Suppose that the following utility function is given U(X,Y) = X²/ªy²/3¸ If the price of good X is 5. price of good Y is 4 and income is 120. What would be the optimal bundle of X and Y. respectively? 12, 15 24, 30 8, 20 16, 10
Q: You are to share with the audience examples of domestic and international movement of goods. Provide...
A: Introduction Suppose 300 cases of pharmaceutical products has produced by Pfizer. One box is equal t...
Q: At what annual interest rate will $1,200 invested today be worth $2,500 in 12 years?
A: We have: Annual interest rate = $1,200 Time= 12 years
Q: 1998, five companies were found guilty because of their actions to raise the price of an animal feed...
A: Elasticity of demand is the ratio of %change in Qd(quantity demanded) and %change in P(price) of the...
Q: Use the figure to select all the correct statements. B Q1 Q2 Q3 Q4 Q5 Q6 DA. The distance between Cu...
A: Answer -
Q: How will the age of the existing capital stock affect aggregate demand?
A: In Macroeconomics, the Aggregate Expenditure or Aggregate Demand is the sum total of four components...
Q: Katherine advertises to sell cookies for $4 a dozen. She sells 50 dozen, and decides that she can ch...
A: Answer -
Q: If actual output stays above potential output for some time, then we should expect. to rise and the ...
A: The goods market is in equilibrium where the aggregate demand and aggregate supply are equal to each...
Q: Suppose a consumer has utility function u(r1, r2) = + x. (a) Compute the Marginal Rate of Substituti...
A: (a) MRS = MUx1MUx2 = 12x112x2= x2x1 (b) To find: Optimal bundle: x(p, w) Equating MRS to price rat...
Q: A company in a perfectly competitive market produces an output level Q = 100 where marginal revenue ...
A: We know that the marginal curve in a perfectly competitive market is constant and equal to the marke...
Q: Consider two firms with the following marginal abatement costs (MAC) functions: MAC1 = 25 - E1 MAC...
A: Externality refers to the condition where a certain entity is affected due to another completely unr...
Q: Ontario is removing vehicle license renewal fees (article below). How does this affect the cost of o...
A: Understanding the impact of eliminating licence renewal fees on automobile ownership costs is the go...
Q: Your friend is a talented artist. She has no other employment options, she finds painting effortles...
A:
Q: In a gambling game, Player A and Player B both have a $1 and a $5 bill. Each player selects one of t...
A: Dear Student as you have posted multiple sub-parts in a question, but according to our policies and ...
Q: Given the production function q = 1.37LK, what is the marginal product of labor? A) 1.37 B) 0 C) 1.3...
A: Marginal product of labor is the additional output produced by employing an additional worker
Q: Suppose that many varieties of lettuce have been damaged in a particular season by disease. Only gre...
A: Answer: We’ll answer the first question since the exact one wasn’t specified. Please submit a new qu...
Q: 5. How can the high rate of return available in modern financial markets discourage businesses from ...
A: Introduction The hazard-go back tradeoff is a buying and selling law that combines extreme risk with...
Q: 2. Give at least four examples of trade-offs when scarce resources are used. a. b. C. d.
A: Scarcity means resources are limited and our wants are unlimited. It means the demand exceeds the su...
Q: Suppose a government program guarantees $ 2,000 a month in income, even for those who do not work at...
A: While this program may bring some people above the poverty line, this will not redefine the poverty ...
Q: By selecting a bundle of good X and good Y where MRS = MRT, the consumer is saying A) "I value my ...
A: MRS & MRT The marginal rate of transformation (MRT) basically refers to how many units or quanti...
Q: What is a leading economic indicator? Provide two example
A: There are different economic models and theories through which an individual can better understand e...
Q: Price Sus 23,000 22.000 21:000 20.000 19,000 Dus 123456789 QuTos Refer to the above diagram, where S...
A: Given; World price= $20000 Domestic demand= 8 million autos Domestic supply= 2 million autos Import...
Q: The first costs of an equipment is P 65,000 and a salvage value of P 3,000 at the end of its 6- year...
A: Cost of equipment = 65000 P Salvage value = 3000 Time = 6 years
Q: Cônsider the table below. The addition of worker number is when the firm first experiences diminishi...
A: Total product is simply the output that is produced by all of the employed workers. Marginal product...
