Q)using concept of ordinal utility theory, derive two demand curves-one rhat keeps money income constant and another that keeps consumer's utility level constant Explain this early but not the copy paste answer provides.
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Q)using concept of ordinal utility theory, derive two demand
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- Q) using concept of ordinal utility theory, derive two demand curves-one that keeps money income constant and another that keeps consumer's utility level constant. Explain it early but not copy paste answer provides give in own words onlys.Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer would get from successive quantities of products J and K. Units of J MUj Units of K MUk 1 56 1 32 2 48 2 28 3 32 3 24 4 24 4 20 5 20 5 12 6 16 6 10 7 12 7 8 What level of total utility is realized from the equilibrium combination of J and K, if the consumer has a money income of $28 and the prices of J and K are $8 and $4, respectively? Multiple Choice a. 172 utils b. 168 utils c. 188 utils d. 72 utils Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.An experimental subject has reference-dependent preferences over mugs and money. Letconsumption in mugs and money be c1 and c2, respectively, and let the reference point inmugs and money be r1 and r2, respectively. Then, the person’s utility is given by v(3c1 − 3r1) + v(c2 − r2) (1)where v(x) = x for x ≥ 0 and v(x) = 3x for x < 0. Normalize the person’s initial amountof money to zero, and suppose she starts off with zero mugs.a) What feature(s) of the prospect-theory value function does v capture? Whatfeature(s) does it not capture?b) According to the above utility function, who is better off: a person whosereference point is to get nothing and gets nothing, or one whose reference point is toget $1,000 and gets $1,000? Is there something weird about this? If so, how couldyou modify the utility function to make it more realistic (while still capturing thesame features of prospect theory)? Use the original utility function for the rest of…
- Consider a consumer that lives only for two periods. He works in period 1 (and gets income Y1) and moves up the corporate ladder in period 2 (and gets income Y1 < Y2). This consumer has the usual preferences over time: u(C1) + βu(C2) 1. Assume this consumer cannot borrow. What is the consumption in period 1 and period 2? Display graphically. Show the corresponding utility curve. 2. Assume that now the consumer is allowed to save or borrow. Write down the new budget constraint. What is the consumption in period 1 and period 2? Display graphically. Could the consumer be worse off? Could the consumer be better off? Draw budget constraints such that for one of them consumer prefers to borrow and for the other - prefers to save. 3. Assume once again that a consumer cannot borrow, but can borrow and immediately sell some MacGuffins, and in the next period, the consumer must buy back the MacGuffins to return to the lender. Assume that MacGuffin t r a d e s a t P1 > 0 in the first period…It is October and Sam has won a price of $9000. She has the following two options:• Option A: receiving the entire amount in October;• Option B: receiving the price in three equal installment, that is, receiving $3000 in eachof the following months (October, November, December).Sam decides to distribute her price over time by choosing Option B. Assume that Sam hasconstant marginal utility of money. Prove mathematically that Sam’s preference for Option B cannot be explained by hy-perbolic discounting (the β − δ model). Assume 0 < δ < 1 and 0 < β ≤ 1.An experimental subject has reference-dependent preferences over mugs and money. Letconsumption in mugs and money be c1 and c2, respectively, and let the reference point inmugs and money be r1 and r2, respectively. Then, the person’s utility is given byv(3c1 − 3r1) + v(c2 − r2) (1)where v(x) = x for x ≥ 0 and v(x) = 3x for x < 0. Normalize the person’s initial amountof money to zero, and suppose she starts off with zero mugs.a) What feature(s) of the prospect-theory value function does v capture? Whatfeature(s) does it not capture?b) According to the above utility function, who is better off: a person whosereference point is to get nothing and gets nothing, or one whose reference point is toget $1,000 and gets $1,000? Is there something weird about this? If so, how couldyou modify the utility function to make it more realistic (while still capturing thesame features of prospect theory)? Use the original utility function for the rest of theproblem.c) Calculate the person’s buying…
- Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer would get from successive quantities of products J and K. Units of J MUj Units of K MUk 1 56 1 32 2 48 2 28 3 32 3 24 4 24 4 20 5 20 5 12 6 16 6 10 7 12 7 8 If the consumer has money income of $52 and the prices of J and K are $8 and $4 respectively, the consumer will maximize her utility by purchasing Multiple Choice 3 units of J and 7 units of K. 5 units of J and 5 units of K. 4 units of J and 5 units of K. 6 units of J and 3 units of K.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.If you had a vacation budget of $3000 to take vacation(s) this fall, use utility analysis theory to predict which vacation that you would participate in this fall. You need to explain why you would take this vacation instead of another one that you were considering. Assume that you must take the vacation or all life on Earth would perish. I made that last assumption to prevent you from saying that you would just spend it to pay down bills or put it in savings. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- 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…33. Suppose MRSx,y = MUx/MUy = 0.1(a) If the consumer substitutes 10 units of X for one unit of Y, then the utility remainsunchanged(b) Regardless of prices, the consumer will only consume Y(c) If the consumer substitutes 1 unit of Y for 0.1 unit of X, then the utility remainsunchanged(d) Regardless of prices, the consumer will only consume XSuppose that a consumer has a choicebetween two goods, X and Y. If the price of X is $2 and the priceof Y is $3, how much of X and Y does the consumer purchaseper period, given an income of $17 per period? Use the followinginformation about marginal utility:Units MUX MUY1 10 52 8 43 2 34 2 25 1 2