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- True/ false Describe Since a greater utility number indicates that a consumer is better off, utility numbers cannot be negative.part D E F solution needed Question 1Elmira has a monthly income of $200 that she allocates between two goods: Beef (B) andPotatoes (P). Beef costs $6 per pound while Potatoes cost $1 per pound. Elmira’s utilityfunction is given by: U(B, P) = 2B + P Assume that both Beef and Potatoes are finelydivisible goods (so your answer may or may not be a whole number). This questioncontains 6 parts, (a)-(f)) (a) Write down the equation for Elmira’s indifference curves. (Assume Beef is measuredon x-axis and Potatoes on y-axis) (b) Depict Elmira’s budget line graphically and mention its slope. (Again, assume Beef ismeasured on x-axis and Potatoes on y-axis) (c) Illustrate some indifference curve(s) for Elmira. (d) Find MRSBP . Do Elmira’s preferences have a diminishing Marginal Rate of Substitution? (e) What combination of Beef and Potatoes should Elmira buy to maximize her utility? (f) Determine Elmira’s utility at the utility maximizing choice.Consider three individuals with utility indicators UA = MA, UB = nMB, and UC = MC d. Explain the answers to parts a through c in terms of the comparability of utility.
- Given that utility function for a consumer is given by u = (x-3)2 + (y-4)2, draw any twoindifference curves for this consumer while clearly labelling the higher one as ‘H’ and lower oneas ‘L’. Does he prefer more of a good to less of it? Does he prefer averages to extremebundles? Explain.Draw a consumer’s indifference curves for wine andcheese. Describe and explain four properties of theseindifference curves.define utility with its practical examples also explain its different measures in detail?
- If Jaxson's consuming goods x and y where mrs>mrt, he can increase his utility by a. decreasing x and increasing y. b. increasing x and decreasing y. c. doing nothing, because he is maximizing his utility. d. none of the above.The primary goal of very consumer is to maximize satisfaction. Explain, how a consumer achievesequilibrium using:a) Indifference curve analysisb) Marginal Utility theoryEmelia inherits a collection of 100 Michael Jackson’s CDs (good XA) and 50 Madonna’s CDs (good XB). Her utility function is U(XA, XB) = XA^2 XB^2 Initially, the price of Jackson’s CDs PA= £5 and the price of Madonna’s CDs is PB= £10. Following the success of the “This is it”, the price of Michael Jackson’s CDs increases to P'A = £10 while the price of Madonna’s CDs remains unchanged. Show on your diagram how is Emelia's budget constraint affected by the price change? Create a clear and well explained (including all available information) diagram to illustrate her original and new (after the price change) optimal consumption bundles, the substitution effect of the price change, the ordinary income effect of the price change and the endowment income effect of the price change. the diagram should show the original budget constraint, the original and new optimal consumption bundles, the substitution effect, the ordinary income effect, and the endowment income effect. The movement from…
- Consumer spends $ 360 per week on two goods, X and Y. Px=$3 and Py= $2. His utility function is U = 2X^2Y. What quantities of X and Y does he buy each week in quillibrium?Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either callher on the land-line phone for five cents per minute or he can drive to see her, at a round-trip cost of $2 in gasolinemoney. He has a total of $10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses ahandy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values inTable 6.6, figure out the points on Jeremy’s consumption choice budget constraint (it may be helpful to do a sketch)and identify his utility-maximizing pointTake Jeremy’s total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremy’s utility. 6.1Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either callher on the land-line phone for five cents per minute or he can drive to see her, at a round-trip cost of $2 in gasolinemoney. He has a total of $10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses ahandy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values inTable 6.6, figure out the points on Jeremy’s consumption choice budget constraint (it may be helpful to do a sketch)and identify his utility-maximizing point.