Q: Which of the following is an example of the real flow in the circular flow model of economics? A. A ...
A: The interaction and relationship between the households and the business is interpreted by the circu...
Q: In the ADT/ASI model, the equilibrium inflation rate is O a. The target inflation rate O b. The rate...
A: The ADπ/ASπ model refers to the representation of the goods market through mathematical and graphica...
Q: Suppose a government program guarantees $ 2,000 a month in income, even for those who do not work at...
A: Yes the correct answer is : "While the goal may be to reduce poverty , people rarely respond to the ...
Q: Which of the following are reasons that market prices might not reflect true social costs? O Monopol...
A: As we know that market price is determined by the market forces of demand and supply and it's intera...
Q: . Which of the following are determinants of aggregate demand? Choose all that apply. A. a spike in ...
A: Answer: Determinants of aggregate demand: the determinants of aggregate demand refer to the factors ...
Q: The following questions relate to the information in the table below. Billions of dollars $1,349.5 8...
A: Disclaimer: Since you have posted a question with multiple subparts, I am providing you with the ans...
Q: Given demand function Q= 50 - 0.4P, what is the pnce elasticity of demand at price P = 257 O 025 O 0...
A: Q = 50-0.4P Put P = 25 => Q = 50 - 0.4 * (25) => Q = 50 - 10 => Q = 40 At a price of 25, th...
Q: Productive and allocative efficiencies are among the core concepts in economics. i. Differentiate be...
A: Productive efficiency says that the economy can't produce more of one commodity without sacrificing ...
Q: Suppose that there are three movies each in a week. In week 1, we have Mediocre movie that generates...
A: Given information Week Movie Utility 1 Medicore 3 2 Good 5 3 ...
Q: Given the (inverse) demand function P = 337 - 19Q, at which value of Q is revenue maximized? Q = 9 Q...
A: Revenue is the product of price and quantity.Revenue = PQ
Q: A manufacturing firm can sell x number of units of each product produced per month at a price of (24...
A: TR(TOTAL revenue) is the product of p(price) and x(quantity). TC(TOTAL cost) is the sum of fixed and...
Q: Draw the graph for the firm (include ATV, AVC, MC, and MR curves) 2. At this output of Q = 100, cal...
A: A perfectly competitive firm is a price taker and can sell any quantity of the commodity at the mark...
Q: In the short run, we assume that capital is a fixed input and labor is a variable input, so the firm...
A:
Q: A price floor for commodity crops would always make farmers better off. True or false?
A: "A price floor is referred to as a limit on how low price can be charged for a commodity."
Q: farmer grows a bushel of wheat and sells it to a Miller for $20.00. The Miller turns the wheat into ...
A: a. GDP refers to the money value of all final goods and services that are produced within the countr...
Q: Suppose real GDP is constant. If the government's fiscal policy objective is to reduce the outstandi...
A: Fiscal policy: It is taken by the government in order to make the growth of the economy more and to ...
Q: “How to allocate limited resources in an efficient way (as emphasized in an introductory economics c...
A: limited resources - The term limited resources specifies that a country has limited amount of capita...
Q: All of the following statements about import tariffs are true except Group of answer choices ...
A: Import tariffs means the taxes that are levied on the imported goods. The basic aim behind imposing ...
Q: Adult population 2,189,000 Employed 1,043,000 Not in the labour force 723,000 How many adults are ...
A: Labour force is the sum of people who are employed and people who are unemployed.
Q: In the latter years of the command economy in the Soviet Union, there was some experimentation with ...
A: Between 1929 and 1933, Stalin ordered the collectivization of agriculture, which he pursued vigorous...
Q: Identify principles of classical and neoclassical economics and summarize theirimplications for the ...
A: Classical political economics is another name for classical economics. Classical economics is a scho...
Q: Normal profit is
A: To find : What is normal profit
Q: 54.60 40.00 48.60 40.20 43.80 37.80 36.60 36.60 37.80 40.20 20.00 22.20 1.40 0.00 10 11 12 13 14 15 ...
A: A perfectly competitive firm is a price taker, which means that it must accept the equilibrium price...
Q: Which of the following is directly implied by an industry having many small firms producing homogene...
A: A industry where larger number of sellers selling homogenous products will have the same price det...
