i. Using the indifference curve below, explain by marking two distinct points on this indifference curve label these points 'A' and "B". Which point will have the lower marginal rate of substitution. Explain Good Y Good X It is known that the indifference curve is convex. What does this tell you about the relationship between the goods?| ii. iii. Assuming that seafood is your favorite food. Would the law of diminishing marginal utility apply to your consumption of seafood? Using examples, does an increase in income affect a consumer's budget line? Does it impact their total utility. iv.

i. Using the indifference curve below, explain by marking two distinct points on this indifference curve label these points 'A' and "B". Which point will have the lower marginal rate of substitution. Explain Good Y Good X It is known that the indifference curve is convex. What does this tell you about the relationship between the goods?| ii. iii. Assuming that seafood is your favorite food. Would the law of diminishing marginal utility apply to your consumption of seafood? Using examples, does an increase in income affect a consumer's budget line? Does it impact their total utility. iv.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.7P

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Take Jeremys total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremys utility.
Draw a well-labeled graph that shows the substitution effect (SE), incomeeffect (IE), and total effect of good 1 and is consistent with the following: The consumerreceives $m per month and has well-behaved preferences with strictly convex indifferencecurves; the price of good 1 increases; the original utility-maximizing point is labeled at A; thenew utility-maximizing point is labeled C; the compensated budget’s utility maximizing point islabeled B; good 1 is inferior but not Giffen. Make sure to clearly state and graphically showwhether the SE, IE, and total effect of good 1 are each positive or negative. Also state if the SEor IE is higher in magnitude if possible. Good 1 needs to be on the horizontal axis.
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Under the ordinal theory, a consumer is expected to rank his or her scale of preference from the least to the most satisfying. From this knowledge, describe the assumptions of the ordinal utility theory how do t the consumer attains equilibrium under the indifference curve approach use the idea of microeconmics ,show how the demand curve is derived under the cardinal theory approach
(d) What point in the graph will lead to utility maximizing with the budget line LZ and the indifference curves as shown above? Please label the point C. (e) What is the marginal rate of substitution (slope of the indifference curve) at the utility maximizing point you have shown in (d)?(f) Please explain why the consumer will not choose point A or point B.
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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