Consider an individual with preferences represented by the following utility function: 1 2 U (x1, 2) = x; a} The individual faces prices: P1 = 0.5; p2 = 1 And has income: M = 250 If the price of good one increases to p1 =1 For this change in price, mark all of the following answers that are correct. (EV = equivalent variation; CV = compensating variation)

Q: Suppose a consumer’s preferences over two goods x1 and x2 are given by u = root(x_1 x_2). Her…

A: Answer: Given, Utility function: u=x1x2 Price of good 1 = p1 Price of good 2 = p2 Income = M The…

Q: An individual preference scale for two goods x and y is defined by the marginal rate of substitution…

A: Utility functions define the level of satisfaction or welfare of consumer with the given level of…

Q: To remain in consumer​ optimum, a price decrease requires(blank) in consumption. A price increase…

A: 1. As per law of demand, decrease in price will result in increase in demand.   A price decrease…

Q: 44) A person is in equilibrium when marginal utility per dollar equals 1. False True

A: When a consumer spends his given income on the purchase of certain goods in such a way that he…

Q: Suppose we know that the marginal utility of good 1 is: 4x1?x2?, from this we can conclude that: The…

A: If the individual really likes the good 1, then good 1 can any one type of good out of the following…

Q: Which of the following utility functions represent preferences which do not satisfy monotonicity? U=…

A: Monotonic preferences refer to such consumer preferences towards the greater consumption of goods…

Q: The following statement is true for consumer preferences: a) The axiom of weak monotonicity implies…

A: Consumer preference: It refers to the items that a consumer wants to buy. The change in consumer…

Q: Which of the following are true regarding the law of diminishing marginal utility? The more a person…

A: The marginal utility derived from each additional unit decreases as consumption increases, according…

Q: How can I analyze and find the Marshallian Demands of the following Utility function?…

A: The perfect complements x1 and x2 would result in the perfect complements which would be consumed…

Q: Suppose that the consumer has a utility function u(a, b) = min (2a, b). The price of both goods is…

A: Recall that the utility function of the form u(a, b) = min(2a, b) represents goods which are perfect…

Q: Consider a consumer with preferences represented by a utility function u(r1, 12) = max{r1,72}. The…

A: Indifference curves are the curves that show the different combination of two goods that gives the…

Q: Consider the consumer whose tastes and preferences for (X) and (Y) can be characterized by the…

A: The utility function can be written as follows: The budget constraint can be written as follows:

Q: Why the following variables (x1, x2 and x3) cannot be the Marshallian demand functions of a consumer…

A: The Marshallian demand function is exclusively the ordinary market demand function we have been…

Q: Consider the following utility function: U = 4X + Y. A consumer faces prices of P, = $2 and Py =1.…

A: Answer: A consumer maximizes his/her utility where the following condition satisfies:…

Q: Let the utility function of a consumer is given by the following function U = (x + 1)(y + 1) a. Find…

A: Given utility function  U=x+1y+1             ............ (1)

Q: Mary has the utility function u(x, y) = Inx + x^2. Are her preferences strongly convex?

A: u (x,y) = ln x +x2

Q: Given a utility function that represents preference over bundles which consists of two goods. Can we…

A: To analyze consumer behavior and their satisfaction from the consumption of goods and services,…

Q: Consider a consumer, he has the utility function: u(x1, X2) = xỉ * Could you find a monotone…

A: A utility function represents homothetic preferences when it is homogeneous of degree n.

Q: Consider the following utility function for goods x1 and x2:   u(x1,x2)=(x1+x2)2    What type of…

A: Utility function is a representation of individuals preferences for goods and services.

Q: Suppose that consumer (has the following utility function: U(X,Y) = In(3X) + 2Y. What would be the…

A: Utility function: U = ln(3X) + 2Y ---------- Let's assume Px is the price of good X Py is the price…

Q: Given the following utility function: U = 5X + 10Y and marginal utilities: MU, = 5, MU, = 10 A…

A: U=5X+10Y MUx=5 MUy=10 Px=2 Py=1 Consumes(X,Y)=(16,9) MRS is the marginal rate of substitution. It is…

Q: If a rational consumer is in equilibrium, then: a. the marginal utility obtained from one product is…

A: A rational consumer is in equilibrium when he maximizes his utility subject to his budget.

