Graphically show what happens to 1. Slutsky decomposition (PE = SE + IE) graph if commodity X1 is inferior and its price rises (X2 is normal).
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Graphically show what happens to
1. Slutsky decomposition (PE = SE + IE) graph if commodity X1 is inferior and its
2. Slutsky decomposition (PE = SE + IE) graph if commodity X1 is Giffen and its price rises (X2 is normal).
3. Slutsky decomposition (PE = SE + IE) graph if both are normal goods and price of X1 rises.
4. Hicksian decomposition (PE = SE + IE) graph if both are normal goods and price of X1 rises.
5. Hicksian decomposition (PE = SE + IE) graph if commodity X1 is inferior and its price rises (X2 is normal).
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- differentiate between slutsky and hicks approach of decomposing price effect. draw two different diagrams ,one illustrating slutsky version of income and substitution effect and the other illustrating the hicks version of income and substitution effect.Draw the compensated (hicksian) and uncompensated (marshallian) demand curves when: a) both normal goods when price of good 1 increases b) both normal goods when price of good 1 decreases c) both inferior goods when price of good 1 increases d) both inferior goods when price of good 1 decreases e) one normal good, another inferior good when price of inferior good (good 1) increases f) one normal good, another inferior good when price of inferior good (good 1) decreases Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Draw the compensated (hicksian) and uncompensated (marshallian) demand curves when: a) both normal goods when price of good 1 increases b) both normal goods when price of good 1 decreases c) both inferior goods when price of good 1 increases d) both inferior goods when price of good 1 decreases e) one normal good, another inferior good when price of inferior good (good 1) increases f) one normal good, another inferior good when price of inferior good (good 1) decreases
- Show graphically both slutsky and Hicks analysis for fall in price of giffen goods. Explain using diagramThe government wants to make medicare benefits available to more people, but to achieve this goal, it needs to make cuts in the existing medicare budget. The two areas where they are considering cuts are non-essential elective surgery and 6-12 month mental health care programs. Applying the concept of diminishing marginal utility, the budget cuts should be made for spending on: a. neither can be compared by measuring marginal utility. b. mental health therapy due to its higher marginal return rate. c. elective surgery due to its lower marginal return rate. d. both programs, which have the same marginal return rate.The market for lemon has 10 potential consumers, each having an individual demand curve P=101-10Q1, where P is price in dollars per cup and Q1 is the number of cups demanded per week by the ith consumer. Find the market demand curve using algebra. Draw an individual demand curve and the market demand curve. What is the quantity demanded by each consumer and in the market as a whole when lemon is priced at P= $1/cup?
- Assume that product X is quantified in the following manner:QDX= -2PX + 0,5PY - 0,2PZ + 1,2I. In which:QDX is a quality of product XPX is the price of product XPY is the price of product YPZ is the price of product ZI is the entry of the center of the userMake an argument to determine whether the demand curve for product X will change and how it will change for each of the following cases:i. Consumer income increasesii. The price of product X decreasesiii. The price of product Y increasesiv. The price of product Z decreases1. Using the Marshall and Hicksian Demand Identity Equation, derive the Slutsky equation to determine whether x1 and x2 are complements or substitutes. That is, derive the following Slutsky equation:Kyle receives two free passes to the symphony as a bonus at work. He has never been to the symphony before and would probably not buy such tickets for their face value of $120. Kyle decides to use the tickets rather than sell them at face value. This type of behavior is: Question 49 options: a irrational, since Kyle would not pay $120 for the tickets, yet gives up $120 by not selling them. b rational, since Kyle can check out the symphony and not have to pay for it himself. c irrational, since Kyle ignores his sunk cost of $120. d rational, since Kyle does not ignore his sunk cost of $120.
- A manufacturer of microwaves has discovered that male shoppers, on average, have lower values for microwave ovens than female shoppers. Additionally, male shoppers attribute almost no extra value to an auto-defrost feature, while female shoppers, on average, value the auto-defrost feature. The manufacturer has determined that men value a simple microwave at $70 and one with auto- defrost at $80, while women value a simple microwave at $80 and one with auto-defrost at $150. If there is an equal number of men and women, what pricing strategy will yield the greatest revenue?The utility function of a certain consumer is U =(x1,x2)= x11/3 x22/3 , x 1and x 2 is the consumption of two kinds of goods, and the consumer's income is 100. The current prices of the two kinds of goods are P 1 =1 and P 2=2 respectively, ask: 1. If the price of the first commodity increases from 1 to 2, and other factors remain unchanged, what is the total effect of the price increase on the consumption of the first commodity? According to the Slutsky decomposition principle, what are the income effect and substitution effect? 2. Calculate the amount of income compensation that changes the price of the first commodity from 1 to 2, keeping the original effect unchanged3. A firm that is located in country H, where price levels are p = (1,1), needs to send one of its two employees to its branch in country F. However, in country F price levels are p′ ≫ p, so the firm will have to pay additional salary to ensure that its employee is equally well-off in country F as she was in country H. Suppose the utility functions of the two employees are u1(x1, x2) = x1 + x2 and u2(x1, x2) = min {x1, x2}. The two employees are otherwise identical, including current salary. If the firm wants to minimize the additional salary it needs to pay, which employee should it send? Explain.