James lives by the motto “ Eat, drink and be merry today, for tomorrow doesn't matter." If today's consumption is measured on the horizontal axis and tomorrow's consumption is measured on the vertical axis, how does James' indifference curves look like?
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- Graph and explain indifference curves for the following situations:(i) An individual has constant marginal utility toconsumption in both periods.(ii) An individual does not derive utility from this period’sconsumption, but does from the next period’sconsumption.(iii) An individual’s utility decreases with consumption inboth periods.We claimed in the text that if preferences were monotonic, then a diagonal line through the origin would intersect each indifference curve exactlyonce. Can you prove this rigorously? (Hint: what would happen if itintersected some indifference curve twice?)Eren’s two main hobbies are taking vacations overseas (V) and eating expensive meals (M). His utility function is given as: U(V,M) = V^2MLast year, the average price of taking a vacation overseas was US$200 and the average price of an expensive meal is $50. However, due to supply problems in Onions, the average price of an expensive meal rose to $75. The average price of a vacation did not change. His income, which is $1500, did not change. Suppose that the Department of Welfare wants to know how much should be given to Eren to offset his change un utility due to the price increase of an expensive meal. Calculate the compensative variation (CV).
- can explain this question? tq A consumer decides not to buy a VCR when her income is $20,000. However, when her income rises to $30,000, she decides to buy one. In a single diagram, draw the budget lines and indifference curves to illustrate this situation (assume the VCR costs $300 in both time periods). Be sure to label your diagram completely.I like drinking Smirnoff and Stoli Vodka, but I really only careabout the total amount of alcohol I get out of it. They areperfect substitutes. Smirnoff is sold in liter bottles that are100 proof (that’s 50% alcohol). Stoli is sold in liter bottlesthat are 80 proof (40% alcohol). What is my utility functionfor bundles of these two vodkas? What do my indifferencecurves look like?Eren’s two main hobbies are taking vacations overseas (V) and eating expensivemeals (M). His utility function is given as: U(V,M) = V2MLast year, the average price of taking a vacation overseas was US$200 and the averageprice of an expensive meal is $50. However, due to supply problems in Onions, theaverage price of an expensive meal rose to $75. The average price of a vacation did notchange. His income, which is $1500, did not change. Calculate for the equivalent variation (EV) for the price change.
- Jill likes to consume coffee and cream in a very particular way: with every cup ofcoffee she always consumes two 0.5 oz. cream containers. Jill is a utility maximizer anddecides to spend her income is $120 per month on coffee and cream. If the price of eachcoffee cup is $2.50, and the price of each cream container is $0.25, she will consume______ cups of coffee and ______ cream containers per month.A) 48; 96.B) 96; 48.C) 240; 480D) 80; 40E) None of the above.Eren’s two main hobbies are taking vacations overseas (V) and eating expensivemeals (M). His utility function is given as: U(V,M) = V2MLast year, the average price of taking a vacation overseas was US$200 and the averageprice of an expensive meal is $50. However, due to supply problems in Onions, theaverage price of an expensive meal rose to $75. The average price of a vacation did notchange. His income, which is $1500, did not change. Calculate the change in consumer surplus from consuming the expensivemeals considering the price change (Hint: you need to compare his optimalconsumption bundle before and after the price change to get the change in CS).The primary goal of very consumer is to maximize satisfaction. Explain, how a consumer achievesequilibrium using:a) Indifference curve analysisb) Marginal Utility theory
- Explain the consumer equilibrium point by using Indifference Curve Approach andthe Budget Line. What is the necessary condition for the consumer equilibrium? Explain whyconsumer is not in equilibrium if this condition does not fulfilPareto eliminated psychology from economics:a. by defining utility as ordinal, not cardinal utilityb. searching for secondary qualities of thingsc. defined rationality as consumer behavior only after they have bought something several timesd. by accepting revealed preference.Suppose a consumer buys only two goods x and y and spends her entire income on these teo goods. She must first but some fixed quantity y before she buys any amount of x. After purchasing y; what matters is the quantity of x only and utility will increase only by buying more x. Please Draw the indifference curves. * Please draw the indifference curves as the solution*