Q: Example of budget line
A: A budget line shows all the combinations of two goods X and Y which the consumer can afford to buy…
Q: The movement of the budget line from AB to CD is consistent : a decrease in the consumer’s money…
A: A budget line illustrates the combination of two goods that are affordable by a consumer with a…
Q: When a consumer earns a higher income, it rotates the budget line outward around the point where it…
A: A BL (budget line) demonstrates the two commodities whose combination a consumer can render to buy…
Q: If price of commodity X = $20 and price of commodity Y =$ 10 and the income= $200From the diagram…
A: Given price of goods X = $20 Price of goods Y = $10 Income = $ 200
Q: Melanie has an income of $140 which she can spend on tea at $8 per cup or used clothes at $20 per…
A: Budget line shows the graphical representation of Budget Constraints, which shows the how much…
Q: If the price of good 1 is $2/unit, the price of good 2 is $2/unit, and income is $102... What is…
A: Price of good1 = $2/unitPrice of good2 = $2/unit Income = $102
Q: Rummy has $40 a week to spend on burger and cake.The price of burger is $5 and the price of cake is…
A: It is given that the consumer prefers burger (B) and cake (C). The price of B and C are equal to $5…
Q: Explain how the budget constraint might change if income and prices of all goods increased in same…
A: Consumer income is the earnings that an individual has gain from their work or investment.
Q: Jack buys apple at 4$, firts 5 amount of orange at 5$ , and any amount above 5 amoun is charged 10$.…
A: The budget set shows different combinations of the consumption bundles that are feasible for the…
Q: The consumer's initial budget line is I with income equal to S3000. The budget line then shifts from…
A: A graphical representation in which all possible combinations of two products are purchased with…
Q: What happens to the budget line if the price of good 2 increases, but the price of good 1 and income…
A: Budget constraint refers to the amount of expenditure incurred by a consumer to make purchases at…
Q: Tammy spends her money on lemonade and iced tea. If the price of lemonade falls, it is as though her…
A: A person's income is nothing but the number of goods and services they can purchase within their…
Q: If a consumer has an income of $120, the price of X is $5, and the price of Y is $8. Which…
A: An attainable combination is the bundle of two goods which a consumer can buy given his/her income…
Q: 1 Good 1 is on the horizontal axis and good 2 is on the vertical axis. Pi is the price of good 1 and…
A: Individuals have budget. Budget states the amount of goods and services that can be bought with a…
Q: Billy Madison consumes 100 units of X and 50 units of Y. The price of x rises from 2 to 3. The price…
A: Budget set shows the combinations of two goods that can be consumed with given level of resources.
Q: A halving of the prices good A and good B has the same effect on the budget line as doubling the…
A: The graph that depicts all of the combinations that are possible to be brought with the given income…
Q: Jane has $500 a week to spend on clothing and food. The price of clothing is $25 and the price of…
A: The income of an individual refers to the total amount received by an individual from various…
Q: u (x₁, x2) = min { } If the price of good 1 is $5/unit, the price of good 2 is $2/unit, and income…
A: "The utility function in the form of 'min' represents the perfect complement case. Two goods when…
Q: If the consumer’s income is held constant, how would the prices of goods X and Y have to change to…
A: A consumer can consume more of a commodity in two ways: either, his overall income increases -…
Q: (Figure and Table: The Budget Line) Use Figure and Table: The Budget Line. A(n) _____ in the price…
A: The budget line shows the maximum affordability of consumer based on the availability of income. the…
Q: a) Jim buys gingerbread and candy, both of which are normal goods. When the price of gingerbread…
A: Income effect refers to the change in the quantity of good due to change int he price of that good,…
Q: Given the following budget line pxx + Pyy = m And that the slope of the budget line depends only on…
A: Given that the budget line is xpx+ypy=m, the slope of the line is -pxpy and the x and y intercepts…
Q: Amy has $12 to spend on coffee and soda. The price of coffee is $2 a cup, and soda is $1 a can. The…
A: A budget line is a downward-sloping straight line that contains all potential combinations of the…
Q: Good X A B IC2 Good Y | The rotation of the budget line from red to blue depicts an increase in…
A:
Q: Assuming ceteris paribus (all other things being equal), What are the effect of the following on a…
A: The demand curve shows the association between the amounts of commodity demanded by the consumer at…
Q: Suppose that income rises 50% while price of X rises 25% and price of Y rises 75%. How would the…
A: Budget line is also known as price line for consumer it shows different combinations of two goods…