Q: what is Circular flow of production units?
A: circular flow model Lets understand this concept with an example:- In this circular flow model ther...
Q: 1. Calculate the value of nominal GDP for 2004. a. PHP800 b. P1,060 c. P1,200 d. P1,460
A: Nominal GDP refers to the GDP at current prices. It is defined as the market value of the various go...
Q: An equipment can be bought on installment basis with 24 monthly payments of P3,440, each payable at ...
A: Interest rate = 12 % compounded monthly Monthly rate = 1 % Time = 24 months Payment = monthly
Step by step
Solved in 2 steps with 2 images
- A consumer finds only three products, X, Y, and Z, are for sale. The amount of utility which their consumption will yield is shown in the table below. Assume that the prices of X, Y, and Z are $10, $2, and $8, respectively, and that the consumer has an income of $74 to spend. Product X Product Y Product Z Quantity Utility Marginal Utility per $ Quantity Utility Marginal Utility per $ Quantity Utility Marginal Utility per $ 1 42 NA 1 14 NA 1 32 NA 2 82 4 2 26 6 2 60 3.5 3 118 3.6 3 36 5 3 84 3 4 148 3 4 44 4 4 100 2 5 170 2.2 5 50 3 5 110 1.25 6 182 1.2 6 54 2 6 116 0.75 7 182 _0 7 56.4 _1.2 7 120 _0.5_ Why would the consumer not be maximizing utility by purchasing 2 units of X, 4 units of Y, and 1 unit of Z?A consumer finds only three products, X, Y, and Z, are for sale. The amount of utility which their consumption will yield is shown in the table below. Assume that the prices of X, Y, and Z are $10, $2, and $8, respectively, and that the consumer has an income of $74 to spend. Product X Product Y Product Z Quantity Utility Marginal Utility per $ Quantity Utility Marginal Utility per $ Quantity Utility Marginal Utility per $ 1 42 NA 1 14 NA 1 32 ___NA__ 2 82 4 2 26 6 2 60 __3.5_ 3 118 3.6 3 36 5 3 84 __3___ 4 148 3 4 44 4 4 100 __2___ 5 170 2.2 5 50 3 5 110 _1.25___ 6 182 1.2 6 54 2 6 116 _0.75__ 7 182 0 7 56.4 1.2 7 120 _0.5_ How many units of X, Y, and Z will the consumer buy when maximizing utility and spending all…Q7. Consider a utility function: U (F,C) = FC so MU_F = C and MU_C = F. In Case 1, Total income is $100 In Case 2, Total income increases to $120For both cases per unit prices of Food (F) and Cloth (C) are $2 and $10, respectively. Find the following for both cases, and contrast Case 2 with Case 1:a. What is the value of MRS at the optimal point and what does this value mean? b. What is the optimal consumption bundle i.e. (F*, C*)? c. Plot the budget line and clearly depict the point of optimality in the F (x-axis)-C (y-axis) space (draw both case budget lines and point of optimality on one diagram)
- 3. Consider the following utility function: U = 5 x1 + 2 x2 Also consider the following bundles: A=(6, 6) B=(8, 4) C=(4,11) D=(7, 9) E=(9, 3) If x1=20, how much of x2 does the consumer has to consume to obtain a utility level of 150? 50 300 170 25Assume, as in Exercise 22.1, that a consumer has utility function F or fruit and chocolate. Determine the consumer's demand functions q1(P1, P2, M) and q2(P1, P2, M). Determine also It* in terms of P1, P2 and M. Find the indirect utility function and show that It* = 8Vj8M. Suppose, as before, that fruit costs $1 per unit and chocolate $2 per unit. If the income is raised from $36 to $36.5, determine the precise value of the resulting change in the indirect utility function. Show that this is approximately equal to (O.5)λ*, where λ* is evaluated at P1 = 1,P2 = 2 and M = 36. Exercise 22.1 A consumer purchases quantities of two commodities, fruit and chocolate, each month. The consumer's utility function is For a bundle (X1, X2) of X1 units of fruit and X2 units of chocolate. The consumer has a total of $49 to spend on fruit and chocolate each month. Fruit cost $1 per unit and chocolate costs $2 per unit. How many units of each should the consumer buy…Q2. Lucas likes lemon soda (X) and chips (Y). His utility function is given by: U (X, Y) = X0.2Y0.8 He earns $40 per week to spend on lemon soda (X) and chips (Y). The prices of lemon soda and chips are $2 and $4 respectively. Find out Lucas’s utility-maximizing bundle of lemon soda and chips (X*, Y*). Set up the utility-maximization problem and find out the price ratio of these two goods. Find out Lucas’s marginal utility of lemon soda (MUX) and marginal utility of chips (MUY). Calculate the MRSXY . Set up the optimal tangency condition and solve for Y in terms of X. Solve for Lucas’s optimal consumption bundle of lemon soda (X*) and chips (Y*). Draw the optimal consumption bundle on the budget constraint BC1 in Q1. Denote it as Bundle A. Make sure to indicate the optimal consumption of lemon soda (X*) and chips (Y*). Draw an indifference curve that is tangent to the budget constraint at Bundle A. Calculate the value of the MRSXY (the value not the formula) at the optimal…
