79. Chapter ma2pe08r, Section .212, Problem 016 (ID: 016.21.2 - MC - MANK08) An indifference curve illustrates the a. prices facing a consumer as she chooses how much of good X and good Y to consume. b. income facing a consumer as she chooses how much of good X and good Y to consume. c. trade-offs facing a consumer as she chooses how much of good X and good Y to consume. d. All of the above are correct.
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Marginal Rate of Technical Substitution
MRTS reaches a manufacturer when a part of the product is lowered to sustain the manufacturing level when the other part is extended. It is the level of the quantity that is lowered when one extra volume is used, and the output is unchanged.
Preferences and Utility Analysis
Before understanding what is preference and utility analysis, it is very important to understand the terms preference and utility separately.
An indifference curve illustrates the?
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- 1. Suppose someone's budget is $780, and it is fully spent on buying Product A. The price of this product is $26. Calculate the price change of Product A if there is a 1.3 times increase in the quantity available to purchase. Enter your answer in the box below, use a minus sign to show a decrease in price, and round to the nearest whole number if necessary. 2. Consider the spending choices of the following consumer: Emily's income is spent on colas and orange sodas, as well as other goods. She considers colas to be a normal good and orange sodas to be a normal good. What will happen to Emily's purchases of these goods if her income decreases? Select the best answer. She will buy more colas and fewer orange sodas.She will buy fewer colas and fewer orange sodas.She will buy more colas and more orange sodas.She will buy fewer colas and more orange sodas. Is the following statement true or false? Select the best answer. The price ratio of coffee to cookies is 1.5, so the marginal utility…5.1 By using a relevant diagram, illustrate and explain how the market demand curve is derived. A brief explanatory discussion of the graph is required with reference to price and quantity. 5.2 Explain how an increase in a person’s income can lead to lower consumption of an inferior good such as hamburgers and higher consumption of, say, steak. Use a graph to illustrate your explanation. Tip: On an indifference diagram, show what the shape of the income consumption curve is for an inferior good and then briefly explain how an increase in a person’s income can lead to lower consumption of one of the two goods being purchased. 5.3 Explain what the income consumption curve is in terms of individual and market demand.Student question Time Left : 00:09:39 5) Quasimodo consumes earplugs and other things. His utility function for earplugs x and money to spend on other goods y is given by ux,y=100x-x22+y What kind of utility function does Quasimodo have? What is his inverse demand curve for earplugs? (Implicitly, the price of money left over for other goods is 1) If the price of earplugs is $50, how many earplugs will he consume? If the price of earplugs is $80, how many earplugs will he consume? Suppose that Quasimodo has $4,000 in total to spend a month. What is his total utility for earplugs and money to spend on other things if the price of earplugs is $50? What is his total utility for earplugs and other things if the price of earplugs is $80? How much does the utility decrease when the price changes from $50 to $80?
- Suppose a consumer has a monthly income of m = 100 which she spendson two commodities: french fries (x1) and beef jerky (x2). The price offrench fries is p1 = 2 and the price of beef jerky is p2 = 5. (e) What is the slope of the budget line? Provide an economicinterpretation of this number.(f) Because of Mad Cow Disease, the price of beef jerky increasesto $10 (lower supply of beef). On a new graph, plot the originaland new budget constraint clearly identifying how the budgetconstraint has changed. What is the new relative price of beefjerky in terms of french fries?(g) Because of severe shortages, Congress passes the Jerky ReliefAct which limits each consumer to purchase at most 5 packs ofjerky. Show on a graph how this affects the consumer’s budgetset. Answer all three.Reid has the following utility function. U = 24m1/3d1/2 where U is Reid's total utility, m is the quantity of muffin consumed, and d is the quantity of doughnuts consumed. Reid has a budget of $25.00, the price of a muffin is $1.00 and the price of doughnut is $0.60. a. What is the equation for the marginal utility Reid receives from muffins? What is the equation for the marginal utility Reid receives from doughnuts? b. What is the equation for the marginal rate of substitution, MRSm,d? Is Reid's utility function subject to the law of the diminishing marginal rate of substitution? c. Reid has a $15.00 gift card that can only be used to buy doughnuts and $10.00 cash to spend on either of the two goods. The price of a doughnut is $0.60 and the price of a muffin is $1.00. Using equations, determine, determine Reid's optimal combination of muffins and doughnuts given the cash and gift card.Q43 Laurie spends all of her money buying bread and cheese. The marginal utility she receives from the last loaf of bread is 60 and from the last block of cheese is 30. The price of bread is $3 and the price of cheese is $2. Laurie... a. Should buy more cheese and less bread to maximise her utility. b. Should buy more bread and more cheese in order to maximise her utility. c. Spends too much money on bread and cheese. d. Should buy more bread and less cheese in order to maximise her utility. e. Is buying currently the utility-maximising amount of bread and cheese.
