Demands differ from wants because. demands reflect a decision about which wants to satisty and a pian to buy the good, while wants are unlimited and involve na specific plan to obtain the good. O . none of the answers given is true. wants imply a decision about which demands to satisfy, while demands involve no specific plan to obtain the good. O demands are unlimited, whereas wants are limited by income Owants require a plan to obtain a good but demands require no such plan.

Demands differ from wants because. demands reflect a decision about which wants to satisty and a pian to buy the good, while wants are unlimited and involve na specific plan to obtain the good. O . none of the answers given is true. wants imply a decision about which demands to satisfy, while demands involve no specific plan to obtain the good. O demands are unlimited, whereas wants are limited by income Owants require a plan to obtain a good but demands require no such plan.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter6: Consumer Choice And Demand

Section: Chapter Questions

Problem 12PAE

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Praxilla, who lived in ancient Greece, derives utility from reading poems and from eating cucumbers. Praxilla gets 30 units of marginal utility from her first poem 27 units of marginal utility from her second poem 24 units of marginal utility from her third poem, and so on, with marginal utility declining by three units for each additional poem. Praxilla gets six units of marginal utility for each of her next three cucumbers consumed, five units of marginal utility for each of her next three cucumbers consumed, four units of marginal utility for each of the following three cucumbers consumed, and so on, with marginal utility declining by one for every three cucumber consumed. A poem costs three bronze coins hut a cucumber costs only one bronze coin. Praxilla has 18 bronze coins. Sketch Praxillas budget set between poems and cucumbers, placing poems on the vertical axis and cucumbers on the horizontal axis. Start off with the choice of zero poems and 18 cucumbers, and calculate the changes in marginal utility of moving along the budget line to the next choice of one poem and 15 cucumbers. Using this step-by-step process based on marginal utility, create a table and identify Praxillas utilityâ€”maximizing choice. Compare the marginal utility of the two goods and the relative prices at the optimal choice to see if the expected relationship holds. Hint: Label the table columns: 1) Choice, 2} Marginal Gain from More Poems, 3) Marginal Loss from Fewer Cucumbers, 4) Overall Gain or Loss, 5) Is the previous choice Optimal? Label the table rows: 1) 0 Poems and 18 Cucumbers, 2) 1 Poem and 15 cucumbers, 3) 2 Poems and 12 cucumbers, 4) 3 Poems and 9 Cucumbers, 5) 4 Poems and 6 cucumbers 6) 5 Poems and 3 Cucumbers, 7) 6 Poems and 0 Cucumbers.
As a college student you work at a part-time job, but your parents also send you a monthly allowance. Suppose one month your parents forgot to send the check. Show graphically how your budget constraint is affected. Assuming you only buy normal goods, what would happen to your purchases of goods?
Fill in the marginal utility schedule for each of the goods. Assume that the price of food is $20, clothing $10, and housing $30. What is marginal utility per $ derived from consumption of the first unit of each of t1 three commodities? If Smith had only $20 to spend, which good(s) would he Assume that Smith's income is $130/week. If he purchased only the three commodities and faced the price structure in part b, how many units of each . would he demand per week?
You are choosing between two goods, X and Y, and your marginal utility from each is shown in the following table. Units of X MUx Units of Y MUy 1 10 1 8 2 8 2 7 3 6 3 6 4 4 4 5 5 3 5 4 6 2 6 3 Instructions: Enter your answers as a whole number. a. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? 2 units of X and 5 units of Y b. What total utility will you realize? 48 utils c. Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? 3 units of X and 3 units of Y d. Using the two prices and quantities for X, complete the table to derive the demand schedule (a table showing prices and quantities demanded) for X. Instructions: Start with the highest price first Price of X Quantity Demanded of X $ $
Let the following table represents the total utility of a given consumer, in the cardinal utility approach. Q 1 2 3 4 5 Tux 8 14 18 20 20 Tuy 6 10 13 15 16 Mux Muy Mux/px Muy/py D) Assuming the consumer has any amount of money (enough budget) how many of X and Y should the consumer buy, to maximize utility? E) What is the total utility of X and Y? F) Let now price of X is 4 birr per unit and price of Y is 2 birr per unit and budget of the consumer for consumption of X and Y is 20 birr. Given budget constraint how many of X and Y should the consumer buy to maximize utility? G) What are the total utility of X and Y
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.
Which of the following statements are true? Instruction: you may choose more than one option. O. The Law of Demand is explained by the Slutsky-Hicks equationO. All statements are false.O. For well behaved preferences the income effect is positive.O. For well behaved preferences the substitution effect is non positive.O. if the demand foro good increases when income then the demand for that good must decrease when its price increases.O. A Giffen good cannot be explained by the Slutsky-Hicks equation.
True or false with reasoning: 1) _______When we claim that utility can be ordinally measured, we assume that the consumer is able to measure the total and marginal utility received when one extra unit of a commodity is consumed. 2)_______If MRS between two goods is constant, then having more of one good without having more of the other does not increase utility. 3)_______Marginal Utility increases until total utility is at a maximum and then marginal utility decreases.
please only do: if you can teach explain each partc: what does it mean? can you show graphs: For these to be optimal choices with such preferences, the indifference curve through a must lie entirely on or above the budget line associated with (p, w), and simi- larly for r' for the budget line associated with (p', w'). how do you know this:Because each of these bundles lies below the other budget line, this implies that the indifference curves must cross, which is impossible. can you show graphs: note that (3,1) is a conver combination of x and x', so for conver preferences must be weakly preferred to x (the less preferred bundle between a and a'). But then the bundle (3,5/3) must be strictly preferred z, contradicting that is optimal given the initial budget set
Suppose that Elif spends her income on shoes and outfits. The price of a shoe is 100/unit and the price of an outfit is 200/unit. Q shoes outfits total utility marginal util. MU/Ps total utility marginal util. MU/Po 1 1000 1800 2 1700 3000 3 2000 4000 4 2200 4600 15) What is the quantity of shoes and outfits that maximizes Elif’s utility? a) 3 shoes and 3 outfits b) 4 shoes and 2 outfits c) 3 shoes and 4 outfits d) 4 shoes and 3 outfits 16) Suppose the price of an outfit increases to 500. What is the new utility maximizing quantity of shoes and outfits for Elif? a) 3 shoes and 4 outfits b) 3 shoes and 2 outfits c) 3 shoes and 1 outfits d) 4 shoes and 3 outfits
5. Consider a consumer whose utility function isu(x,y) = sqrt(xy) (MRS(x,y)=y/x)a. Assume the consumer has income $120 and initially faces the prices px = $1 and py = $1. Howmuch x and y would they buy? Draw the budget constraint and the demands. b. Next, suppose the price of x were to increase to $2. How much would they buy now? Draw thisin the same figure.c. Decompose the total effect of the price change on demand for x into the substitution effect and theincome effect. That is, determine precisely how much of the change is due to each of thecomponent effects. (Hint: See the lecture notes for the two properties that determine the locationof “z”, the reference point for distinguishing the income and substitution effects.)
Sally the Sleek's preferences can be described by the utility function U(x, y) = x*y/1000. Prices are Px = 4 and py = 3; she has an income of $80 to spend. (a) If Sally initially consumed 5 units of x and 20 units of y, how much additional utility does she get from spending one small fraction of a dollar more on good x? How much additional utility does she get from spending one (small fraction of a) dollar more on good y? (b) By how much would her utility change if she stayed on the same budget and consumed 4 (small fractions of a) dollars worth more of x? Judging from this, can the allocation of x = 5 and y = 20 be optimal? (c) How much should Sally consume of x and y in order to maximize utility, given her income?