Suppose we know that the marginal utility of good 1 is: 4x1?x2?, from this we can conclude that: The individual really likes good 1 Good 1 is a luxury good The individual would be willing to give up a large quantity of good 2 to get more of good 1 Preferences are strictly concave At least one fundamental assumption underlying preferences is violated Two answers are correct Three answers are correct All answers are correct No answer is correct

Q: Jack and Jill live in the same village where they both face the same price. Jack has preferences…

A:

Q: Ambrose's utility function is = 4x1 ^1/2 + x2. If the price of nuts (good 1) is $1, the price of…

A: A consumer will maximise its utility at a point where marginal rate of substitution is equal to the…

Q: Assuming the two good case.  When a person is attempting to maximize utility and the price of one of…

A: A budget constraint is  combination of two goods which are available for the consumer at market…

Q: The "useful" are hypothetical units of measurement with which we suppose it can be measure the…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Walt has utility function u = x + y. He has an income of $240. If the price of good x changes from…

A: The given utility function is of perfect substitutes and in this type of utility function consumer…

Q: To remain in consumer​ optimum, a price decrease requires(blank) in consumption. A price increase…

A: 1. As per law of demand, decrease in price will result in increase in demand.   A price decrease…

Q: With reference to the indifference theory with good Y on the vertical axis and good X on the…

A: Indifference curve is the graph which shows the two combinations Of two goods which gives equal…

Q: (In this question, differently from our lecture notes, income will be denoted by Y, not W). The…

A: Qx(px,py,Y), the demand of good x for prices px and py and income Y can be found out by the…

Q: (In this question, differently from our lecture notes, income will be denoted by Y, not W). The…

A: Demand: the demand refers to the intention or willingness to purchase a commodity at the prevailing…

Q: The following statement is true for consumer preferences: a) The axiom of weak monotonicity implies…

A: Consumer preference: It refers to the items that a consumer wants to buy. The change in consumer…

Q: Assuming the two good case.  When a person is attempting to maximize utility and the price of one of…

A: The term utility refers to the want satisfying power of any commodity. The associated term is…

Q: A well-behaved utility function is assumed to exhibit monotonic and convex preferences. (1) Define…

A: lets solve part 1 and part 2 in the following steps

Q: Sophia’s preferences over donuts (D) and coffee (C) are represented by the utility function:…

A: The utility function implies donuts and coffee are perfect complements and consumed in fixed…

Q: For the utility u(x1, x2) = x} + xž verify the Slutsky equation

A: Utility function : U(x1 , x2 ) = x11/3 + x21/3 Let the prices be p1 & p2  Income be (m)  Budget…

Q: Suppose an individual's utility function is given by the following expression: U (q1 , q2) = min…

A: Individuals (consumers) directly concerned within the acquisition, use, and disposal of economic…

Q: According to Kahneman and Tversky, what is the major problem they find with the basic tenets of…

A: Introduction According to the prospect hypothesis, investors assess gains and losses separately,…

Q: Which of the following statements best describes how individuals maximize their utility given a…

A: Individuals maximize their utility when the budget constraint is tangent to the indifference curve,…

Q: Mary has the utility function u(x, y) = Inx + x^2. Are her preferences strongly convex?

A: u (x,y) = ln x +x2

Q: Question 1 Consider an economy with two goods t = 1,2. Whenever an individual consumes ₁ units of…

A: As given utility function is u(x1,x2) = αlnx1 +lnx2 Where α>0

Q: Given a utility function that represents preference over bundles which consists of two goods. Can we…

A: To analyze consumer behavior and their satisfaction from the consumption of goods and services,…

Q: The law of diminishing marginal utility says that...   A. as a person consumes more and more of a…

A: The marginal utility is the satisfaction derived from the consumption of an additional unit. The…

Q: Which of the following are directly related to the principle of diminishing marginal utility?…

A: The Law of Diminishing Marginal Utility states that the marginal utility from each additional unit…

Q: uppose a consumer has preferences between two goods that are perfect substitutes. In this case would…

A: Two goods are substitutes in microeconomics if they may be utilized for the same purpose by the…

Q: Suppose Elizabeth’s preferences can be described by the Cobb-Douglas utility function, u(x_1, x_2 ).…

A: Given information Elizabeth has Cobb-Douglas  utility function U=u(X1,X2) P1 =price of X1 P2=price…

Q: (a) Explain with the help of a diagram the Slutsky substitution effect and the income effect when…

