Which of the following does NOT describe the optimal choice condition%3Dslope of budget constraint = slope of indifference curvePxMRS%3DPrO MUX MUyPyPxMUXMUyIncomeIncome

Indifference curve: - it is the graphical representation of different combinations of two goods that…

Answered: Which of the following does NOT…

Which of the following does NOT describe the optimal choice condition slope of budget constraint = slope of indifference curve %3! Px MRS %3D Py O MUX MUy Py %3D Px MUX MUy %3D Income Income

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: If the price of biscotti is $1.50 and the price of a cappuccino is $3.00, what is the slope of the…

A: Budget constraint shows the relationship between the two goods, their prices and the income of the…

Q: Further assume that the price of good x, px = $6, the price of good y, py = $8 and the individual…

A: Utility: It refers to the maximum satisfaction which a consumer gets from the purchase of the goods…

Q: Why does the optimal consumption bundle occur where the budget line is tangent to the indifference…

A: Answer: Introduction: A consumer maximizes his/her consumption where the slope of the budget line is…

Q: Consumer utility function= U=X^2Y^3. and faces constraint, Income=200, Px=$2 Py=$3. The consumer's…

A: The utility function is given by U(x, y) = x2 y3 Px = Price of good X ; Px =…

Q: Ambrose has indifference curves with the equation, x₂= constant-4x, where larger constants…

A: The indifference curve equation is given as The higher the constant value, the higher is the…

Q: Explain why non-convex indifference curve has a corner solution instead of interior solution?

A: IC (Indifference curve) shows the different agreement of two commodities between which a consumer is…

Q: For the following utility function, u(x, y) =Vxy, (a) Verify that Shephard's Lemma:…

A: We are going to use marginal rate of substitution to find marshallian demand for both goods. Income…

Q: Explain why most indifference curve are convex??

A: In economics the indifference curve is usually denoted as the contour line merely where the value of…

Q: Ann consumes two goods, r and y. Her utility function is given by: u(x, y) = (x+1)VJ. The price of a…

A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Determine which, if any, of Properties 4-1 through 4-4 are violated by the indifference curves show…

A: Indifference curves or IC curves represents combinations of two goods represented on the axis of the…

Q: What are the three properties of indifference curves for two goods?

A: An indifference curve is a graph that displays possible pairings of two goods or commodities that,…

Q: Use a general utility function and general prices and income to derive the equal marginal principle.…

A: Utility is the want satisfying power of a commodity. A utility function measures the preferences of…

Q: Explain the consumer equilibrium point by using Indifference Curve Approach and the Budget Line.…

A: The equilibrium of consumer is established when he derives maximum satisfaction. In case of…

Q: What does the law of equi marginal utility states? MU. MU, MU, Px P₂ P₂ MU₂ x P = MU₂ x P₂ =MU₂ x P₂…

A: The principle of equi-marginal utility in economics suggests that a rational consumer distributes…

Q: Section II: Indifference Curves Problem Q7 Given the information in Problem Q5, calculate and…

A: The objective of the question is to calculate the change in total expenditure when moving along the…

Q: Jason has utility function U(x,y)=x2y. Then, the equation of Jason's indifference curve through…

A: Indifference curve indicates the combination between input and output that means this curve actually…

Concept explainers

Revealed Preferences and Budget Constraint Analysis

Revealed means “Let Out,” and Preference means “Choice”; Choice Reveals Preference.

Question

Which of the following does NOT describe the optimal choice condition
%3D
slope of budget constraint = slope of indifference curve
Px
MRS
%3D
Pr
O MUX MUy
Py
Px
MUX
MUy
Income
Income

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

In comparing one market basket, A, to others to the northwest or southeast, we can say that a typical consumer will THE NORTHWEST AND SOUTHEAST ARE REFERRING TO THE POINTS ON A BUDGET CONSTRAINT AND INDIFFERENCE CURVE prefer A to any other market basket. prefer any other market basket to A. be indifferent between A and any other market basket in the Northwest or Southeast. be indifferent between some other market baskets in the Northwest or Southeast Only typed answer and don't use chat gpt
A consumer has the following utility function: U(x, y) = y + x1/2. Let px and py bt the corresponding prices and m her income. a). Write down the corresponding Lagrangian function and find the first order conditions (FOCs). b). Use these FOCs to find the expression for the marginal rate of substitution (MRS). Bearing in mind that the MRS is the slope of the indifference curve, what can you tell about the indifference curves of a quasilinear utility function?
Antonin notices he is currently spending all of his money ona bundle (x1, x2) where his marginal rate of substitution isgreater than the relative prices (p1/p2). Can Antonin reach abundle on a higher indifference curve with his current income?Explain clearly and provide a graph with your response.
28) When measuring the substitution effect, one uses the change along A) the new indifference curve. C) the old indifference curve. B) the budget constraint. D) either the old or the new indifference curve.
Que Robert's utility function is U(x, y) = 2/T + y. In every graph for this question, set y in the vertical axis and z in the horizontal axis. (a) Obtain the marginal rate of substitution MRS. Obtain the equation of the indifference curves for Ū = 2 and Ū = 4 (solving for y as a function of 1). Draw these indifference curves, identifying the intersections with each of the axes. (b) Suppose p, = 2 and Robert's income is M = 6. In a new graph, show the total, income and substitution effects (on the demand of r) of a drop in the price of z from p, = 4 to Pz = 2. (c) Now, the store where Robert goes for shopping has changed the prices to p, = 2 and py = 6, however, it also has a new special offer: for any amount of Y that Robert buys, he gets the same amount of X for free. Robert's income is M = 6. Draw Robert's budget line. Write down the equation of this line. Find Robert's utility-maximising bundle. (d)(d.1) Arthur's income is M = 6 and he goes to the same store as Robert. His utility…
8. Fabian consumes X and Y and the following utility function represents his utility: U = 2XY a. With a utility function of U = 2XY, Fabian's MU, = 2Y and his MU, = 2x ,where MU is marginal utility. Write an equation for Fabian's marginal rate of substitution (MRS). b. Suppose Fabian's income is $120 and Px = S6 and Py-$2, where Px is the price of X and Py is the price of Y. Write an equation for Fabian's budget constraint. c. Write the equation that equates the slope of Fabian's budget constraint to the slope of Fabian's indifference curve: d. If Fabian is spending all of his income, how much X and how much Y will he choose? Use the equations you wrote in part's b and c to answer this question. e. What will Fabian's utility be with this combination of X and Y? f. Now suppose the price of X increases to P.=10. Write the equation that equates the slope of Fabian's budget constraint to the slope of Fabian's indifference curve. How will this change the optimal combination of X and Y? What…
The marginal rate of substitution is the slope of an indifference curve. O True O False
Given the following budget constraint: PXQX + PYQY = M, where PX = $2, PY = $1 and M = $10 (M is income) a. What is the slope of the budget constraint in QX/QY space (where QX is on the horizontalaxis and QY is on the vertical axis)?b. What is the relative price of an additional unit of X?c. What is the relative price of an additional unit of Y