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1. Explain what is meant by an Inferior Good. What information is required to establish whether a particular good is inferior?
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- 4 Assume we live in an economy with only two available goods, X and Y. Suppose that we experience an increase in consumer income. If Y is an inferior good, then what cannot happen from the choices below? decrease the demand for Y. decrease the demand for X. increase the demand for X. make the consumer better off.6. If a decrease in the price of Good X causes a decrease in the demand for Good Y, we can conclude that a. Goods X is a normal good while Y is an inferior good. b.Goods X and Y are complement goods. c. Goods X and Y are normal goods. d. Goods X and Y are substitute goods.True/False 1. it is necessary assumption and economics that consumers prefer higher quantities a good to lower quantities of that good for all goods
- Suppose Olivia has an income of $800/week for which she can use to consume two goods: entertainment (E) and other (O). Furthermore, suppose the price per unit of entertainment is $40 and the price per unit of other is $25. If Olivia buys 5 units of entertainment, what is the maximum amount of other she could buy? Question 43 options: a 16 units of other b 20 units of other c 28 units of other d None of the above17. Evaluate the truthfulness of the following statements:I. The Engel curve for a normal good is upward sloping.II. The Engel curve for an inferior good is downward sloping.(a) Both I and II are false.(b) Both I and II are true.(c) I is true; II is false.(d) I is false; II is true.12 You have two people who bought think two goods are perfect complements and should be consumed in one-to-one proportions, draw an edgeworth box for the two people
- 4. URGENT Given that maximize utility of two goods, x and y, is where MUx/Px=MUy/Py MUx/MUy=Px/Py , where MU is marginal utility, and P is price. a. Explain what happens to the marginal utility of x, when more of x is consumed. b. Explain what a rational person should do when MUx/Px>MUy/Py , and how each MU, and MU/P changes or not. c. Graph and explain the intercepts and the slope of the budget line (constraint) when the budget is 100 and the price of x is 5 and the price of y is 4. d. Graph and explain an indifference curve that is tangent to a budget line. This is a general graph with no numbers.1. Suppose that a consumer’s utility function for two goods (X and Y) is U(X,Y) = 10X^0.5 + 2Y , with MUx = 5X-0.5 and MUy = 2. The price of good X is $5 per unit, the price of good Y is $10 per unit, and the income is $275. a. Find the utility maximizing quantities of X and Y. b. If instead, the price of good Y is $20 per unit, how does your answer change?5.2 Benefit, Cost, and Surplus 1) Choose the statement or statements that are correct. I.The value of one more unit of a good or service is its marginal benefit. II.Marginal benefit equals the total amount we spend on a good or service. III.Marginal benefit is the maximum amount willingly paid for another unit of a good or service. A) I only. B) II only. C) I and III. D) III only. E) I, II, and III. 2) The demand curve for a good is the same as the A) marginal cost curve of that good. B) marginal benefit curve for that good. C) consumer surplus curve of that good. D) production possibilities frontier (PPF). E) none of the above. 3) What is the consumer surplus for the market from the production of the 100th unit of a good? A) the marginal social cost of the 100th unit B) the marginal social benefit from the 100th unit C) the opportunity cost of producing the 100th unit D) the marginal social benefit from the 100th…
- Suppose Olivia has an income of $800/week for which she can use to consume two goods: entertainment (E) and other (O). Furthermore, suppose the price per unit of entertainment is $40 and the price per unit of other is $25. Can Olivia afford the following bundle: 10 units of entertainment and 15 units of other? Question 42 options: a Yes b No3A .If the price of the good you are analyzing rises, how does this movement show up on the demand curve? What is the name of this movement? 3B. Give a personal example of an “inferior good”, and explain how you determined that this good is inferior for you.5.1 Explain, with the aid of a graph, the effect of an increase in income on theequilibrium price and quantity of wine if wine is an inferior good.
