Suppose you find that MU1(x1+x₂)=2x2 and MU₂(x1+x₂)=2x1. What is the rate at which the consumer is willing to trade good 2 for good 1 at bundle (2,4)? (Note: enter a positive number, i.e. enter the quantity of good 2 that the consumer is willing to give up for an additional-marginal-unit of good 1.)
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- If the consumer thinks that (x₁,x2) is at least as good as (y₁.42) and that (y₁y2) is at least as good as (x₁,x2), we can conclude that (look at the following options)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.A consumer is willing to trade 4 units of x for 1 unit of y when she is consuming bundle(8, 1). She is also willing to trade in 1 unit of x for 2 units of y when she is consumingbundle (4, 4). She is indifferent between these two bundles. Assuming that the utilityfunction is Cobb-Douglas of the form U(x,y)=xα yβ, where α and β are positiveconstants, what is the utility function for this consumer?
- It is given that a typical consumer has a well-behaved preference structure for his consumption bundle, which includes only two goods, A and B. Further, assume that commodity A is normal and commodity B is Giffen. By keeping commodity A on the x-axis and commodity B on the y-axis, you are required to show the price decomposition for commodity B when $PB decreases exogenously relative to $PA.Consider a consumer with well-behaved preferences and an income of $160. The price of good 1 is $12 and the price of good 2 is $16. At the consumption bundle (4,2), where 4 is the number of units of good 1 purchased and 2 is the quantity of good 2, the opportunity cost of consuming an extra unit of good 1 is ["", "", "", "", ""] units of good 2.I. A)MRS=1/3, B)MRS=1/4, C)MRS=4/3, D)MRS=12 II. A)Rhea should buy more bread, less milk, B)Rhea should buy more milk, less bread, C) Rhea maximizes her utility at bundle A, so she should not change her consumptions of either good, D) Rhea cannot afford bundle A, so she should buy less of both goods III. A)Rhea's MRS at bundle A is greater than the price ratio (Pb/Pm), B)Changing her bundle moves Rhea to a higher indifference curve, C)The slope of the indifference curve (where bundle A is found) is not equal to the slope of Rhea's budget constraint, D)All of the above statements explain your answer to part II.
- If a 5 percent decrease in the price of Good A results in an increase of 8 percent in the quantity demanded of Good B, then it can be concluded that Goods A and B areQ50 Marginal utility analysis predicts a downward-sloping demand curve for good X because... a. As PX rises, the consumer increases purchases of X such that MUX/PX is equal to MU/P for all other products. b. As PX falls, the ratio MUX/PX becomes smaller, causing the consumer to purchase more of good X. c. As PX falls, the consumer increases purchases of X until MUX/PX is equal to MU/P for all other products. d. Utility-maximising consumers equate the marginal utility received for each product consumed. e. All demand curves are downward sloping, regardless of the behaviour of consumers.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.
- Evaluate the one specific law which states that the marginal utility of a good orservice declines as more of the good or service is consumed in a specific timeperiod.For the utility function U = Qx0.22Qy(1-0.22) find the trade-off rate between good X and good Y at Qx= 9 and Qy=19 Please enter your response as a positive number with 1 decimal and 5/4 rounding (e.g. 1.15 = 1.2, 1.14 = 1.1).Mats, who has reference-dependent preferences over beer and money, goes to the local pub with a friend, but is not planning on drinking any beer or spending any of his 50 Euro in cash. Let his end-of-evening outcomes in pints of beer consumed and cash be c1 and c2, respectively, and let his reference point in pints of beer and cash be r1 and r2, respectively. Then, Mats’ utility is given by v(6c1 − 6r1) + v(c2 − r2), where v(x) = x for x ≥ 0, and v(x) = 1.5x for x < 0. (a) Suppose that the price of beer is pB. Calculate Mats’ utility from drinking one pint of beer at this price. What is Mats’ utility from drinking no beer? And, comparing these two utility values, what is the maximum price pB that Mats would pay for one beer? (b) Suppose that Mats unexpectedly gets a pint of beer as part of a promotion at the pub, and incorporates its consumption into his reference point in beer. [Hint: this means that (r1, r2) = (1, 50).] Suppose that Mats could sell the beer at a price pS.…