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Based on what you have learned so far, provide your response to cach item below. 1. Refer to the figure as you answer the following questions: E D 1 2 4 5 cheeseburgers a. Bundle C is preferred to Bundle A because Bundle C represents a more balanced Bundle. Do you agree or disagree with this statement and why? b. Calculate the MRSXY between points A and B, and between points C and D. Interpret your computed values. C. What assumption about preferences would allow you to say that Bundle E is preferred to Bundle B? Briefly explain. d. Bundle E has one less cheeseburger than Bundle D. What assumption(s) would still allow you to say that Bundle E is preferred to Bundle D? Briefly explain. pearl shakes

Based on what you have learned so far, provide your response to cach item below. 1. Refer to the figure as you answer the following questions: E D 1 2 4 5 cheeseburgers a. Bundle C is preferred to Bundle A because Bundle C represents a more balanced Bundle. Do you agree or disagree with this statement and why? b. Calculate the MRSXY between points A and B, and between points C and D. Interpret your computed values. C. What assumption about preferences would allow you to say that Bundle E is preferred to Bundle B? Briefly explain. d. Bundle E has one less cheeseburger than Bundle D. What assumption(s) would still allow you to say that Bundle E is preferred to Bundle D? Briefly explain. pearl shakes

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Hello! I just want to ask for help whether the answers in the given pictures are correct. If it's not, please help me recheck and resolve it. Please refer to the given pictures below for the answers and questions.

 

After verifying the given answers shown in the subsequent picture, PLEASE ANSWER LETTER — D. Bundle E has one less cheeseburger than Bundle D. What assumption(s) would still allow you to say that Bundle E is preferred to Bundle D? Briefly explain.

 

NOTE: Type only your answers. Please do not handwritten your answers.

An indifference curve is a graph depicting the combination of two goods that provide equal satisfaction and utility to the consumer. A consumer is indifferent between the two at each point on an indifference curve, and all points provide him with the same value. The indifference curve is presented graphically as a downward sloping convex to the origin. The graph depicts a consumer's consumption of two different commodities. Part (a) E D U, 2 cheeseburgers An Indifference curve is seen in the above diagram (IC). Consumer satisfaction is the same for every combination along this curve. Iso-Utility Curve is another name for it. The U indifference curve is depicted in the diagram above, with bundles of goods such as Pearl Shakes and Cheeseburgers. To the customer, bundles A (Pearl Shakes) and B (Cheeseburgers) are similar since they both provide him with the same level of satisfaction. In other words, point A provides the same amount of utility to the individual as point C. If all other factors remain constant, the consumer will be satisfied at any point along the curve. Thus the statement (a) is wrong Part (b) MRSXY between point A and B = Change in Y/ Change in X ΔΥ MRSXY AX 6-10 2-1 = -4 MRSXY between point A and B is -4. This means that consumer is willing to sacrifice consumption of 4 units of good Y in order to increase the consumption of good X by 1 unit. MRSXY between point C and D= Change in Y/ Change in X AY MRSXY AX 3-4 5-4 = -1 MRSXY between point A and B is -1. This means that consumer is willing to sacrifice consumption of only 1 unit of good Y in order to increase the consumption of good X by 1 unit. Part (c) Assumption of monotonicity. It means more is always better. Bundle E would be preferred to bundle B because bundle E contains 6 units of good Y and 4 units of good X, whereas bundle B contains 6 units of good Y and 2 units of good X. Bundle E contains more of at least one of the goods, thus bundle E would yield higher satisfaction to consumer. Thus we can conclude that bundle E would be preferred to bundle B. pearl shakes
Transcribed Image Text:An indifference curve is a graph depicting the combination of two goods that provide equal satisfaction and utility to the consumer. A consumer is indifferent between the two at each point on an indifference curve, and all points provide him with the same value. The indifference curve is presented graphically as a downward sloping convex to the origin. The graph depicts a consumer's consumption of two different commodities. Part (a) E D U, 2 cheeseburgers An Indifference curve is seen in the above diagram (IC). Consumer satisfaction is the same for every combination along this curve. Iso-Utility Curve is another name for it. The U indifference curve is depicted in the diagram above, with bundles of goods such as Pearl Shakes and Cheeseburgers. To the customer, bundles A (Pearl Shakes) and B (Cheeseburgers) are similar since they both provide him with the same level of satisfaction. In other words, point A provides the same amount of utility to the individual as point C. If all other factors remain constant, the consumer will be satisfied at any point along the curve. Thus the statement (a) is wrong Part (b) MRSXY between point A and B = Change in Y/ Change in X ΔΥ MRSXY AX 6-10 2-1 = -4 MRSXY between point A and B is -4. This means that consumer is willing to sacrifice consumption of 4 units of good Y in order to increase the consumption of good X by 1 unit. MRSXY between point C and D= Change in Y/ Change in X AY MRSXY AX 3-4 5-4 = -1 MRSXY between point A and B is -1. This means that consumer is willing to sacrifice consumption of only 1 unit of good Y in order to increase the consumption of good X by 1 unit. Part (c) Assumption of monotonicity. It means more is always better. Bundle E would be preferred to bundle B because bundle E contains 6 units of good Y and 4 units of good X, whereas bundle B contains 6 units of good Y and 2 units of good X. Bundle E contains more of at least one of the goods, thus bundle E would yield higher satisfaction to consumer. Thus we can conclude that bundle E would be preferred to bundle B. pearl shakes
Based on what you have learned so far, provide your response to cach item below. 1. Refer to the figure as you ansver the following questions: E D 1 2 4 5 cheeseburgers a. Bundle C is preferred to Bundle A because Bundle C represents a more balanced Bundle. Do you agree or disagree with this statement and why? b. Calculate the MRSXY between points A and B, and between points C and D. Interpret your computed values. C. What assumption about preferences would allow you to say that Bundle E is preferred to Bundle B? Briefly explain. d. Bundle E has one less cheeseburger than Bundle D. What assumption(s) would still allow to that Bundle E is preferred to Bundle D? Briefly explain. you say pearl shakes
Transcribed Image Text:Based on what you have learned so far, provide your response to cach item below. 1. Refer to the figure as you ansver the following questions: E D 1 2 4 5 cheeseburgers a. Bundle C is preferred to Bundle A because Bundle C represents a more balanced Bundle. Do you agree or disagree with this statement and why? b. Calculate the MRSXY between points A and B, and between points C and D. Interpret your computed values. C. What assumption about preferences would allow you to say that Bundle E is preferred to Bundle B? Briefly explain. d. Bundle E has one less cheeseburger than Bundle D. What assumption(s) would still allow to that Bundle E is preferred to Bundle D? Briefly explain. you say pearl shakes
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