Which one of the following statements about preferences is true? O Quasilinear tastes can be defined, such that if (x₁, x2)> (1. y2), then (tx₁, x2) > (ty1, ty2) O Homothetic preferences have the same MRS on a ray from the origin, whereas quasilinear preferences have the same MRS on a vertical ray. O The MRS for perfect complements is 0 on the vertical part of the indifference curve, -∞ on the horizontal part of the indifference curve and undefined at the kink. then the consumer will optimize by consuming only good O If goods X and Y are perfect substitutes (with X measured on the horizontal axis) and the MRS MUX Px MUY Py O The Engel curve for a normal good will bend backwards, whereas the Engel curve for an inferior good will slope upwards. O No answer.

Which one of the following statements about preferences is true? O Quasilinear tastes can be defined, such that if (x₁, x2)> (1. y2), then (tx₁, x2) > (ty1, ty2) O Homothetic preferences have the same MRS on a ray from the origin, whereas quasilinear preferences have the same MRS on a vertical ray. O The MRS for perfect complements is 0 on the vertical part of the indifference curve, -∞ on the horizontal part of the indifference curve and undefined at the kink. then the consumer will optimize by consuming only good O If goods X and Y are perfect substitutes (with X measured on the horizontal axis) and the MRS MUX Px MUY Py O The Engel curve for a normal good will bend backwards, whereas the Engel curve for an inferior good will slope upwards. O No answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Consider two consumers, each having income of $300 that can be used to purchase two goods: X and Y. The price per unit of X is $5, and the price per unit of Y is $4. Ms. A’s preferences can be described by the utility function: U = (X^2)Y and her marginal rate of substitution is given by MRS X,Y = 2Y/X. Mr. B’s preferences can be described by the utility function: U = X(Y+100) and his marginal rate of substitution is given by MRS X,Y = (Y+100)/X. Calculate the amounts of X and Y each of these consumers will purchase if each is trying to make her- or himself as well off as possible.
Suppose that the following utility function is given U(X,Y) = x/3y1/2, Which of the following is correct? O We have convex preferences since Law of diminishing Marginal Rate of Substitution holds and indifference curves are bowed inward towards the origin We have convex preferences since Law of diminishing Marginal Utility holds and indifference curves are bowed outward from the origin O We have convex preferences since Law of diminishing Marginal Rate of Substitution fails to hold and indifference curves are bowed inward towards the origin O We have non-convex preferences since Law of diminishing Marginal Rate of Substitution holds and indifference curves are bowed inward towards the origin
For the case of two goods, give an example of a utility function U(x1, x2) that represents the preferences of a consumer who regards the two goods as perfect complements. Next, take the transformation f(U) = U³ of the your example utility function and explain if this newly gener ated function represents the original preferences. Further, provide clear arguments supporting or rejecting the claim that "f(U(x1, x2)) must be strongly increasing in (x1, x2)."
1 . Assume the budget constraint and the indifference curves are both linear. Assume the consumer is willing to tradeoff 1 of good X for 1 of good Y. If the relative price of one additional good X is giving up 1/2 of good Y, then the optimal bundle of the two goods is? Assume the budget constraint and the indifference curves are both linear. Assume the consumer is willing to tradeoff 1 of good X for 1 of good Y. If the relative price of one additional good X is giving up 1/2 of good Y, then the optimal bundle of the two goods is? Assume the government imposes an effective minimum wage (i.e., one above the equilibrium wage rate that would otherwise prevail in that market). Our supply and demand analysis implies? If preferences for pizza increase and the price of labor to produce pizza decreases, the equilibrium quantity of pizza will ____ and the equilibrium price of pizza will _____ .? Assume an intertemporal budget constraint that shows how consumption can be traded off between…
which answer is correct among the provided ones the answer i got is provided on the image which is incorrect
i need help with question 3
When goods are complements, there is a direct relationship between the price of one and the demand for the other. O 1) True O 2) False
Two individuals, Blair and Anton, derive utility from leisure and from the other goods (OG) they consume. Observing their leisure and OG choices when wage increases, we conclude that Blair has backward-bending labour supply and Anton has upward slopping labour supply. Therefore, Select all that applies a) Leisure is a normal good for Anton but an inferior good for Blair. b) Anton has only an income effect, while Blair has only a substitution effect. O C) Anton's income effect is larger than Blair's income effect, but Anton's substitution effect is smaller than Blair's substitution effect. O d) Anton's substitution effect is larger than his income effect, but Blair's income effect is larger than her substitution effect. O e) Anton's income and substitution effects are negative while Blair's income and substitution effects are positive.
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- Assume an individual has quasilinear preferences of the form U(x1,x2) = 3x1¹2 + 2x2. If the price of Good 1 is $1 and the price of Good 2 is $2, how many additional units will the individual consume of Good 2 if her income increases by $1, assuming we're at an interior optimum? A. B. C. D. The individual's consumption of Good 2 will increase by 1/2 unit. The individual's consumption of Good 2 will increase by 1 unit. The individual's consumption of Good 2 will decrease. The individual's consumption of Good 2 will not change.
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12 There are two goods and John's preferences can be represented by u: R²0 R given by u(x) = x₁³x2³. His income and price of the two goods are given by (M, P1, 20 P2) = (12, 1, 2). Which 2 of the following 8 options are false: In John's optimal bundle, he consumes the same amount of good 1 as good 2. If we change John's utility function to u(x) = x + then John's optimal bundle remains unchanged. At John's optimal bundle, the slope of the budget constraint equals the slope of the indifference curve. In John's optimal bundle, he spends the same amount on good 1 as good 2. John's preferences satisfy local non-satiation. At John's optimal bundle, his bang per buck of good 1 equals his bang per buck of good If we change John's utility function to u(x) = In (17 +x₁x₂) then John's optimal bundle remains unchanged. If we change the budget set to (M, P1, P2) = (24, 2, 4) then John's optimal bundle remains unchanged.