3. (a) Is the lexicographic preference complete and transitive? Explain. (b) Is the lexicographic preference convex? Explain. (c) For the lexicographic preference on R, find a demand bundle for all (p, w) E R", x R,4.
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- PS2(3c) Question: This New Question – Only!!! Graph the demand curve? Using the Bartleby’s Expert Solutions for Previous Questions a & b ↓ Previous Questions a & b: Already Answered!!! What is the Consumer’s Utility Maximizing Combination of Goodx & Goody & Why? Bartleby’s Expert Answer: Consumer’s Utility Maximizing Combination is: qx = 4.8 & qy = 2.4 What is qx at px = 15? Bartleby’s Expert Answer: At px = 15 qx = 3.6 Given: Consumer’s Utility Function → U = 4qx * qy qx = Quantity Demanded for Goodx qy = Quantity Demanded for Goody Marginal Rate of Substitution → MRS = qy / qx Consumer’s Current Income → I = 60 Price of Goodx → px = 10 Price of Goody → py = 5 Answers / Information by A Bartleby’s Expert from Previous Questions Equation for Budget Line is: 10qx + 5qy = 60 At Optimum, MRS = px / py Therefore, qx / qy = 10/5 qx / qy = 2 qx = 2qy Inserting this into Budget Line, we get: 10(2qy) + 5qy = 60 Therefore,…14) An Indifference curve slope down towards right since more of one commodity and less of another result in which of the following? A) Decreasing expenditure B) Maximum satisfaction C) Greater satisfaction D) Same satisfaction6. Using Marginal Utility analysis, carefully explain why the Demand Curve for a given product is sloping downward.
- 1. A consumer consumes two kinds of goods, namely X and Y. The total satisfaction (TU) obtained in consuming both kinds of goods is shown in the equation; (Unit of money in thousands of dollars).TU = 10X + 24Y - 0.5X2 - 0.5Y2TU is the total satisfaction in consuming goods X and YX is the number of items X consumedY is the number of items Y consumedThe price of item X is known to be $ 2, the price of item Y is $ 6 and the budget available to buy item X and item Y is $ 44.Question:a. Determine how many goods X and the number of goods Y must be consumed so that the consumer gets maximum total satisfaction. Determine the total satisfaction that can be obtained from consuming item X and item Y.b. If the price of item X drops from $ 2 to $ 1, determine the quantity of item X and the number of items Y must consume to obtain maximum total satisfaction. Determine the total satisfaction that can be obtained from the consumption of item X and item Y. 2. A producer has a total cost function: TC =…7) The law of diminishing marginal utility(a) refers to the decrease in total satisfaction as more units of the good areconsumed.(b) refers to the idea that total utility can be negative.(c) refers to the fall in additional satisfaction created by consumption of more andmore units of a good.(d) All of the above.Exercise 1. The demand for your product X has been estimated to be QX = 7, 880 − 4PX − 2PY + PZ − 0.1M where Y and Z are other (related) products. The relevant price and income data are asfollows: PX = 10, PY = 15, PZ = 50, M = 40, 000 b. Is X an inferior or a normal good? d. Graph the demand curve for X given the above information.e. How will the demand curve change if M falls to 35, 000? Is that in line with b.?
- 2/ Assume a piece of jewelry and 2 consecutive drops in its price. Also consider Alia’s demand to be relative elastic in the price range from p1 to p2, and that she perceives jewelry as a Giffen good in the price range from p2 to p3. Draw her price-consumption curve with well-behaved preferences. Clearly label your graph.- Some restaurants offer "all you can eat" meals. How is this practice related of diminishing marginal utility? What restrictions must the restaurant impose on the customer in order to make a profit?2- There is negative relationship between income of the consumers and demand for ______. a. Complementary goods b. Substitute goods c. Normal goods d. Inferior goods
- 15. The assumption that preferences are complete requires the consumer:(a) To rank any two bundles(b) To say bundle C is preferred to bundle A if bundle B is preferred to bundle A andbundle C is preferred to bundle B(c) To rank a bundle with more units of all goods higher than a bundle with fewer unitsof all goods(d) To have a diminishing marginal rate of substitutionPS2(3d) Question: d – Only!!! d. Show with Equations and a Graph what happens to the Demand Curve if Income increases to 100? Using the Bartleby’s Expert Solutions for Previous Questions a & b ↓ Previous Questions a & b: Already Answered!!! What is the Consumer’s Utility Maximizing Combination of Goodx & Goody & Why? Bartleby’s Expert Answer: Consumer’s Utility Maximizing Combination is: qx = 4.8 & qy = 2.4 What is qx at px = 15? Bartleby’s Expert Answer: At px = 15 qx = 3.6 Given: Consumer’s Utility Function → U = 4qx * qy qx = Quantity Demanded for Goodx qy = Quantity Demanded for Goody Marginal Rate of Substitution → MRS = qy / qx Consumer’s Current Income → I = 60 Price of Goodx → px = 10 Price of Goody → py = 5 Answers / Information by A Bartleby’s Expert from Previous Questions Equation for Budget Line is: 10qx + 5qy = 60 At Optimum, MRS = px / py Therefore, qx / qy = 10/5 qx / qy = 2 qx = 2qy Inserting…10) Suppose that the utility function of an individual can be described as U(X,Y) = 4X +2Y. For this utility function the MRSA) is always X*YB) is always constantC) is always X/YD) is always X+YE) is always X-Y.
