Suppose the price of goods X and Y are Px = 4 and Py = 2. with their current consumption bundle, a consumer would be willing to trade 3/2 units of good Y for one unit of good X. At these prices, the consumer should... Consume more of both X and Y. Consume more of good X and less of good Y. Consume more of good Y and less of good X. Keep their consumption bundle the same.

Suppose the price of goods X and Y are Px = 4 and Py = 2. with their current consumption bundle, a consumer would be willing to trade 3/2 units of good Y for one unit of good X. At these prices, the consumer should... Consume more of both X and Y. Consume more of good X and less of good Y. Consume more of good Y and less of good X. Keep their consumption bundle the same.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section6.A: Indifference Curve Analysis

Problem 1SQP

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Suppose you consume x1 unit of Goods 1 and x2 units of Goods 2, the utility you get is U(x1, x2) = x1x2, the price of Good 1 is $3, the price of Good 2 is $5, you have a total of $30. How many units of Goods 1 and 2 will you consume?
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You are choosing between two goods, X and Y, and your marginal utility from each is as shown in the following table. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? What total utility will you realize? Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? Using the two prices and quantities for X, derive a demand schedule (a table showing prices and quantities demanded) for X.
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A consumer currently spends a given budget on two goods, X and Y, in such quantities that the marginal utility of X is 15 and the marginal utility of Y is 8. The unit price of X is $3 and the unit price of Y is $2. The utility-maximizing rule suggests that this consumer should Multiple Choice a. decrease consumption of product X and increase consumption of product Y. b. increase consumption of product X and increase consumption of product Y. c. decrease consumption of product Y and increase consumption of product X. d. stick with the current consumption mix because it yields maximum utility.
Carol has very weird preferences. She only cares about quantity. When evaluating a bundle, Carol only looks at the highest amount of a good she can consume in each bundle, regardless of whether it is of eggs or dumplings. She is indifferent between two bundles only when the largest consumption of a good within each bundle is the same across bundles. So, for instance, if a bundle offers 5 eggs and 1 dumpling she finds that bundle indifferent to a bundle offering 4 eggs and 5 dumplings. These preferences are transitive. But are they monotone? And convex?
You are choosing between two goods, X and Y, and your marginal utility from each is as shown in the table below. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? What total utility will you realize? Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? Using the two prices and quantities for X, derive a demand schedule (price–quantity-demanded table) for X.
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