Q3. Create your own question according to the information below. Using the budget constraint, Px*X+ Py*Y = 1, assume that income is 100 TL There is a pivoting to outwards which takes us from budget constraint I, to budget constraint I, a) Choose Y, Y, and X by yourself. According to these numbers, what will Px and Py be? Y: =. 10 Y = 20 10 Then, for what is 12 Px = Then, for B what is Px = X1 Ry= 25 b) Choose a combination of (XY) on by yourself. Assume that X and Y are substitute products. According to this, choose your new position on I, i.e. new combination of (X.Y) on I. Explain why. combination of (X.Y) on I, new combination of (X Y) on I, Explanation: c) Use your combination of (X.Y) on I, in (b). Assume that X and Y are complementary products. According to this, choose your new position on I, 1.e., new combination of (XY) on . Explain why combination of (X,Y) on I : new combination of (X.Y) on I,

Q3. Create your own question according to the information below. Using the budget constraint, PxX+ PyY = 1, assume that income is 100 TL There is a pivoting to outwards which takes us from budget constraint I, to budget constraint I, a) Choose Y, Y, and X by yourself. According to these numbers, what will Px and Py be? Y: =. 10 Y = 20 10 Then, for what is 12 Px = Then, for B what is Px = X1 Ry= 25 b) Choose a combination of (XY) on by yourself. Assume that X and Y are substitute products. According to this, choose your new position on I, i.e. new combination of (X.Y) on I. Explain why. combination of (X.Y) on I, new combination of (X Y) on I, Explanation: c) Use your combination of (X.Y) on I, in (b). Assume that X and Y are complementary products. According to this, choose your new position on I, 1.e., new combination of (XY) on . Explain why combination of (X,Y) on I : new combination of (X.Y) on I,

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.12P

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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).
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. Suppose that the Department of Welfare wants to know how much should begiven to Eren to offset his change un utility due to the price increase of an expensivemeal. Calculate the compensative variation (CV).
During any year, I can consume any amount that doesnot exceed my current wealth. If I consume c dollars duringa year, I earn ca units of happiness. By the beginning of thenext year, the previous year’s ending wealth grows by afactor k.a Formulate a recursion that can be used to maximizetotal utility earned during the next T years. Assume Ioriginally have w0 dollars.b Let ft(w) be the maximum utility earned during years t, t 1, . . . , T, given that I have w dollars at the be-ginning of year t; and ct(w) be the amount that should be consumed during year t to attain ft(w). By workingbackward, show that for appropriately chosen constantsat and bt,ft(w) btwa and ct(w) atwInterpret these results.
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. Suppose that initially, bread is $2 per loaf,and cake is $2 per slice. Marie Antoinettehas $18 to spend on these items each week.At this income and those prices, Marie consumes 5 loaves of bread and 4 slices of cake.Then, the price of bread DECREASES to$1 per loaf. (The price of cake is still $2.)IF Marie’s budget had also fallen to $13so that she could still just afford her original bundle, she WOULD choose to spendthose $13 on 7 loaves of bread and 3 slicesof cake.But since Marie still has her original $18budget, she actually chooses to buy 4loaves of bread and 7 slices of cake afterthe price change.When the price of bread fell from $2 to $1,what was the substitution effect on Marie’sdemand for bread?
i will 10 upvotes urgent Say Anna's utility function is given by UA = MAMM, where MA is Anna's wealth and MM is Marie's wealth. Initially, Anna has 160 units of wealth and Marie has 40. When Anna maximizes her utility, her utility level is equal to: Multiple Choice 10,000. 5,000. 100. 200.
Sameena works as a free-lance worker at a software house in Rawalpindi. Supposeshe keeps awake for 110 hours a week. Also suppose that part of this time she canspend on earning money doing this job and using it for her consumption, and the restof the time she can spend on her leisure not earning money. At first she earns Rs.550for every hour she works. Draw a figure showing Saima’s budget constraint, herindifference curve for consumption and leisure and her optimum.
1. Draw the Budget Line (BL) for products A and B, where product A is on the horizontal axis. Show in the picture what will happen to your BL (BL1) if one of the following happens (always starting from BL1): a. If the price of A drops by half (BL2) b. If the price of B increases 100% (BL3) c. If the new income is twice the old one (BL4)
A person has a 2-period utility consumption function U(c1, c2), with a budget function W = c1+c2/1+ra. Explain with pictures how one should choose c1 and c2 such that MRS(from c1 to c2) equals 1+r.b. Also explain with pictures how when the individual receives income, whileconditions at that time was a crisis.
Draw the indifference curve for someone decidinghow to allocate time between work and leisure.Suppose the wage increases. Is it possible that theperson’s consumption would fall? Is this plausible?Discuss. (Hint: Think about income and substitutioneffects.)
Katie’s preferences for consumption and leisure can be expressed as U(C, L) = (C – 80) x (L – 40) This utility function implies that Katie’s marginal utility of leisure is C – 80 and her marginal utility of consumption is L – 40. There are 110 hours in the week available to split between work and leisure. Katie earns $15 per hour after taxes. She also receives $200 worth of assistance benefits each week regardless of how much she works. Graph Katie’s budget line. What is Katie’s marginal rate of substitution when L = 70 and she is on her budget line? What is Katie’s reservation wage? Find Katie’s optimal amount of consumption and leisure.