Which of the following combinations areunattainable given a consumer's budgetline? Multiple choice question. Acombination that intersects either of the axesCombinations that fall on the budget lineCombinations that fall inside the budget lineCombinations on the midpoint of the budgetline Combinations that fall beyond thebudget line

The objective of the question is to identify which combinations of goods are unattainable given a…

Answered: Which of the following combinations are…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The concept of diminishing marginal utility says that the satisfaction level of human beings drop as we get more of something. Because of this, we place less value in the good or service and human beings will then demand lower prices for additional units. True or False
The following five individuals have different utility functions over food (good x) and clothing (good y): 1) u₁(x, y) = 3x²y 2) u₂(x, y) = 2√x + y 3) Uz(x, y) = x0.6y0.4 4) u₁(x, y) = x² + y² 1 5) us(x, y) = x + 3y For each of these people: a) Compute their marginal utilities of good x, MUx = Ju(x,y) MU, = ду du(x,y) ax b) Check whether the property of "more is better" is satisfied for both goods? Explain. [Hint: Check whether marginal utilities are positive assuming positive amounts of good x and good y] ƏMUX əx and marginal utility of good y, c) Does the marginal utility of good x diminish, remain constant, or increase as each of the individuals buys more x? Explain. [Hint: There are 2 ways to do it: 1) visually check what happens to the expression of MUx when x increases (does it decrease, keep constant or decrease?); or 2) take the partial derivative of this marginal utility with respect to x, that is ƏMUx .aMUX ƏMUX If 0, the marginal utility of x is increasing in x] d) Does the…
Given above are some of the indifference curves for a student who consumes Burritos and Pizzas and the relevant budget line. Equilibrium is defined as the maximum utility or satisfaction given the consumer’s budget. The consumer has more indifference curves above I3, below I1, and between I1 and I2 and between I2 and I3. Out of all the indifference curves the consumer has, only I1, I2, and I3 are shown. The given budget line touches I2 at the point where I2 touches the y-axis (Burritos axis). a) If the price of Pizzas decreased and the price of Burritos remained unchanged, would the quantity of Burritos consumed at equilibrium increase or decrease compared to the equilibrium point A in the graph given above? (b) If the price of Pizzas increased and the price of Burritos remained the same, would the consumer equilibrium point be different from point A or the same as point A in the graph given above?
You have preferences u(x,y) = xy over games (X) and videos (Y) you can buy on a platform and a $360 budget, with prices px = 9 and py = 6. How much would you be willing to pay (at most) as a subscription fee for each of the following plans (you can buy any amount of Y in each plan at the original price, unless otherwise stated): (a) Plan A : You can buy (any amount of) X at a discounted price px = 4(b) Plan B : You are given 40 units of X for free, but you cannot buy any more of X. (surely can buy any amount of Y)(c) Plan C : You are given 30 units of X for free, but you cannot buy any more of X; you also have a discounted price for good Y; py = 4.
Another instance when people are likely not to spend a dime (or a minute) on an item is when they have a dislike for mixing the item with other items available. In this case, we say the consumer has ‘non-convex preferences’ and indifference curves are bowed out from the origin. In plain language, the consumer has a preference for binging. We often feel this way towards our favorite social media app. Consider a kid who has four hours a day to spend on social media. They enjoy spending time on Snapchat (x) or spending time on Twitter (y). a) Write the kid’s time constraint and illustrate it in a graph where you measure time spent on Snapchat along the horizontal axis and time spent on Twitter along the vertical axis. This kid’s utility from time spent on Snapchat and time spent on Twitter is U(x,y) = 4x2+ y2. b) In your graph, draw a couple of the kid’s indifference curves. Notice how the kid’s |MRSY,X| increases along each curve as he spends more time on Snapchat and less time on…
Which of the following statement is TRUE Group of answer choices As the consumption of a good increases, marginal utility rises, but total utility falls. As the consumption of a good increases, total utility falls and marginal utility falls. As the consumption of a good increases, total utility rises, but marginal utility falls.
The marginal utility of good A is 4 utils, and its price is $ 2. The marginal utility of good B is 6 utils, and its price is $1. Is the individual consumer maximizing (total) utility if she spends a total of $3 by buying one unit of each good? If not, how can more utility be obtained? Explain using the Equimarginal principle.
Kimberly has $1,000 per year to spend between $50 concert tickets and $200 per night getaways. Her utility maximizing combination is 8 concerts and 3 overnight getaways. She recently received a promotion on her job and now she can spend up to $2000 per year on these two items. Her new utility maximizing combination will depend in part on what? Group of answer choices The substitution effect. The income effect. The degree to which concerts and overnight getaways are normal goods or inferior goods. The fact that concerts and getaways are fungible goods.
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
You currently have (x, y) = (8, 2) and the utility function U(x, y) = min(x, 4y ). How many units of X are you willing to give up to get another unit of Y?
Reese thinks peanut butter and chocolate are great when separate, but when they combine they are even more epic. In other words, Reese likes to eat either peanut butter or chocolate, but when he eats them together, he gets additional satisfaction from the combination. His preference over peanut butter (x) and chocolate (y) is represented by the utility function: u(x, y) = xy + x + y Which of the following is NOT true about Reese’s preference? (a) The MRS decreases when x increases.(b) The preferences are homothetic.(c) The marginal utility of y is higher when x = 10 than when x = 5.(d) For any a > 0, Reese prefers the bundle (x =a/2 , y = a/2 ) over either the bundle (x = a, y = 0) or (x = 0, y = a).
Several local golf tournaments are coming up and Tommy needs to purchase golf balls in preparation. He has set a $150 budget and will choose golf balls that will give him as much utility as possible. A local sporting goods store sells a box of golf balls at a retail price of $30 and Tommy purchases 2 boxes. A few buddies tell Tommy about an online store that offers boxes of golf balls at a discounted price of $21, while all other prices remain the same, and Tommy decides to purchase 3 additional boxes of golf balls to keep on hand. Given this information, plot Tommy's demand curve for golf balls. Provide your answer below: Price of Golf Ball Boxes Online Store (4,$22) 20 Local Store (1,$10) —101 Quantity of Golf Ball Boxes

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