EBK PRINCIPLES OF ECONOMICS
8th Edition
ISBN: 8220103600453
Author: Mankiw
Publisher: CENGAGE L
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Question
Chapter 21, Problem 3QR
To determine
The marginal rate of substitution.
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Pick a point on an indifference curve for wine andcheese, and show the marginal rate of substitution.What does the marginal rate of substitution tell us?
draw a consumer’s indifference curves for coke and cheese. pick a point on an indifference curve for coke and cheese and show the marginal rate of substitution. what does the marginal rate of substitution tell us?
Consumer income is 3000$ and coke cost 3$ per glass and cheese cost 6$ per pound.
10
Jason has the following utility function: U = F2C where F is food and C is clothing. Clothing is measured on the vertical axis while food is measured on the horizontal one.
Derive Jason's Marginal Rate of Substitution.
Does his Marginal Rate of Substitution stay constant along one of his indifference curves? Explain your answer clearly
Chapter 21 Solutions
EBK PRINCIPLES OF ECONOMICS
Ch. 21.1 - Prob. 1QQCh. 21.2 - Prob. 2QQCh. 21.3 - Prob. 3QQCh. 21.4 - Prob. 4QQCh. 21 - Prob. 1CQQCh. 21 - Prob. 2CQQCh. 21 - Prob. 3CQQCh. 21 - Prob. 4CQQCh. 21 - Prob. 5CQQCh. 21 - Prob. 6CQQ
Ch. 21 - Prob. 1QRCh. 21 - Prob. 2QRCh. 21 - Prob. 3QRCh. 21 - Prob. 4QRCh. 21 - Prob. 5QRCh. 21 - Prob. 6QRCh. 21 - Prob. 7QRCh. 21 - Prob. 1PACh. 21 - Prob. 2PACh. 21 - Prob. 3PACh. 21 - Prob. 4PACh. 21 - Prob. 5PACh. 21 - Prob. 6PACh. 21 - Prob. 7PACh. 21 - Prob. 8PACh. 21 - Prob. 9PACh. 21 - Prob. 10PACh. 21 - Prob. 11PACh. 21 - Prob. 12PA
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- Suppose we have the following utility function: U(x,y)=x^O.33 y^0.67 1) What is the Marginal utility of x? Marginal utility of y? 2) Comment on how the marginal utility of each changes as x increases and discuss why that makes sense. 3) Does this utility function follow the more is better rule? How do you know? 4) What is the marginal rate of substitution (MRS)? What do we know about the shape of the indifference curve given this MRS? 5) Now suppose we have a new utility function: U(x,y)=x+y. What type of goods are these? Explain.arrow_forwardThe following questions are independent of each other: Samir consumes apples and bananas and is in consumer equilibrium. The marginal utility from his last apple is 81 and the marginal utility from his last banana is 27. If the price of an apple is $0.90, then the price of a banana is $ As one moves up a typical indifference curve, how does the marginal rate of substitution change? It The marginal rate of substitution of X for Y is 5, the price of X is $4, and the price of Y is $7. A utility-maximizing consumer should choose X and Y. The first can of Coke gives 26 units of utility to Witney, while the second can of Coke increases her total utility to 38. The marginal utility of the second can of Coke is units.arrow_forwardIf Porsha views 3 glasses of juice as a perfect substitute for one cup of soda and vice versa, what is her marginal rate of substitution between juice and soda?arrow_forward
- Can you explain why taking a monotonic transformation of a utility function doesn’t change the marginal rate of substitution?arrow_forwardA consumer has $300 to spend on goods X and Y. The market prices of these two goods are Px = $15 and Py = $5. Draw the budget constraint for X and Y. Suppose the income increases by $300. How does this increase in income affect the budget line and the market rate of substitution between goods X and Y? Draw a shift on the same graph of what happens to the budget constraint line when the price of good Y increases to $10. How does this change in the price of good X affect the market rate of substitution between goods X and Y?arrow_forwardjust a b and c pleasearrow_forward
- Explain what is meant by the Income and Substitution Effects? With the help of standard Indifference Curve analysis and appropriate diagrams, discuss the magnitude of the two effects given a change in the price of a good.arrow_forwardPlease answer fastarrow_forwardCalculate the marginal rate of substitution if the consumer is will to leave good y from 100 to 60 to 40 to 30 to 25 to 23 to 22 to get for each an additional unit of x.arrow_forward
- In the theory of consumer behavior, what are the three basic assumptions about individual preferences? What is an indifference curve? What is the Marginal Rate of Substitution (MRS)?arrow_forwardIf we consume an additional unit of goods when utility is maximum, the utility we get from this additional unit is (positive, negative or zero)? Choose one why?arrow_forwardTom has the following utility function: U = FC2 where F is food and C is clothing. Show that Tom’s Marginal Rate of Substitution is given by the expression, MRS = C/2F Does Tom’s Marginal Rate of Substitution stay constant as he moves down along one of his indifference curves? Explain your answer clearly. Suppose the price of food is €1 per unit and the price of clothing is €3 per unit and that Tom’s income is €36. Calculate the number of units of food and clothing that Tom consumes. Partial units are possible.arrow_forward
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