Units of A Units of B 16 12 6 8 8 4 12 24 Assuming that the prices of A and B are $1.50 and $1, respectively, and that Mr. Chen has $24 to spend, plot his budget line and identify the optimal combination of goods A and B that he will purchase. Instructions: (1) Use the tool provided 'Budget' to draw a budget line. Plot only the endpoints such that the first point touches the vertical axis and the last point touches the horizontal axis. (2) Use the tool provided 'Optimum' to locate Mr. Chen's optimal combination of the two goods. Mr. Chen's Preferences and Budget Goods A and B Good A 28 24 18 14 32222226120 8 IC3 6 IC2 4 IC₁1 2 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Good B Tools / -9 Budget Optimum

Units of A Units of B 16 12 6 8 8 4 12 24 Assuming that the prices of A and B are $1.50 and $1, respectively, and that Mr. Chen has $24 to spend, plot his budget line and identify the optimal combination of goods A and B that he will purchase. Instructions: (1) Use the tool provided 'Budget' to draw a budget line. Plot only the endpoints such that the first point touches the vertical axis and the last point touches the horizontal axis. (2) Use the tool provided 'Optimum' to locate Mr. Chen's optimal combination of the two goods. Mr. Chen's Preferences and Budget Goods A and B Good A 28 24 18 14 32222226120 8 IC3 6 IC2 4 IC₁1 2 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Good B Tools / -9 Budget Optimum

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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sketch a person’s indifference map and budget line for two goods, X on the horizontal axis and Y on the vertical axis. Mark the optimum consumption point. Now illustrate the following (you might need to draw a separate diagram for each): (a) A rise in the price of good X (a normal good), but no change in the price of good Y. (b) A shift in the person’s tastes from good Y to good X. (c) A fall in the person’s income and a fall in the price of good Y, with the result that the consumption of Y remains constant (but that of X falls).
PROBLEM (1) Suppose a consumer has just enough money to afford the bundle of 3 apples and 2 oranges, and similarly she also has just enough money to afford the bundle of 2 apples and 4 oranges. (a) Denoting the number of apples with x and oranges with y, plot the two given bundles on a graph, and calculate the relative price of apples; px/ py. (b) If she buys only apples with her budget, how many can she buy? If she buys only oranges, how many can she buy? Write down the budget equation for the consumer. (Notice that knowing two points on the budget line, you can write down the budget equation, even though you weren't given the prices nor the income explicitly!) (c) Suppose MUx = 20 and MUY = 30 at some point on the budget line. Is she maximizing utility by choosing this bundle? If not, should she buy fewer apples (and more oranges), or more apples (and fewer oranges), to increase her utility? (d) Forget about (c); instead, you learn that her utility function is u(x,y) = Axy³. What is…
10) Figure 1 shows some indifference curves and budget lines for consumer Yusuf. Milk A B Cheese Figure 1 If Yusuf's income increases, his optimal consumption changes from point A to point B. Which of the following statements is true for Yusuf? (a) Cheese and milk are substitutes. (b) Cheese is an inferior good. (c) Milk is an inferior good . (d) Milk is a normal good. (e) None of the above.
can you show how they got this answer
Refer to the graph below Quantity of Y 160 0 Multiple Choice The consumer's income is $1,000 Why doesn't the consumer choose the combination at point B O Quantity of X 200 O The marginal utility of Y exceeds the marginal uplity of X O The consumer is willing to give up more X for an additional unit of Y than must be given up given the relative prices of X and Y. The marginal utility per dollar spent on X exceeds the marginal utility per dollar spent on Y The consumer is willing to give up more Y for an additional unt of X than must be given up given the relative prices of X and Y
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Number of Sodas per day Total Utility Marginal Utilit 1 20 35 3 47 12 4 10 Refer to the table, The marginal utility of the second soda per day is L. (Answer should be in the form of numerical characters, e.g. 20) Enter your answer here