Q: uppose that Ahmed's income OR 2800, and he has to purchase two goods X and Y. The price of good X…
A: Income of Ahmed =OR 2800 Price of good X (Px) =OR 20 Price of good Y (Py) =OR 40
Q: In the diagram below, a doubling of the price of X causes one to Y 100 20 40 45 50 100 increase the…
A: When the price of x doubles, the budget constraint swivels around the x-axis. The Y coordinate…
Q: show the effect of this increase in income on the change in his optimal choice of fresh fish, his…
A:
Q: If all prices and income increase by 10%, then the budget line will: a. rotate around its axis. b.…
A: Budget line shows the amount of goods which can be bought with given prices and money income. It is…
Q: Maya divides her income between coffee and croissants (both of which are normal goods). An early…
A: Budget constraint (BC) represents various combinations or bundles of two goods that can be purchased…
Q: Amy has $12 to spend on coffee and soda. The price of coffee is $2 a cup, and soda is $1 a can.…
A: A) According to the question, "income of Amy is $12 to spend on coffee and soda, price of coffee is…
Q: Draw his budget line under several conditions: a. His income is $100, and one gallon of gasoline and…
A: In Microeconomics, the budget constraint is used to analyze the quantities of commodities that a…
Q: Over the past decade, medical costs have increased more rapidly than other prices. In order to…
A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: Good 1 If the two lines in the diagram above are parallel and shift in the direction of the arrow,…
A: Shifting of budget line due to change in income or change in price level , so here we conclude the…
Q: Rummy has $40 a week to spend on burger and cake. The price of burger is $5 and the price of cake is…
A: Rummy’s real income in terms of cake is $40/$2 = 20 that is 20 slices of cake can be purchased in…
Q: Artemis attends the University of Calgary. She has an income of $30, the price of A is $3, and the…
A: Here, given information is: Income: $30 Price of A= $3 Price of B= $2 To find: one combination of…
Q: The graph shows the budget line for a consumer who only buys cookies and magazines. If the…
A: Budget line: - it is the graphical representation of different combinations of two goods that a…
Q: 1. 1. Rummy has $40 a week to spend on burger and cake. The price of burger is $5 and the price of…
A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…
Q: A consumer is choosing between magazines and books. His set of consumer optimums are shown on the…
A: We can show that 1)We seen that PCC is horizontal, that means that change in price of books doesn't…
Q: Questions 6 (Demand). When the price of x¡ is $8 and the price of x2 is $5, Jenny consumes 20 units…
A: Answer a) In the given question the increase in the price of goods X2 has to lead to an increase in…
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- The rules of politics are not always the same as the rules of economics. In discussions of setting budgets for government agencies, there is a strategy called closing the Washington Monument. When an agency faces the unwelcome prospect of a budget cut, it may decide to close a high-visibility attraction enjoyed by many people (like the Washington Monument). Explain in terms of diminishing marginal utility why the Washington Monument strategy is So misleading. Hint: If you are really trying to make the best of a budget cut, should you cut the items in your budget with tile highest marginal utility or line lowest marginal utility? Does the Washington Monument strategy cut the items with the highest marginal utility or line lowest marginal utility?Praxilla, who lived in ancient Greece, derives utility from reading poems and from eating cucumbers. Praxilla gets 30 units of marginal utility from her first poem 27 units of marginal utility from her second poem 24 units of marginal utility from her third poem, and so on, with marginal utility declining by three units for each additional poem. Praxilla gets six units of marginal utility for each of her next three cucumbers consumed, five units of marginal utility for each of her next three cucumbers consumed, four units of marginal utility for each of the following three cucumbers consumed, and so on, with marginal utility declining by one for every three cucumber consumed. A poem costs three bronze coins hut a cucumber costs only one bronze coin. Praxilla has 18 bronze coins. Sketch Praxillas budget set between poems and cucumbers, placing poems on the vertical axis and cucumbers on the horizontal axis. Start off with the choice of zero poems and 18 cucumbers, and calculate the changes in marginal utility of moving along the budget line to the next choice of one poem and 15 cucumbers. Using this step-by-step process based on marginal utility, create a table and identify Praxillas utility—maximizing choice. Compare the marginal utility of the two goods and the relative prices at the optimal choice to see if the expected relationship holds. Hint: Label the table columns: 1) Choice, 2} Marginal Gain from More Poems, 3) Marginal Loss from Fewer Cucumbers, 