The utility maximization and the law of demand .

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Answer 1

Question

Chapter 21, Problem 1VQP

To determine

The utility maximization and the law of demand.

Expert Solution & Answer

Explanation of Solution

The utility maximization is consistent with the law of demand. Assume that a bundle of goods X and Y is the utility-maximizing quantity of consumer and is currently in equilibrium. It can be expressed as MUx/Px = MUy/Py. As per the law of demand, there is a decrease in the quantity demanded as the price increases. Suppose the price of good X falls, MUx/Px > MUy/Py. Then, there is an increase in the demand for good X due to an increase in utility from that good. On the other hand, if there is an increase in the price of good X, then there is a corresponding decrease in the demand for good X. Therefore, the utility maximization is consistent with the law of demand.

Economics Concept Introduction

Law of demand: The law of demand explains the negative relation between price and quantity demanded, that is a higher price associated with a lower quantity demanded.

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Answer 2

Question

Chapter 21, Problem 1VQP

To determine

The utility maximization and the law of demand.

Expert Solution & Answer

Explanation of Solution

The utility maximization is consistent with the law of demand. Assume that a bundle of goods X and Y is the utility-maximizing quantity of consumer and is currently in equilibrium. It can be expressed as MUx/Px = MUy/Py. As per the law of demand, there is a decrease in the quantity demanded as the price increases. Suppose the price of good X falls, MUx/Px > MUy/Py. Then, there is an increase in the demand for good X due to an increase in utility from that good. On the other hand, if there is an increase in the price of good X, then there is a corresponding decrease in the demand for good X. Therefore, the utility maximization is consistent with the law of demand.

Economics Concept Introduction

Law of demand: The law of demand explains the negative relation between price and quantity demanded, that is a higher price associated with a lower quantity demanded.

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Answer 3

Question

Chapter 21, Problem 1VQP

To determine

The utility maximization and the law of demand.

Expert Solution & Answer

Explanation of Solution

The utility maximization is consistent with the law of demand. Assume that a bundle of goods X and Y is the utility-maximizing quantity of consumer and is currently in equilibrium. It can be expressed as MUx/Px = MUy/Py. As per the law of demand, there is a decrease in the quantity demanded as the price increases. Suppose the price of good X falls, MUx/Px > MUy/Py. Then, there is an increase in the demand for good X due to an increase in utility from that good. On the other hand, if there is an increase in the price of good X, then there is a corresponding decrease in the demand for good X. Therefore, the utility maximization is consistent with the law of demand.

Economics Concept Introduction

Law of demand: The law of demand explains the negative relation between price and quantity demanded, that is a higher price associated with a lower quantity demanded.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 21, Problem 1VQP

To determine

The utility maximization and the law of demand.

Expert Solution & Answer

Explanation of Solution

The utility maximization is consistent with the law of demand. Assume that a bundle of goods X and Y is the utility-maximizing quantity of consumer and is currently in equilibrium. It can be expressed as MUx/Px = MUy/Py. As per the law of demand, there is a decrease in the quantity demanded as the price increases. Suppose the price of good X falls, MUx/Px > MUy/Py. Then, there is an increase in the demand for good X due to an increase in utility from that good. On the other hand, if there is an increase in the price of good X, then there is a corresponding decrease in the demand for good X. Therefore, the utility maximization is consistent with the law of demand.

Economics Concept Introduction

Law of demand: The law of demand explains the negative relation between price and quantity demanded, that is a higher price associated with a lower quantity demanded.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 21, Problem 1VQP

To determine

The utility maximization and the law of demand.

Expert Solution & Answer

Explanation of Solution

The utility maximization is consistent with the law of demand. Assume that a bundle of goods X and Y is the utility-maximizing quantity of consumer and is currently in equilibrium. It can be expressed as MUx/Px = MUy/Py. As per the law of demand, there is a decrease in the quantity demanded as the price increases. Suppose the price of good X falls, MUx/Px > MUy/Py. Then, there is an increase in the demand for good X due to an increase in utility from that good. On the other hand, if there is an increase in the price of good X, then there is a corresponding decrease in the demand for good X. Therefore, the utility maximization is consistent with the law of demand.

Economics Concept Introduction

Law of demand: The law of demand explains the negative relation between price and quantity demanded, that is a higher price associated with a lower quantity demanded.

Answer 6

Chapter 21, Problem 1VQP

To determine

The utility maximization and the law of demand.

Expert Solution & Answer

Explanation of Solution

The utility maximization is consistent with the law of demand. Assume that a bundle of goods X and Y is the utility-maximizing quantity of consumer and is currently in equilibrium. It can be expressed as MUx/Px = MUy/Py. As per the law of demand, there is a decrease in the quantity demanded as the price increases. Suppose the price of good X falls, MUx/Px > MUy/Py. Then, there is an increase in the demand for good X due to an increase in utility from that good. On the other hand, if there is an increase in the price of good X, then there is a corresponding decrease in the demand for good X. Therefore, the utility maximization is consistent with the law of demand.

Economics Concept Introduction

Law of demand: The law of demand explains the negative relation between price and quantity demanded, that is a higher price associated with a lower quantity demanded.

Answer 7

Chapter 21, Problem 1VQP

To determine

The utility maximization and the law of demand.

Answer 8

Expert Solution & Answer

Explanation of Solution

The utility maximization is consistent with the law of demand. Assume that a bundle of goods X and Y is the utility-maximizing quantity of consumer and is currently in equilibrium. It can be expressed as MUx/Px = MUy/Py. As per the law of demand, there is a decrease in the quantity demanded as the price increases. Suppose the price of good X falls, MUx/Px > MUy/Py. Then, there is an increase in the demand for good X due to an increase in utility from that good. On the other hand, if there is an increase in the price of good X, then there is a corresponding decrease in the demand for good X. Therefore, the utility maximization is consistent with the law of demand.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Law of demand: The law of demand explains the negative relation between price and quantity demanded, that is a higher price associated with a lower quantity demanded.

Answer 12

Ch. 21.1 - Prob. 1ST Ch. 21.1 - Prob. 2ST Ch. 21.1 - Prob. 3ST Ch. 21.2 - Prob. 1ST Ch. 21.2 - Prob. 2ST Ch. 21.3 - Prob. 1ST Ch. 21.3 - Prob. 2ST Ch. 21 - Prob. 1VQP Ch. 21 - Prob. 2VQP Ch. 21 - Prob. 3VQP

The utility maximization and the law of demand .

The utility maximization and the law of demand.

Explanation of Solution

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Chapter 21 Solutions