferences mean that "averages are preferred to extremes."
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.
Suppose that one of your friends does not care if she consumes spaghetti (S) or noodle (N). She wants toconsume either two-dish spaghetti or two-dish noodle or any combination of both which adds up to twodishes.(i) Write the utility function of your friend to represent his preferences.(ii) Draw couple of indifference curves of your friend on graph with appropriate labels.(iii) Denote prices as Pn, Ps; income as M. If Pn < Ps, then determine the demand function of your friend foreach product as a function of prices and income.
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
2 Indifference curves Suppose an individual who derives utility u(x, y) from consuming a units of good X and y units of good Y. Derive the indifference curve for a level of utility U for each of the following utility functions. Draw them in the graph below for a utility level U = 18. (A) u(x, y) = 2x + 3y (B) u(x, y) = min{3x, y} (C) u(x, y) = xy
In your own words, explain what indifference curves are. Give 4 properties of indifference curves.
Help me
Que Robert's utility function is U(x, y) = 2/T + y. In every graph for this question, set y in the vertical axis and z in the horizontal axis. (a) Obtain the marginal rate of substitution MRS. Obtain the equation of the indifference curves for Ū = 2 and Ū = 4 (solving for y as a function of 1). Draw these indifference curves, identifying the intersections with each of the axes. (b) Suppose p, = 2 and Robert's income is M = 6. In a new graph, show the total, income and substitution effects (on the demand of r) of a drop in the price of z from p, = 4 to Pz = 2. (c) Now, the store where Robert goes for shopping has changed the prices to p, = 2 and py = 6, however, it also has a new special offer: for any amount of Y that Robert buys, he gets the same amount of X for free. Robert's income is M = 6. Draw Robert's budget line. Write down the equation of this line. Find Robert's utility-maximising bundle. (d)(d.1) Arthur's income is M = 6 and he goes to the same store as Robert. His utility…
8. Fabian consumes X and Y and the following utility function represents his utility: U = 2XY a. With a utility function of U = 2XY, Fabian's MU, = 2Y and his MU, = 2x ,where MU is marginal utility. Write an equation for Fabian's marginal rate of substitution (MRS). b. Suppose Fabian's income is $120 and Px = S6 and Py-$2, where Px is the price of X and Py is the price of Y. Write an equation for Fabian's budget constraint. c. Write the equation that equates the slope of Fabian's budget constraint to the slope of Fabian's indifference curve: d. If Fabian is spending all of his income, how much X and how much Y will he choose? Use the equations you wrote in part's b and c to answer this question. e. What will Fabian's utility be with this combination of X and Y? f. Now suppose the price of X increases to P.=10. Write the equation that equates the slope of Fabian's budget constraint to the slope of Fabian's indifference curve. How will this change the optimal combination of X and Y? What…
Suppose the utility function for a consumer is given by U = X + Y, where X and Y are a consumer's consumption of goods X and Y. Which of the following bundles does this consumer find indifferent between 10 units of X and 5 units of Y? You Answered a. 4 units of X, 10 units of Y b. 2 units of X, 13 units of Y c. 5 units of X, 7 units of Y d. 8 units of X, 8 units of Y
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?
7. Find the indirect utility function and the expenditure function for the quasilinear utility function.

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