Q: A consumer consumes two goods and her utility is form by Cobb-Douglas utility function. Her MRS is…

A: A rational consumer utility is maximized at a point where the slope of the budget line is equal to…

Q: Suppose you are a beta-delta discounter with beta=1/2. If, on Thursday, you are indifferent between…

A: In economics, utility is a term that describes the total satisfaction gained from consuming a…

Q: (d) The preferences of a consumer with utility function U (x1, x2) = (1+x1)(1+x2) are convex. [Note:…

A: Microeconomics refers to the branch of economics in which it studies the individual, household, and…

Q: he marginal rate of technical substitution Group of answer choices is the rate at which one input…

A: The marginal rate of technical substitution (MRTS):   MRTS is the rate at which the firm can trade…

Q: A consumer is in equilibrium and is spending income in such a way that the marginal utility of…

A: Here,

Q: A consumer has a Cobb-Douglas utility function and consumes two goods x and y. If the price of good…

A: In economics, Cobb-Douglas utility function is widely used to show the ordinary consumer…

Q: The price of goods A and B are 20 and 10 respectively. given that the marginal utility of commodity…

A: Marginal utility is the extra utility experienced with the consumption of an additional unit of a…

Q: The following statement is true for consumer preferences. a) /The axiom of weak monotonicity…

A: Consumer preference: It refers to the items that a consumer wants to buy. The change in consumer…

Q: Question 8 An optimizing consumer will select the consumption bundle in which the marginal rate of…

A: Marginal Rate of substitution is the volume of good that a consumer is willing to consume in…

Q: Consider an economy with two goods t = 1, 2. Whenever an individual consumes xị units of good 1 and…

A: Marginal rate of substitution between good 1 and 2 can be defined as MRS =dUdX1dYdX2 = 1X1δX2 =…

Q: Utility Maximization A consumer faces income constraints and has CES preferences of the following…

A: An individual always consumes in such a way so that his total utility can be maximized but a…

Q: T/F Explain If preference is strongly convex, the utility function will exhibit dimin- ishing…

A: The satisfaction or benefit acquired from consuming a product is referred to as utility;…

Q: Suppose the weighted marginal utility for two goods, x and y, at a position of consumer equilibrium…

A: Here, weighted marginal utility is given as 70 at equilibrium, it implies that MUm is equal to 70.

Q: Miss Coco consumes cheese cake and curry puff. Her consumption yields the following total utility as…

A: The entire satisfaction gained from the consumption of an item or service is referred to as utility…

Q: For the consumer whose choices are shown in the diagram, the substitution effect of the price change…

A: Substitution effect is change in demand or consumption of  a commodity or a service due to a change…

Q: TRUE OR FALSE? Maximilian consumes two goods, x and y. His utility function is U(x, y) = max{x, y}.…

A: Please find the attached answer os all three questions below-

Q: (b) Derive the household’s compensated demand function for goods 1 and 2, i.e., obtain functions of…

A:

Q: Q48 As a consumer moves along an indifference curve, ... a. The combination of goods will vary,…

A: An Indifference curve is a combination of two goods that gives same level of utility. One of the…

Q: Consider the following utility function: U= 100x0.50,0.50 A consumer faces prices of P, = $2 and P,…

A:

Q: marginal rate of substitution (MRS) can be defined as: Select one or more: a. The amount of one…

A: Marginal rate of substitution depicts the relative price of two goods.

Q: A household with strictly convex preferences may consume only one of two goods.

A: Strict convexity of preferences may be a stronger property than simply plain convexity. Preferences…

Q: The preferences of a typical Californian can be represented by the following utility function: U…

A: U (x1 , x2 ) = α ln(x1) + (1 − α) ln(x2) α=0.25 U (x1 , x2 ) = 0.25 ln(x1) + 0.75 ln(x2)

Q: Which of the following statements is true? Group of answer choices If the more is better assumption…

A: All of the given statements are true.

Q: Consider the following utility function: U= 4X+Y. A consumer faces prices of P,= $2 and P, =1. %3D…

A: Answer: Given, Utility function: U=4X+Y The formula of the marginal rate of substitution (MRS) is…

Q: The substitution effect. Multiple Choice is generally so weak that its effect cannot be predicted.…

A: The price effect includes income effect and substitution effect. It is the summation of two effects…

Q: Amrita, a utility maximizing consumer, consumes only two normal goods, Breakfast Cereal and Bread…

A: Marginal utility refers to the value of additional utility that derived from the consumption of one…

Q: Suppose that consumer has the following utility function: U(X, Y) = X/2y/+. What would be the demand…

A: