4. (b) There are three people and two goods in an economy. The utility functions and initialbundles are given below:U, = x11X12U2 = 2x21 + x22U3 = X31X32 + X32W1 = (0,8)W2 = (2,2)W3 = (8,0)Suppose it is suggested that the three traders move to the allocation x given by:x1 = (1,2), x2 = (8,4), x3 = (1,4).i) Calculate the marginal rate of substitution for the three at the allocation x.

4. (b) There are three people and two goods in an economy. The utility functions and initial bundles are given below: U₁ = x11x12 W₁ = (0,8) U₂ = 2x21 + x22 W₂ = (2, 2) U3 = X31X32 + x32 W3 = (8,0) Suppose it is suggested that the three traders move to the allocation x given by: x₁ = (1,2), x₂ = (8,4), x3 = (1,4). i) Calculate the marginal rate of substitution for the three at the allocation x.

4. (b) There are three people and two goods in an economy. The utility functions and initial bundles are given below: U₁ = x11x12 W₁ = (0,8) U₂ = 2x21 + x22 W₂ = (2, 2) U3 = X31X32 + x32 W3 = (8,0) Suppose it is suggested that the three traders move to the allocation x given by: x₁ = (1,2), x₂ = (8,4), x3 = (1,4). i) Calculate the marginal rate of substitution for the three at the allocation x.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter11: Resource Market

Section: Chapter Questions

Problem 3.5P

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Suppose that Marissa is interested in buying some beers and hamburgers. Her budget constraint for these two goods is given below: If beers cost $6/beer, how much income does she have to spend on beer and hamburgers? Group of answer choices $24 $18 $12 not enough information to answer the question
Question 7 Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are Group of answer choices inferior goods. normal goods. complementary goods. substitute goods.
Question 26 Any combination of goods lying outside of the budget line: implies that the consumer is not spending all his income. yields less utility than any point on the budget line. is unobtainable, given the consumer's income. yields less utility than any point inside the budget line.
17 - Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $2.00 and the price of a banana is $1.00. If the consumer spent all of her budget on just apples or just bananas, how many apples or bananas maximum would she be able to buy?
28 - Which of the following statements is true about the point where the budget line cuts the horizontal axis? a) Returns the slope of the budget line. B) It shows the marginal utility of the good on the horizontal axis. C) When all of the income is spent on the good on the horizontal axis, it shows the amount that can be bought from this good. D) It shows the rate of substitution between goods. TO) It represents the bundle of goods that makes the marginal utility of income zero.
7 Describe in detail about Equilibrium, budget line, new equilibrium as well as how consumers are affected (positively or negatively) by the price change? Explain applying economic analysis
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 satisfaction
1. How does a consumer’s optimal choice of goods change if all prices and the consumer’s income double? (Hint: focus on the budget constraint) 2. Output is produced according to a production process given by: Q = 4LK, where L is the quantity of labor input and K is the quantity of capital input. If the price of K is $10 and the price of L is $5, then what is the cost-minimizing combination of K and L capable of producing 32 units of output?
Question 28 The marginal rate of substitution measures the: extra utility that a consumer derives from successive units of a product. consumer's willingness to substitute one product for another so that total utility will remain constant. magnitude of the substitution effect. total utility received by a consumer when equilibrium is achieved.
38 - According to cardinalists, which of the following is consumer equilibrium? a) It is the point where the demand curve and the budget line are tangent. B) It is the point where the production possibilities curve and the budget line are tangent. C) It is the point where the indifference curve and the budget line are tangent. D) It is the point where the total utility is maximum and the marginal utility is zero. TO) It is the point where the total utility is zero and the marginal utility is maximum.
Question 9 Rational consumer behaviour is where a person consumes the amount of a good that maximises the total utility from the good. maximises the consumer surplus from the good. minimises the amount spent on the good to achieve a given level of utility. maximises the marginal utility from the good
Question 17 Marginal utility is the: sensitivity of consumer purchases of a good to changes in the price of that good. change in total utility obtained by consuming one more unit of a good. change in total utility obtained by consuming another unit of a good divided by the change in the price of that good. total utility associated with the consumption of a certain number of units of a good divided by the number of units consumed.