A: Normal good: It refers to a good whose demand increases when there is an increase in the income of…

Q: he marginal rate of technical substitution Group of answer choices is the rate at which one input…

A: The marginal rate of technical substitution (MRTS):   MRTS is the rate at which the firm can trade…

Q: Suppose a consumer has a budget of $200 to spend on two goods, X and Y, whose prices are $20 and…

A: Answer: Given, Total budget = $200 Price of good X PX=$20Price of good Y PY=$10 (d). A consumer is…

Q: Suppose the price of good x falls. As a result, the quantity demanded for good x increases for a…

A: Inferior goods are those goods whose demand falls when the consumer Income is rice. People are a…

Q: As the price of a good rise, the consumer will experience Select one: a. a southwesterly movement…

A: Indifference curve:- Indifference curve can be defined as a graph that represent different…

Q: The following statement is true for consumer preferences. a) /The axiom of weak monotonicity…

A: Consumer preference: It refers to the items that a consumer wants to buy. The change in consumer…

Q: Timothy has a utility function that depends on the number of musicals and the number of operas seen…

A: Introduction- Utility is determined by a consumer, on the basis of happiness or satisfaction that he…

Q: Let x and y denote the amount of goods X and Y. Find the demand functions of X (do not need to find…

A: Normal good is defined as a good whose income effect is positive. Law of Demand states that as price…

Q: A consumer has GH¢600 to spend on two commodities, A and B. Commodity A costs GH¢20 per unit and…

A:

Q: Explain the consumer equilibrium condition according to utility theory. Include in  your answer the…

A: Equilibrium of a Single Good: When a consumer buys a commodity, he stops when the price and utility…

Q: The law of diminishing marginal utility allows us to conclude that A) demand curves slope downward…

A: Law of diminishing marginal utility states that as we consume more and more units of a commodity…

Q: A consumer has a budget set aside for entertainment during the year, and they spend the budget on…

A: An indifference curve shows various possible combinations of two commodities that gives an equal…

Q: x0.25 y0.75 and has an income of As in question 2a, A consumer has a utility function given by U…

A: U = x0.25y0.75 MRS = MUxMUy = 0.25x-0.75y0.750.75x0.25y-0.25 = 1y3x Before Price change: MRS =…

Q: 1. Let k = one plus the last digit of your student number. For example, if your student number is…

A: Given value of Utility function  in the question is following -:…

Q: If the slope of the indifference curve between goods X and Y is steeper than the slope of the budget…

A: The indifference curve shows a combination of two goods that gives an equal level of satisfaction…

Q: Assume the price of good A goes up and the consumer decreases purchases of good A and decreases…

A: Luxury goods refer to the types of goods whose demand rises more than proportionally income rises so…

Q: Muoki says, “I’d rather see an action movie than a comedy, and I’d rather see a comedy  than a…

A: Transitivity Axiom: Suppose there is three bundles, i.e., A, B, and C If consumer prefers A over B,…

Q: Assume an individual’s preference for Fanta (Good x) and Fritters (Good y) are given by   the…

A: Given that the utility function for both good x and good Y are  U(x,y) = 20 = x^0.5y^0.5

Q: This is in accordance with the principle of diminishing marginal utility. Which of the following are…

A: "Since you have asked a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Cherise considers movies and concerts to be perfect substitutes. When Cherise maximizes her utility,…

A: Perfect substitutes are two goods that can be used in place of each other.An IC is the graphical…

Q: Suppose i's preferences are represented by the following utility function: u=x-y.Which of the…

A: U = x-y

Q: marginal rate of substitution (MRS) can be defined as: Select one or more: a. The amount of one…

A: Marginal rate of substitution depicts the relative price of two goods.

Q: Saketa's utility function is given by: U =x} +2x,x, +x Shainaz's utility function is given by: V =…

A: Monotonic preferences refer to the preferences of consumers that gives consumer higher satisfaction.…

Q: The substitution effect. Multiple Choice is generally so weak that its effect cannot be predicted.…

A: The price effect includes income effect and substitution effect. It is the summation of two effects…

Product and Price Bundling

Product and price bundling is used as a marketing strategy by businesses, where complementary products and services are combined and sold as a package deal. This bundled price is usually less than the total price of the individual products if they were to be sold separately. When bundled and sold, each product is sold at a reduced price. Using a price bundling strategy helps increase the average revenue per user and also increases the engagement with the user. This happens as the perceived value of the bundled products is more than the individual products.