Using the lotteries:L =[Amarone : 0.55, Cabernet : 0.45]L2 = [Barolo : 1].L3 =[Cabernet : 1]L4 =[L1 : 0.9, L3 : 0.1]L5 =[L2 : 0.9, L3 : 0.1]Explain why Lauren's preferences violations the Independence Axiom.Enter your answer here

Answer - Need to find- Explain why Lauren's preferences violations the independence Axiom Given…

Answered: Using the lotteries: L1 = [Amarone :…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose you find that MU1(X1Xx2)=2x2 and MU₂(x1+x₂)=2x1. What is the rate at which the consumer is willing to trade good 2 for good 1 at bundle (2,4)? (Note: enter a positive number, i.e. enter the quantity of good 2 that the consumer is willing to give up for an additional-marginal-unit of good 1.) Question 20 Suppose you find that the expressions of the marginal utilities for a consumer are given by MU1 (1,2)= 2 and MU₂ (1,2)= 7. Then you can conclude that: This consumer has Cobb-Douglas tastes For this consumer good 1 and good 2 are perfect complements For this consumer good 1 and good 2 are perfect substitutes None of the above Question 21 Suppose a consumer is always willing to give up 5 units of good 2 for an additional unit of good 1. For this consumer: Good 1 and good 2 are perfect complements Good 1 and good 2 are perfect substitutes Good 1 and good 2 are both essential goods None of the above
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Suppose Lea is presented with the following four bundles A=(12, 4), B = (10,6), C = (10, 7) and E=(8,8). Lea's preferences satisfy strong monotonicity and strict convexity. It is also true that for Lea A-E Which of the following statements, if any, is correct? (If no statement is correct, select "None".) Select one or more: a. For Lea, bundle C is strictly preferred to bundle A. b. Lea is indifferent between bundles A and C. c. Lea's favorite bundle among the four stated is A. d. None. e. For Lea, bundle C is strictly preferred to bundle B. f. For Lea, bundle B is strictly preferred to bundle E. g. For Lea, bundle E is strictly preferred to bundle A.
To determine the utility maximizing consumption of two products one uses the formula that is called the rule for maximizing utility: OP1/P2-MU1/MU2 which also is stated as MU1/PU1-MU2/P2.. OExplains the Diamond-Water Paradox. O Calculates the utility maximizing consumption of the two goods. All of the above are correct. None of the above are correct.
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Using the lotteries: L1 = [Amarone : 0.55, C'abernet : 0.45] L2 = [Barolo : 1]. L3 = [C'abernet : 1] L4 = [L1 : 0.9, L3 : 0.1] %3D L5 = [L2 : 0.9, L3 : 0.1] Explain why Lauren's preferences violations the Independence Axiom.