The shape of a person's indifference curves between two goods depends on A) the marginal rate of substitution B) the prices of the two goods. C) the level of satisfaction for the person. D) the person's income. E) all of the above

Q: Sally eats at the local burger restaurant. Suddenly the restaurant lowers its prices. A - In…

A: Answer:-  A) You can't do it. Because Sally frequents the burger joint, lower burger prices imply…

Q: It is known that the indifference curve is convex. What does this tell you about the relationship…

A: The indifference curve refers to the graphical representation of different combinations of two goods…

Q: Goods 1 and 2 are perfect complements, and a consumer always consumes them in the ratio of 2 units…

A: Perfect complements are a pair of goods or services that are typically consumed together in fixed…

Q: In the diagram on the right the consumer's original budget line is L₁, and the consumer buys the…

A: The consumer equilibrium refers to situation where consumer maximises his utility at given level of…

Q: What is the concept of diminishing marginal utility of consumers? How consumer use Marginal Rate of…

A: "Marginal utility represents the addition to the total utility from consuming one more unit of the…

Q: Consider a consumer buying perfect complements. If there is a decrease in the price of good 1, the…

A: The goods which are consumed with other goods is considered as a perfect compliment. It has a…

Q: if there are 2 products, milk and yoghurt, how can we understand the satisfaction maximization…

A: In the context of consumer choice and satisfaction maximization, a budget line represents all…

Q: When May's income increases, she consumes more of goods A and B. Suppose there is no change in May's…

A: Price Effect: If the price of a good changes, then it affects the demand for the good. And we can…

Q: Explain the law of demand using substitution effect,income effect and the law of diminishing…

A: Law of Demand says that as a price(P) of a commodity decreases, the quantity(Q) of it increases,…

Q: Draw a budget constraint for two goods and set of indifference curves over the  possible…

A: Budget constraint represents the combinations of goods that an individual could purchase with the…

Q: Let u(x₁, x₂) = 4x₁ + x₂ be the utility function. 1. Sketch the indifference curves corresponding to…

A: The indifference curve shows the different combinations of two goods  which can be consumed which…

Q: 1) A) Suppose that y is an inferior good and the price of y falls. Draw a budget constraint and…

A: Inferior goods are the goods for which income and demand are inversely related. When the income…

Q: How would you describe the relationship between two goods X and Y if the indifference curve was…

A: An indifference curve is a graphical representation of all combinations of two goods or commodities…

Q: Arthur spends his income on bread and chocolate. Chocolate is a good from which Arthur gets a…

A: Indifference curve: Indifference curve shows different combinations of 2 goods such that consumer’s…

Q: Which of the following is incorrect? O Income effect can be zero If consumer consumes two goods,…

A: Answer: A Giffen good is a good that has a positive relationship with price. It means when the price…

Q: i. Analyze the utility maximizing problem with two goods as follows: Max u(x, y) subject to px + qy…

A: Our problem is :     In order to maximize U(x, y), we set up the Lagrangian function as follows:…

Q: Decompose the change into income and substitution effects

A: The price of pillows has increased from $35 to $40 per pillow, while the price of sodas remains…

Q: Consider the following pairs of goods: Right and left boots Hazelnut Butter and Almond Butter Iphone…

A: The Indifference curve is the summation of two goods or commodities that provide equal satisfaction…

Q: Normal goods cannot be Giffen goods because their income effect is smaller than their substitution…

A: For the normal goods, both the income and the substitution effect both work in the same direction.…

Q: For two goods that I consume and I like both of them, say hamburger and Ice Latte, if hamburger is…

A: Introduction: The budget line depicts all potential combinations of two commodities that a customer…

Q: a) Jim buys gingerbread and candy, both of which are normal goods. When the price of gingerbread…

A: Income effect refers to the change in the quantity of good due to change int he price of that good,…

Q: Suppose that a consumer has $200 to spend on two goods: beer and pretzels. The price of beer is…

A: Given; Income of the consumer=$200 Price of beer= $6 Price of pretzels= $3

Q: Suppose that Jason's utility is entirely based on number of hours of skiing (X) and skating (Y). His…

A: An indifference curve depicts the combination of two goods that derives the same level of utility.…

Q: Assume the production function is given as Y = 4X + 3X ? - 0.2X 3 Where Y is amount of output…

A: Answer - Given in the question- Y = 4X + 3X2  - 0.2X3 Y = output  X = input  Part 1 Answer- Need to…

Q: From the information given above calculate the price of Y. Given the information above, calculate…

A: Consumer has options of two goods; X and Y. This consumer has total income of $1000 to spend on X…

Q: a. find her most preferred affordable bundle b. Jackson also likes hamburgers and figs. his…

A: Utility of a consumer is represented using indifference curves. The budget constraint is the…

Q: In the above figure, if the budget line shifts from RT to RS, the substitution effect is illustrated…

A: The budget line represents the different combinations of two goods that can be purchased with…

Q: (a) What are the effects of an increase in the price of good A on a consumer’s demand if i) good A…

A: The fluctuations that happen between demand and also the supply-side decides the levels of prices…

Q: Joan has the following utility function U = 4x + 4y. a. Describe her preferences for these two…

A: Utility function : U = 4x + 4y  Utility function describes the level of satisfaction derived by a…

Q: A consumer has preferences over two goods, coconuts and fish. The consumer prefers more of each good…

A: Indifference curve represents the combinations of two goods between which the cunsumers are…

Q: Explain what is meant by the Income and Substitution Effects? With the help of standard Indifference…

A: The interaction between the income and substitution effects will determine how the quantity required…

Q: You are hungry. You are debating between Pizza House, Taco Bell, and Five Guys hamburgers. Say pizza…

A: Consumer refers to an individual or a group of people that buys goods or service for the purpose of…

Q: A consumer is always indifferent between one unit of good A and one unit of good B, no matter how…

A: When a customer is indifferent between one unit of good A and one unit of good B, regardless of how…

Q: a) In words describe what the Marginal Rate of Substitution represents. b) Explain why two…

A: a) The marginal rate of substitution is referred to the amount of a particular good that a consumer…

Q: iv) Use points A and B to draw a demand curve for meals at Dhaaba. What is this type of good called?

A: Since you are asking for the fourth part of the question, then i am assuming that you must have…

Q: The income effect of an increase in the price of a normal good that a consumer buys on a regular…

A: The income effect measures the change in demand for goods and services due to a change in the…

Q: Suppose Cenk consumes only two goods, Good X (inferior good) and Good Y (normal good). Given that…

A: The utility function refers to all those commodity bundles that derive the same amount of utility…

Q: Diminishing marginal rate of substitution for a good means:     I. decreasing the quantity of a…

A: Generally, marginal substitution is reducing, which means a shopper picks the substitute instead of…

Marginal Rate of Technical Substitution

MRTS reaches a manufacturer when a part of the product is lowered to sustain the manufacturing level when the other part is extended. It is the level of the quantity that is lowered when one extra volume is used, and the output is unchanged.

Preferences and Utility Analysis

Before understanding what is preference and utility analysis, it is very important to understand the terms preference and utility separately.