Select the true or false for the following statement also give the explanation and support your answer with graphical presentation where necessary. Explanation is compulsory 3 to 6 line. Two indifference curves can intersect each other.
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Q1-Select the true or false for the following statement also give the explanation and support your answer with graphical presentation where necessary. Explanation is compulsory 3 to 6 line.
- Two indifference
curves can intersect each other. - If total utility at optimum level
marginal utility is negative. - If government imposes
price ceiling on goods “X” the result isexcess supply and shortage ofdemand for goods “X”. - Consumer budget line cannot touch axis.
- In perfectly inelastic goods and services change in price equal to change in quantity demand.
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- Q1-Select the true or false for the following statement also give the explanation and support your answer with graphical presentation where necessary. Explanation is compulsory 3 to 6 line. If total utility at optimum level marginal utility is negative.Which of the following statements is correct? Suppose leisure is a normal good, then an increase in non-labor income always increases labor supply. Suppose leisure is a normal good, then an increase in wage rate increases labor supply if the income effect dominates the substitution effect. Suppose leisure is an inferior good, then an increase in non-labor income increases leisure hours. Suppose leisure is a normal good, then an increase in non-labor income reduces labor supply. 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.Clearly comment on the validity of the statement as True or False. Justify your answer in either case. Draw diagram along with explanation Budget constraint and budget set depends on prices and income Marginal rate of substitution is increasing for concave indifference curve Strictly convex indifference curve implies unique solution If one commodity is neutral and other is good. Indifference curve is horizontal
- You are given the following utility function and price of commodities q1 and q2: U = 3q1+q1q2-5q2-15 P1=3 and p2=2 If the corresponding bugdet is 20. i. Write the consumer's budget equation,augmented objective function, ii.construct a constrained utility maximization problem out of the information given above, Is the second order condition for a maximum satisfied? Iii. Find the optimum level of U and the levels of q1 and q2 that will satisfy the first order condition for a maximum.This question refers to the utility function and indifference curve equations below the Parameter table. Use the equation for the indifference curve for a given level of utility to calculate a set of plot points. Each set of plot points is for one indifference curve (IC1 or IC2). Based on the given levels of utility indicated, calculate a set of points (in the Table of plot points, for the range given) for:(i) U1 (using the equation for IC1) and,(ii) U2 (using the equation for IC2).44) A person is in equilibrium when marginal utility per dollar equals 1. False True 45) The budget line for large-ticket items will be affected by the prices of the two items, the income level, and the interest rates for borrowers. True False 46) Which statement is NOT a critique of utility theory? Not all decisions are made rationally. Utility is not measurable. Utility theory is limited to an analysis of individual demand behavior. People do not make mental calculations of satisfaction.
- Juliana gets the following 15 units for free if she buys 30 units of good Y (at RM2 per unit). This promotion is only valid for the first 30 pieces she purchases. Calculate Julia's total utility received. Derive Juliana's new budget line equation. Sketch the budget line before and after the change in the price of good Y using an appropriate diagram.It is an established fact in economics that for goods which are described as inferior goods, when incomes of consumers increase, consumers tend to reduce their consumption of such goods and rather patronize goods which would normally provide higher satisfaction .If a researcher decides to undertake a study to verify the general preposition that as incomes rise, the consumption of inferior goods falls, which type of economic study and what analysis is this? Justify your answer.Under the ordinal theory, a consumer is expected to rank his or her scale of preference from the least to the most satisfying. From this knowledge, describe the assumptions of the ordinal utility theory With the help of illustrations, show how the consumer attains equilibrium under the indifference curve approach As a student of microeconomics, use the knowledge attained during the teaching-learning process and show how the demand curve is derived under the cardinal theory approach .
- Q4. Explain with the aid of well labelled diagram(s) whether this statement is True, False or Uncertain, given the information provided below:“Two goods, A and B are perfect substitutes with prices $PA and $PB respectively. The income of an individual is given by $Y. Initially, $PA = $PB.It is claimed that in a particular situation where $I is assumed to remain unchanged and if due to some exogenous factor, $PB < $PA, the budget line will pivot, become flatter and optimal bundle will be a corner solution (0,B*) and no other possibility would exist.Indicate whether the statement is true or false, and justify your answer.There is a massive body of evidence that humans prefer a fixed amount of utility now to that same amount of utility later.X1=(5 4 3) X2=(7 5 3) X3=(10 1 1)The operative price levels are the following: P1=(2, 2, 1) and P2=(2,1,1.5) and P3=(1,2,2). The choice set issuch that under the price level P1 the optimal choice is X1, under the price level P2 the optimal choice isX2, and under the price level P3 is the choice level X3.a-Compute the matrix of total expenditures for all the consumption bundles under the differentpotential prices.b- Which consumption bundle(s) can you show directly revealed preferred to which otherconsumption bundle(s)? Explain your answer.c-Does the choice structure in a fulfill Strong Axiom of Revealed Preference (SARP)? What are theimplications of fulfilling/or not fulfilling SARP?d-If the Paasche quantity index>1 what does this imply in terms of welfare changes from yesterday totoday? Are you using direct or indirect preference revelation to reach your conclusion?e- If the Laspeyres quantity index<1 what does it imply in terms of welfare changes from yesterday? Areyou using…
