2. The prices are (P1, P2) = (2,3), and the consumer is currently consuming (x1, x2) = (4, 4). (a) Will the consumer necessarily prefer to consume the bundle (x1, x2) = (3,5) over the bundle (x1, x2) = (4,4). Why? (b) Will the consumer necessarily prefer to have the bundle (x1, x2) = (3, 5) over the bundle (x1, x2) = (4,4). Why?
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- Refer to the figure. Which statement is TRUE? This consumer is indifferent between bundle B and bundle A. This consumer prefers bundle C to bundle A. Bundle B generates the highest utility out of all the points shown. Only bundles A, C, and D are relevant.First household m=$2,500 per month, spends $125 dollars per month on electricity. Second household m=$10,000 per month and spends $200 per month on electricity. p1=0.1 and p2=1 x1=consumption of electricity and x2=everything else The preferences over electricity and other goods is described by a Cobb- Douglas utility function. What are the parameters of the utility function for each of the two households?Question 10 If look at the indifference curves and budget constraint for two goods, X and Y, we can find a new points on a consumer's demand curve for good X by Group of answer choices shifting the budget constraint so that both intercepts change. pivoting the budget constraint so that the Y-intercept stays put, but the X intercept changes. pivoting the budget constraint so that the X-intercept stays put, but the Y intercept changes. keeping the budget constraint the same, but changing the indifference curve.
- A consumer prefers to consume two commodities in fixed proportions. Specifically, she prefers to consume 1 unit of x2 and 4 units of x1 at the same time. Represent her utility function and find the most preferred and affordable consumption bundle for prices p1 and p2Lisa views pizzas and burritos as goods. If she prefers a bundle of 4 burritos and 4 pizzas to a bundle of 4 burritos and 5 pizzas, which property of consumer preference is violated? What change in the assumptions could lead a rational consumer to prefer the first bundle?Suppose a consumer’s utility function is given by U(X,Y) = X1/2*Y1/2. Also, the consumer has $72 to spend, the price of Good X, PX = $1, and the price of Good Y, PY = $1. a)How much X and Y should the consumer purchase in order to maximize her utility? b)How much total utility does the consumer receive? c) Now suppose PX increases to $9. What is the new bundle of X and Y that the consumer will demand?
- 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…Maria spends all of her income of $2,000 on food (F) and clothing (C). The prices per unit are: PF = $5 and PC = $20. (a) The maximum amount of food that Maria can consume is _____. (b) The maximum number of pieces of clothing that Maria can consume is ____. (c) Therefore the intercepts of Maria’s budget line are _____ F and _____ C. (d) Graph Maria’s budget line, with F on the vertical axis and C on the horizontal axis. (e) Maria (can, cannot) __________ afford to buy a combination of 200 F and 60 C because this combination of goods is located (outside, inside, on) __________ her budget line. (f) The slope of this budget line is _________. (g) The opportunity cost of one piece of clothing is ___ units of food. h) If Maria’s income rises to $3,000, the new intercepts of her budget line are _____ F and _____ C. (i) Graph this new budget line on your graph for item (d) above.Quantity of gasoline Marginal utility from gasoline Quantity of hamburgers Marginal utility from hamburgers 1 35 1 20 2 25 2 18 3 16 3 17 4 10 4 10 5 5 5 8 6 4 6 7 d. Given the data in the above table, income of $13, a price of $1 for a gallon of gasoline and $2.00 for a hamburger, what is the marginal utility per dollar spent on the fifth hamburger?
- Maria spends all of her income of $2,000 on food (F) and clothing (C). The prices per unit are: PF = $5 and PC = $20. (a) The maximum amount of food that Maria can consume is _____. (b) The maximum number of pieces of clothing that Maria can consume is ____. (c) Therefore the intercepts of Maria’s budget line are _____ F and _____ C. (d) Graph Maria’s budget line, with F on the vertical axis and C on the horizontal axis. (e) Maria (can, cannot) __________ afford to buy a combination of 200 F and 60 C because this combination of goods is located (outside, inside, on) __________ her budget line. (f) The slope of this budget line is _________. (g) The opportunity cost of one piece of clothing is ___ units of food. h) If Maria’s income rises to $3,000, the new intercepts of her budget line are _____ F and _____ C. (i) Graph this new budget line on your graph for item (d) above. Question 2 Use the diagram below to answer the questions that follow. (a) What change could cause the…5. Find the optimal bundle using the following utility functions and budget constraints. 1. U(x, y) = lnx + y and 2x + y = 10 2. U(x, y) = 3x + 2y and 3x + 2y = 24 3. U(x, z) = 3x + 2z and 3x + 6z = 24Suppose a consumer is indifferent between the bundles (x1, x2) = (19, 10) and (15, 16), and suppose that the same consumer prefers the bundle (15, 14) to both. What can you say about his/her preferences when evaluated against standard assumptions of consumer preferences?