4) Overall Gain or Loss, 5) Is the previous choice Optimal? Label the table rows: 1) 0 Poems and 18 Cucumbers, 2) 1 Poem and 15 cucumbers, 3) 2 Poems and 12 cucumbers, 4) 3 Poems and 9 Cucumbers, 5) 4 Poems and 6 cucumbers 6) 5 Poems and 3 Cucumbers, 7) 6 Poems and 0 Cucumbers.1 Assume there are two firms in a Hoteling Linear city. One firm is located at zero and the other at one. Assume the following utility equations: U0=v−p−tx+μ, U1=v−pn−t(1−x). Where U0 is utility from buying the good from the firm located at zero, p is the price for the firm at point zero, t is the travel cost and μ is bonus utility because the firm at point zero makes people a little bit happier. U1 is utility from buying the good from the firm at point one and pn is the price. Part a) Find the indifferent consumer
- True/False/Uncertain: 1. In taking an exam, Atack, a rational student, allocates his time to the various questions so as to equalize hismarginal point utility per minute on all questions. 2. The marginal utility of food to Zecher depends only on the amount of food (and not on the amount ofhousing) and the marginal utility declines as more food is consumed; likewise for housing. Therefore,both food and housing are normal goods. (Hint: Express the optimality condition for Zecher’s [UMP], MUF/MUH = PF/PH. Notice that PF/PH is fixed. If all of an increase in income is spent on F, can the equality be maintained?)Solve; a consumer utility function is given as 64q10.5q20.25q30.4 1. what is the marginal utility of consuming commodities q1, q2 and q3 2. derive the second-order partial derivatives of the utility function with respect to the three pairs of commodities 3. show the cross partial derivatives with respect to q1 4.what is her total utility when q1 is 24, q2 is 30, and q3 is 15Find the optimal bundle using the following utility functions and budget constraints. 1. U(x,y)=lnx+yand2x+y=10 2. U(x,y)=3x+2yand3x+2y=24 3. U(a,z)=3a+2zand3a+6z=24 4. U(a,z)=a2z2 and4a+2z=485. U(x,z)=a2z3 and3a+2z=36
- 4. Two individuals, Amir and Budi, consume two goods, clothes (X) and shoes (Y). The utility functions for the two individuals are given as: Utility function of Amir, UA = 15X0.25Y0.75Utility function of Budi, UB = 25X0.5Y0.5 The current price for clothes (Px) is Rp 100,000 and the current price for shoes (PY) is Rp 150,000 a. Determine marginal rate of substitution (MRSXY)between clothes (X) and shoes (Y) for Amir and Budi! Please explain. b. Amir is currently consuming 5 units of clothes (X) and 10 units of shoes (Y), whereas Budi is consuming 12 units of clothes (X) and 8 units of shoes (Y). At this current consumption, have Amir and Budi reached the efficient allocation of clothes and shoes? If they have, explain why. If they have not, calculate the optimal allocation and explain. c. Considering the relative price between of clothes and shoes, at the current consumption, have Amir and Budi reached exchange equilibrium? Please explain d. Use the Edgeworth Box to illustrate the…4. Two individuals, Amir and Budi, consume two goods, clothes (X) and shoes (Y). The utility functions for the two individuals are given as: Utility function of Amir, UA = 15X0.25Y0.75Utility function of Budi, UB = 25X0.5Y0.5 The current price for clothes (Px) is Rp 100,000 and the current price for shoes (PY) is Rp 150,000 a. Determine marginal rate of substitution (MRSXY)between clothes (X) and shoes (Y) for Amir and Budi! Please explain. b. Amir is currently consuming 5 units of clothes (X) and 10 units of shoes (Y), whereas Budi is consuming 12 units of clothes (X) and 8 units of shoes (Y). At this current consumption, have Amir and Budi reached the efficient allocation of clothes and shoes? If they have, explain why. If they have not, calculate the optimal allocation and explain. c. Considering the relative price between of clothes and shoes, at the current consumption, have Amir and Budi reached exchange equilibrium? Please explain d. Use the Edgeworth Box to illustrate the…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…4. Two individuals, Amir and Budi, consume two goods, clothes (X) and shoes (Y). The utility functions for the two individuals are given as: Utility function of Amir, UA = 15X0.25Y0.75Utility function of Budi, UB = 25X0.5Y0.5 The current price for clothes (Px) is Rp 100,000 and the current price for shoes (PY) is Rp 150,000 b. Amir is currently consuming 5 units of clothes (X) and 10 units of shoes (Y), whereas Budi is consuming 12 units of clothes (X) and 8 units of shoes (Y). At this current consumption, have Amir and Budi reached the efficient allocation of clothes and shoes? If they have, explain why. If they have not, calculate the optimal allocation and explain.Michelle has $7 to spend on makeup and clothes and wants to maximize her utility on her purchase. Based on the data in the table, how much makeup and clothes should Michelle purchase to maximize her utility. Show all working Makeup= $1 Clothes = $0.50Quantity Total Utility Quantity Total Utility1 28 1 122 52 2 223 72 3 304 88 4 365 100 5 406 108 6 427 112 7 428 112 8 40
