Demand curves have a negative slope. Why? a. firms tend to produce less of a good that is more costly to produce. b. the substitution effect always leads consumers to substitute higher quality
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- . It is a hot day, and Bert is thirsty. Here is the value heplaces on each bottle of water:Value of first bottle $7Value of second bottle $5Value of third bottle $3Value of fourth bottle $1a. From this information, derive Bert’s demandschedule. Graph his demand curve for bottledwater.b. If the price of a bottle of water is $4, how manybottles does Bert buy? How much consumersurplus does Bert get from his purchases? ShowBert’s consumer surplus in your graph.c. If the price falls to $2, how does quantitydemanded change? How does Bert’s consumersurplus change? Show these changes in yourgraph.A consumer has income of 15000. Masks costs $35 per mask, and sanitizers cost $70 per bottle. Under what circumstance(s) if an can an increase in the price of sanitizers induce a consumer to buy more of that good? Explain4. URGENT Given that maximize utility of two goods, x and y, is where MUx/Px=MUy/Py MUx/MUy=Px/Py , where MU is marginal utility, and P is price. a. Explain what happens to the marginal utility of x, when more of x is consumed. b. Explain what a rational person should do when MUx/Px>MUy/Py , and how each MU, and MU/P changes or not. c. Graph and explain the intercepts and the slope of the budget line (constraint) when the budget is 100 and the price of x is 5 and the price of y is 4. d. Graph and explain an indifference curve that is tangent to a budget line. This is a general graph with no numbers.
- Please no written by hand and no image Assume that the consumer's preferences are such that the choice problem has a unique solution. There are two goods in the market, x and y. The price of good x is 3, and the price of good y is 5. With these prices, the consumer chooses the basket (x,y)=(4,4). (a) Due to economic policy actions (e.g., changes in taxation), the price of good x rises to 5, and the price of good y drops to 2. How do these actions affect the consumer's well-being? (b) What if the price of good x rises to 6, the price of good y drops to 2, and the consumer chooses the basket (x,y)=(3,7) at these prices?"Answer the following short questions:a. Suppose that a consumer’s preferences between goods x andy are represented by the utility function u(x, y) = x^2 + 16xy + 64y^2. If these two goods have the same price, describe the optimal consumptionchoice of this consumer.b. Suppose that when the price of a good change, the incomeand substitution effects change the consumer’s demand for that goodin opposite directions.i. Is this good a normal or an inferior good? Explain.ii. Is this good a Giffen or an ordinary good? Explain.c. Is the following statement true or false? The differencebetween a monopolist’s marginal cost and its profit-maximizing price issmaller when the demand is more elastic.a halving price of the prices of good A and Good B have the same effects on the budget line as doubling income. is this true or false and how woukld it look like using ana equation of a budget line
- 7) By definition, an inferior good is aa) Good for which demand decreases when income increase. b) Want that is not expressed by demand.c) Normal substitute good.d) Good for which demand decreases when its price rises.8) The study of the decisions of individual units in the economy is known asa) Microeconomicsb) Macroeconomicsc) The Study of incentivesd) Ceteris Paribus Study 9) If a good has a price, then it is considered _______ ?An increase in the price of Wood will shift thesupply of furniture to the left or inwards.Select one:Oa. FalseO b. TrueASAP!! ANSWER PLEASE Danish Wali has Rs.70 to spend on apples and bananas and wants to maximize his utility on his purchase. Based on the data in the table: How many apples and bananas should Danish purchase? What is his total utility from the purchase? Does the utility-maximizing rule hold true for his purchase? Explain. Apples Rs.10 Bananas Rs .5 Quantity MU TU Quantity MU TU 0 - - 0 - - 1 28 28 1 12 12 2 24 52 2 10 22 3 20 72 3 8 30 4 16 88 4 6 36 5 12 100 5 4 40 6 8 108 6 2 42 7 4 112 7 0 42 8 0 112 8 -2 40
- a. What is an Inferior good? Sketch an Engel curve for inferior goods and clearly label the two axes. b. Briefly explain why demand may increase as price increases? (Hint: think about substitution and income effects.) c. What is the relationship between Inferior and Giffen goods? Use a Slutsky equation to justify your statement. d. Some people may work less when their wage rates go up. Why is it the case? (Hint: think about substitution effect and endowment income effect).Raj consumes only cheese and crackers.a. Could cheese and crackers both be inferior goodsfor Raj? Explain.b. Suppose that cheese is a normal good for Rajwhile crackers are an inferior good. If the price ofcheese falls, what happens to Raj’s consumptionof crackers? What happens to his consumption ofcheese? Explain(a) If a consumer has to choose between McDonald burger and King Burger, both are perfect substitute to each other. Explain the conditions of consumer's equilibrium with the help of graph. (b) Suppose that the price of commodity Y is $ 20 per unit while the price of commodity X is $ 15 per unit and suppose that an individual’s money income is $ 100 per period and is all spent on X & Y. Draw the budget constraint line for this consumer at the initial point. If the price of X decreases to $10, incorporate BL2 showing change in the Budget line. Calculate slope of Budget Line for both cases.