- Every week I spend a total of £400 buying two goods, luxuries (L) and necessities (N). I obtain utility (U) from these goods according to the rule U(L, N) = 10 + L + 20N−2N2. Suppose that I pay £10 for each unit of L and £20 for each unit of N and that I am a utility-maximiser. MUL=1 and MUN=20-4N. Define the Marginal Rate of Substitution (MRS) as MRS ≡ MUL/MUN). Calculate its value at the bundle (L = 0 and N = 4) and at (L = 1 and N = 4). By referring to a graphic illustration of the above calculations or otherwise, argue that an increase in my budget will have no effect on my consumption of N if I am already consuming 2.5 units of N. Calculate my optimum choice of L and N if instead I have £40 to spend. Fully explain your answer.7 which following statement is true or flase with explaination 1. for a cobb douglas utility function, the slope of its income offer curve is constant while the slope of its price offer curve is not . 2. monotonic transformation of a utility function is possible because utility itself ordinal.Q10. Consider a utility function: U (F,C) = FC so MU_F = C and MU_C = F. In Case 1, Total income is $100 , per unit prices of Food (F) are $2 , per unit prices of Cloth (C) are $10In Case 2, Total income is $100 , per unit prices of Food (F) are $2 , per unit prices of Cloth (C) are $15 Find the following for both cases, and contrast Case 2 with Case 1:a. What is the value of MRS at the optimal point and what does this value mean? b. What is the optimal consumption bundle i.e. (F*, C*)? c. Plot the budget line and clearly depict the point of optimality in the F (x-axis)-C (y-axis) space (draw both case budget lines and point of optimality on one diagram)
- You are choosing between two goods, X and Y, and your marginal utility from each is shown in the following table. Units of X MUx Units of Y MUy 1 10 1 8 2 8 2 7 3 6 3 6 4 4 4 5 5 3 5 4 6 2 6 3 a. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? ______units of X and ______units of Y b. What total utility will you realize? ______utils c. Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? _____units of X and ______units of Y d. Using the two prices and quantities for X, complete the table to derive the demand schedule (a table showing prices and quantities demanded) for X. Instructions: Start with the highest price first Price of X Quantity Demanded of X $ $Suppose Coke and Pepsi are perfect substitutes for me, and right and left shoes are perfect complements. A. Suppose my income allocated to Coke/Pepsi consumption is $100 per month, and my income allocated to right/left shoe consumption is similarly $100 per month. a. Suppose Coke currently costs $0.50 per can and Pepsi costs $0.75 per can. Then the price of Coke goes up to $1 per can. Illustrate my original and my new optimal bundle with "Coke" on the horizontal and "Pepsi" on the vertical axis. b. Suppose right and left shoes are sold separately. If right and left shoes are originally both priced at $1, illustrate (on a graph with "right shoes" on the horizontal and "left shoes" on the vertical) my original and my new optimal bundle when the price of left shoes increases to $2. c. True or False: Perfect complements represent a unique special case of homothetic tastes in the following sense: Whether income goes up or whether the price of one of the goods falls, the optimal bundle…RM2 1. Assume Good X and Good Y are perfect complements and both are normal goods. Suppose the price of X increases while the price of Y remains unchanged. On a preference map, a. demonstrate the change in the optimal consumption bundle. b. On a separate graph, decompose the substitution effect and the income effect.