Question 7: For each of the following price-income scenarios, sketch the con-sumer's budget lines on one set of axes (i.e. put all three budget lines in one pictureand label them 1, 2, and 3). Y is income, and pı and p2 are the prices of goods 1 and2, respectively.(1) Y = 70, p1 = 5, p2 = 10(2) Y = 70, p1 = 10, p2 = 10(3) Y = 140, p1 = 10, p2 = 10For the prices and income in part (1), solve for the optimal bundle for a con-sumer with each of the following utility functions: (i) U(q1, 42) = min{q1,5q2}; (ii)U (q1, 42) = 391 + 4q2; and (iii) U(41, 42) = q" 423/7 4/74In each case, how would the optimal amounts of each good change if the prices andincome were to change to those given in part (2)?

The optimal consumption condition is a fundamental concept in microeconomics that represents the…

Question 7: For each of the following price-income scenarios, sketch the con- sumer's budget lines on one set of axes (i.e. put all three budget lines in one picture and label them 1, 2, and 3). Y is income, and pı and p2 are the prices of goods 1 and 2, respectively. (1) Y = 70, p1 = 5, p2 = 10 (2) Y = 70, p1 = 10, p2 = 10 (3) Y = 140, p1 = 10, p2 = 10 %3D For the prices and income in part (1), solve for the optimal bundle for a con- sumer with each of the following utility functions: (i) U(q1, 42) = min{q1,5q2}; (ii) U(q1, q2) = 3q1 + 4q2; and (iii) U(q1, 42) = qỉ' q²'". 3/7 4/7 4 In each case, how would the optimal amounts of each good change if the prices and income were to change to those given in part (2)?

Question 7: For each of the following price-income scenarios, sketch the con- sumer's budget lines on one set of axes (i.e. put all three budget lines in one picture and label them 1, 2, and 3). Y is income, and pı and p2 are the prices of goods 1 and 2, respectively. (1) Y = 70, p1 = 5, p2 = 10 (2) Y = 70, p1 = 10, p2 = 10 (3) Y = 140, p1 = 10, p2 = 10 %3D For the prices and income in part (1), solve for the optimal bundle for a con- sumer with each of the following utility functions: (i) U(q1, 42) = min{q1,5q2}; (ii) U(q1, q2) = 3q1 + 4q2; and (iii) U(q1, 42) = qỉ' q²'". 3/7 4/7 4 In each case, how would the optimal amounts of each good change if the prices and income were to change to those given in part (2)?

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 3SQP

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In the above figure a consumer is initially at equilibrium at point C. The consumer’s income is $400, and the budget line through point C is given by $400 = 100X + 200Y. When the consumer is given a $100 gift certificate that is good only for product X, she moves to a new equilibrium point at point D. (a) How many units of product X will be purchased at point B? Please explain. (b) How many units of Product X will be purchased at point F? Please explain. (c) Please rank the bundles of goods A, B, C, D, from least preferred to most preferred (from lowest utility or satisfaction to highest utility of satisfaction).
In the below figure, a consumer is initially in equilibrium at point C. The consumer’s income is $400, and the budget line through point C is given by $400 = $100X + $200Y. When the consumer is given a $100 gift certificate that is good only at store X, she moves to a new equilibrium at point D.d. How many units of product X could be purchased at point B?e. How many units of product X could be purchased at point F?f. Based on this consumer’s preferences, rank bundles A, B, C, and D in order from most preferred to least preferred. (Click to select) D, B, C, A D, C, A, B C, A, B, D A, B, C, D g. Is product X a normal or an inferior good? (Click to select) Normal Inferior
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