- 11) An increase in the wage rate means that the opportunity cost of leisure has fallen. 12) There is a negative relationship between the price of labor and the quantity of labor supplied, ceteris paribus. 13) We can easily predict whether an increase in the wage will cause a worker to demand more leisure time or less leisure . 14) As the dollar prizes for professional golf tournaments have increased, professional golfers have entered fewer tournaments per year. Is this type of behavior consistent with utility maximization? Explain. 15) Explain the income effect and the substitution effect due to an increase in the wage rate. 16) Tyler's wage rises and he chooses to increase the number of hours he supplies to the labor market. What does this imply about the relative sizes of the substitution effect and the income effect? Explain. 17) Comment on the following statement: "An increase in the wage always leads to an increase in the quantity of labor supplied." 18)…Emelia inherits a collection of 100 Michael Jackson’s CDs (good XA) and 50 Madonna’s CDs (good XB). Her utility function is U(XA, XB) = XA^2 XB^2 Initially, the price of Jackson’s CDs PA= £5 and the price of Madonna’s CDs is PB= £10. Following the success of the “This is it”, the price of Michael Jackson’s CDs increases to P'A = £10 while the price of Madonna’s CDs remains unchanged. Show on your diagram how is Emelia's budget constraint affected by the price change? Create a clear and well explained (including all available information) diagram to illustrate her original and new (after the price change) optimal consumption bundles, the substitution effect of the price change, the ordinary income effect of the price change and the endowment income effect of the price change. the diagram should show the original budget constraint, the original and new optimal consumption bundles, the substitution effect, the ordinary income effect, and the endowment income effect. The movement from…5.1) Jane has RM500 a week to spend on clothing and food. The price of clothing is RM25 and the price of food is RM10. The clothing and food pairs in Jane's choice set include ________ units of clothing and ________ units of food. 5.2) Sue is maximizing her utility. Her MUx/Px = 10 and MUy = 40. Then the price of Y must be __________ 5.3) Ted has $600 a week to spend on clothing and food. The price of clothing is $30 and the price of food is $5. What is the equation for Ted's budget constraint, assuming he spends his entire budget? ______________________
- may explain to me step by step? tq 1. An individual consumes products X and Y and spends $25 per time period. The prices of the two goods are $3 per unit for X and $2 per unit for Y. The consumer in this case has a utility function expressed as: U(X,Y) = 0.5XY MUX = 0.5Y MUY = 0.5X. a. Express the budget equation mathematically. b. Determine the values of X and Y that will maximize utility in the consumption of X and Y. c. Determine the total utility that will be generated per unit of time for this individual.1 Giving a list of arguments, explain why indifference curves cannot intersect witheach other. 2 Calculate the price elasticity of supply when the price is S80 and when the price is$90Susan consumes music downloads (M) and concert tickets (C). Her utility by U = 0.5M2 + 2C?. a. Write the equation for the MRSMC (i.e., the MRS of C for M; M is increasing, C is decreasing). b. Would the bundles of (M = 4 and C = 1) and (M = 2 and C = 2) be on the same indifference curve? How would you know? c. Calculate the MRSMC when M = 4 and C = 1 and when M = 2 and C = 2. Explain why the values of MRSMC differ across these two bundles. d. Based on your answers above, are Mariah's indifference curves convex? Explain using the values calculated.