In your understanding, briefly discuss the following, application to current situations. Follow the manner, matter, and method of answering. 1. Substitution and income effects 2. Principle of marginal diminishing utility 3. Changes in the demand curve 4. Supply curve 5. Factors affecting the supply of a commodity (each)

In your understanding, briefly discuss the following, application to current situations. Follow the manner, matter, and method of answering. 1. Substitution and income effects 2. Principle of marginal diminishing utility 3. Changes in the demand curve 4. Supply curve 5. Factors affecting the supply of a commodity (each)

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics

Section: Chapter Questions

Problem 4WNG

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Course: Microeconomic - Consumer Theory Model, explain and analyze in detail, based on consumer theory, how an individual responds to a change in the price of a good in his or her basket (income and substitution effect).a) Considering 2 goods (potatoes and meat) explain how they are related. Analyze the total effect of a decrease in the price of the first good.b) Analyze the income and substitution effect if potatoes are an inferior good.Attach the graphs in each case.
Describe how economists measure pleasure related to understanding the concept of utility. Include the primary and alternate theories in your response.
Discuss it in your own understanding and then give example of the following: Utility and Demand
Antonio buys five new college textbooks during his first year at school at a cost of $80 each. Used books cost only $50 each. When the bookstore announces that there will be a 10 percent increase in the price of new books and a 5 percent increase in the price of used books, Antonio’s father offers him $40 extra. What happens to Antonio budget line when the price of new books increases by 10 percent? Is Antonio worse or better off after the price change
(2) ________ is the satisfaction or value people extract from consumed services or goods and those derived from pursued activities. Select one: a. Equilibrium b. Rational behavior c. Utility (3) Technology and entrepreneurship are examples of what? Select one: a. economies of scale b. natural resources c. factors of production (4) Price ceilings attempt to make consumer prices ________. Select one: a. higher b. at equilibrium c. lower
4. 1).Find the marginal utility of each of the two commodities? If the two commodities are free, what are the consumed quantities of the two commodities? 2) .If the price of X is two Riyals and the price of Y is 4 Riyals, and the income is 32, find the equilibrium quantities? 3) .If the price of Y drops to two Riyals, find the equilibrium quantities? Explain the graph?
1. A person has $ 100 to spend on two goods X and Y whose respective prices are $3 and $5. a. Draw the budget line. b. What happens to the original budget line if the budget falls by 25%? c. What happens to the original budget line if the price of X doubles? d. What happens to the original budget line if the price of Y falls to $4?
[Microeconomics Theory] If an individual buys only two goods and these must be used in a fixed relationship with one another (e.g., coffee and cream for a coffee drinker who never varies the amount of cream used in each cup), then a. there is no substitution effect from a change in the price of coffee.b. there is no income effect from a change in the price of coffee.c. Giffen's Paradox must occur if both coffee and cream are inferior goods.d. an increase in income will not affect cream purchases. The answer is A but I don't know why. Thanks!
1. These are factors affecting the supply to increase and decrease, except one. A. Technology C. Producers Tastes B. Producer Preferences D. Consumer preferences 2. These are factors affecting the demand to increase and decrease, EXCEPT one. A. Raw materials C. Consumer Tastes B. Producer Preferences D. Price of related goods
Question 2 A consumer is currently purchasing three pairs of jeans and five T-shirts per year. The price of jeans is $50, and shirts cost $25. At the current rate of consumption, the marginal utility of jeans is 150, and the marginal utility of shirts is 100. Based on the model of consumer choice, what should this consumer do to maximize utility? Purchase more shirts and fewer jeans. Purchase fewer shirts and more jeans. Purchase only jeans. This consumer is already maximizing utility. Purchase only shirts.