Question One @ Zabron has preferences > for Champagne (good 1) and Wine (good 2) defined by: (*, x2) > (2, 2) min (x, x2) 2 min (z), z;) and max (x, x2) 2 max (z,, z2) Are Zabron's preferences complete? Transitive? Locally Non - satiable? Convex? Justify your answers and draw the No-worse-Than, No-Better-Than and the Indifference set of a representative bundle. (m Suppose that Zabron's preferences > can be represented by a continuous utility function. Show that > satisfies Axioms 1 (Completeness). 2 (Transitivity) and 3 (Continuity).

Question One @ Zabron has preferences > for Champagne (good 1) and Wine (good 2) defined by: (*, x2) > (2, 2) min (x, x2) 2 min (z), z;) and max (x, x2) 2 max (z,, z2) Are Zabron's preferences complete? Transitive? Locally Non - satiable? Convex? Justify your answers and draw the No-worse-Than, No-Better-Than and the Indifference set of a representative bundle. (m Suppose that Zabron's preferences > can be represented by a continuous utility function. Show that > satisfies Axioms 1 (Completeness). 2 (Transitivity) and 3 (Continuity).

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 3SQP

See similar textbooks

Similar questions

Karen has perfect complement preferences over toothbrushes B and toothpaste P, with the associated utility function U(B,P) = min (3B, 2P). Suppose the price of a toothbrush is $6, the price of toothpaste is $4 a tube, and she has $72 to buy her entire year's supply of toothbrushes and toothpaste. How many toothbrushes and tubes of toothpaste will she buy?
Suppose that you have highly nonconvex preferences for ice cream andolives, like those given in the text, and that you face prices p1, p2 and havem dollars to spend. List the choices for the optimal consumption bundles.
Given a consumer has a money budget M = 90 and utility function ? ( ? , ?) = ? 1/4? 1 / 2 If she consumes two goods x and y with prices given by ? = 2 and ? = 4 state the ? ? budget constraint equation. Determine the utility maximizing quantities X and Y for the consumer
A consumer prefers to consume 1 unit of x with each unit of y. if the price of x is $12 and the price of y is $4 , and he has income of $120, what is the optimal pair (x*,y*) to consume? a. (12,12) b. (20,20) c. (22,22) d. (40,40)
J 4 True or false? Be sure to explain your answer in detail. Suppose the utility function u(x1, x2) = 2x1x2 represents a consumer's preferences. Then the utility function v(x1,x2) = x1x2 also represents the same consumer's preferences
Lara has preferences represented by the utility function U(x, y)  2x  2y. She consumes 10 units of good x and 6 units of good y. If her consumption of good x is lowered to 4, how many units of y must she have in order to be exactly as well off as before? The answer is 12 not sure how to get it
I need help with this homeowrk question i am unsure if i have it correct. Suppose a consumer’s utility function is given by U(X,Y) = X^1/2*Y^1/2. Also, the consumer has $36 to spend, and the price of good X is P(x) = $4. Let good Y be a “composite” good (good Y is the “numeraire”) whose price is P(y) = $1. So, on the Y-axis, we are graphing the amount of money that the consumer has available to spend on all other goods for any given value of X.if P(x) increases to 9 and the new bundle of the customers demands are 2 units of x and 18 units of y, how much additional money would the consumer need in order to have the same utility level after the price change as before the price change? (Note: this amount of additional money is called the Compensating Variation.) and of the total change in the quantity demanded of good X, how much is due to the substitution effect and how much is due to the income effect? (Note: since there is an increase in the price of good X, these values will be…
True or false Law of diminishing margnal utility law states that utility derived from each successive consumption will keep falling.
Question 3 Mrs. Griffiths earns $5000 a week and spends her entire income on dresses and handbags, since these are the only two items that provide her utility. Furthermore, Mrs. Griffiths insists that for every dress she buys, she must also buy a handbag. - What is the algebraic equation for Mrs. Griffiths budget constraint if dresses cost $25 each and handbags cost $14 each? How many of each good will she buy and represent this on a budget line with handbags on the horizontal axis. - Draw an indifference curve showing the optimum choice. Label the optimum as point A. What would be the marginal rate of substitution at the point that corresponds to the optimal consumption choice? Interpret the marginal rate of substitution. - Suppose the price of a dresses increases to $200 and income decreases to $4200. What is the new algebraic equation for Mrs. Griffiths budget constraint? Show the impact of the new budget line relative to the original budget line. - What would be the new marginal…
For the Price-Consumption Line & Demand Curve: (kindly place Good A on the X-axis & Good B on the Y-axis) If the consumer's tastes are given by the Indifference curves schedule and Pa = P1.00, Pb= P1.00 and original budget = P10.00, what happens if budget remains the same but the price of Good A decreases to P0.50 To do: Create the new budget schedule. Plot the 2 budget lines with the 3 indifference curves together and determine the tangency points or LCPC and create the Price-Consumption Line. Create the Demand Curve for Good A.
Frank spends $75 on 10 magazines and 25 newspapers. The magazines cost $5 each and the newspapers cost $2.50 each. Suppose that his MU from the final magazine is 10 utils while his MU from the final newspaper is also 10 utils. According to the utility-maximizing rule, Frank should: a. Reallocate spending from magazines to newspapers. b. Reallocate spending from newspapers to magazines. c. Be satisfied because he is already maximizing his total utility. d. None of the above
Assume that Rossi consumes only bananas and avocado. Fortunately, she likes both goods. The consumption bundle where Rossi consumes x1 units of bananas per week and x2 units of avocado per week is written as (x1, x2). In fact, Rossi’s preferences can be represented by the utility function u (x1,x2 )=4√(x1 )+ x2 . The price for bananas is $1 per unit and the price for avocado is $2 per unit. Rossi has $24 to spend on the two goods. Write down Rossi’s budget constraint and solve for her optimal consumption bundle.