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 = Y = X =_10 10 20 Then, for , what is Px = Py =_5 Then, for b, what is Px = Py = 2.5 b) Choose a combination of (X.Y) on I, by yourself. Assume that X and Y are substitute products. According to this, choose your new position on I,, i.e., new combination of (XY) on . Explain why. combination of (X,Y) on I; : new combination of (X_Y) on I, : Explanation: c) Use your combination of (X.Y) on in (b). Assume that X and Y are complementary products. According to this, choose your new position on e new combination of (X.Y) on I. Explain why. combination of (X,Y) on I new combination of (XY) 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 = Y = X =_10 10 20 Then, for , what is Px = Py =_5 Then, for b, what is Px = Py = 2.5 b) Choose a combination of (X.Y) on I, by yourself. Assume that X and Y are substitute products. According to this, choose your new position on I,, i.e., new combination of (XY) on . Explain why. combination of (X,Y) on I; : new combination of (X_Y) on I, : Explanation: c) Use your combination of (X.Y) on in (b). Assume that X and Y are complementary products. According to this, choose your new position on e new combination of (X.Y) on I. Explain why. combination of (X,Y) on I new combination of (XY) on I,:

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section6.A: Indifference Curve Analysis

Problem 2SQP

See similar textbooks

Similar questions

A consumer has income of $3,000. Wine costs $3per glass, and cheese costs $6 per pound. Drawthe consumer’s budget constraint with wine onthe vertical axis. What is the slope of this budgetconstraint?
What happens to the original budget line if the income of the consumer falls by 25%? (i.e., Will there be a change in the slope and/or intercepts of the original budget line? If yes, what are those changes?) Draw the new budget line after the fall in income.
Explain the consumer equilibrium point by using Indifference Curve Approach andthe Budget Line. What is the necessary condition for the consumer equilibrium? Explain whyconsumer is not in equilibrium if this condition does not fulfil
What happens to the original budget line if the price of good ? doubled? (i.e., Will there be a change in the slope and/or intercepts of the original budget line? If yes, what are those changes?). Interpret economically how the change in the price of good ? affects the consumption decision of the consumer
How do you derive that the slope of a budget line is -p1/p2? I'd like to see the mathematical process. Thanks!
What happens to the original budget line if the price of good ? falls to 4$? (i.e., Will there be a change in the slope and/or intercepts of the original budget line? If yes, what are those changes?). Interpret economically how the change in the price of good ? affects the consumption decision of the consumer.
Mrs. Rochester earns $4500 a week and spends her entire income on computers andpastries, since these are the only two items that provide her utility. Furthermore, Mrs.Rochester insists that for every computer she buys, she must also buy a pastry. A) Suppose the price of pastries increases to $20 and income decreases to $3200. Whatis the new algebraic equation for Mrs. Rochester’s budget constraint? Show theimpact of the new budget line relative to the original budget line. B) What would be the new marginal rate of substitution that corresponds to theoptimal consumption choice? Interpret the marginal rate of substitution. D) Assume for this question only that when the price of computers decreases, less ofthat good is demanded. Illustrate the income and substitution effect of this pricedecrease.
b. Mary has two dinner options available: eating a home cooked meal for $150 permeal, or at a restaurant for $260 per meal. Her weekly budget is $2500.iv. Suppose the price of a home cooked meal increases to $200 and incomeincreases to $4200. Show the impact of the new budget line relative to theoriginal budget line. What would be the new marginal rate of substitutionthat corresponds to the optimal consumption choice? Interpret themarginal rate of substitution
Suppose that, from an initial individual consumer equilibrium position in the indifference curve-budget line diagram, the prices of both goods rise by 10 percent. What happens to the position and slope of the budget line? Why does the consumer’s level of satisfaction from a given money income fall? Illustrate and explain. Would it be acceptable for an economist to say that the level of satisfaction of the consumer fell by exactly 10 percent? Why or why not?
why convex: The budget set consists of all convex combinations of the points How to know these: can you show each the points can be derive (0, 0), (0, w/p2), (2,(w p1)/p2), and (1 + w/p1, 0). The upper-right boundary of this region consists of two line segments meeting at a kink, with the segment to the left of the kink being flatter than the one to the right. b) how to solve it?
Pareto 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.
For lunch, Misha eats only salads or fruit & yogurt smoothies. Her weekly food budget is $48. Each salad costs $8 and each smoothie costs $3.a. Draw Misha’s budget constraint.b. What is the opportunity cost of purchasing one more smoothie? What is the opportunity cost of purchasing one more salad?c. Describe intuitively how Misha should make the optimal consumption decision.d. Suppose that Misha income falls from $48 to $24. Show what happens to the budget constraint. Is it possible that Misha will consume more salad as a result of this?