For Question 2 there is a typo. It is supposed to say consider Ronald from question 1. Both question 1 and 2 are provided, i would appreciate if someone could complete them as soon as possible. Also this is not a graded question from an exam, it is homework l have been given although l did not purchase the textbook so cant get the solutions for it. Continue to consider Ronald from Question 2. Suppose that Ronald's preferences over moviesand climbing are such that he likes them exactly equally: he is always willing to trade onemovie for one climbing session and remain exactly as well of as he was before. One valid utilityrepresentation of Ronald's preferences is u(x, y) = x+y.(a) On the same picture as before, plot indifference curves for the utility levels u = 5.8, 10, 14.2, 18.4.(b) Compute Ronald's marginal utilities for each good. Using the marginal utility formulasyou have just computed, prove that Ronald's preferences are strongly monotone.(c) i. Label three distinct bundles (x, y) on the indifference curve corresponding to a utilityof 5.8.ii. Hence, or otherwise, argue that his preferences are not strictly convex.(d) i. Explain why Ronald's optimal consumption bundle must lie on the outer boundary ofhis budget set.ii. Identify Ronald's optimal bundle by visual inspection. Briefly explain what you did.iii. Find Ronald's optimal consumption bundle using a mathematical argument. Ronald is an Economics students who likes to spend his leisure time of sixty hours a month doingone of two activities: watching movies at Dendy Cinemas Newtown (x), and indoor-climbing(y). A trip to the movies takes 3 hours, and each visit to the climbing gym lasts 5 hours.Further, suppose that Ronald has a fixed monthly monetary budget to spend on leisure activi-ties. He currently exhausts this entire budget by watching two movies and visiting the climbinggym fifteen times. With this monthly budget, he would also have been able to afford exactlyseven movies and six visits to the climbing gym.Assume that both goods are perfectly divisible.(a) Write down Ronald's money and time constraints as algebraic inequalities.(b) Show, using algebra, that Ronald's two budget lines intersect at the bundle (x, y)(5.5, 8.7).=(c) Plot Ronald's money constraint using a red dotted line. Plot Ronald's time constraintusing a blue dotted line. Clearly label each constraint, any axis intercepts, and any pointsof intersection between the two constraints. Shade in Ronald's budget set, using solid blacklines to indicate where the boundaries of the budget set are.

Budget Set:Budget set refers to the collection or set of all possible consumption bundles that an…

(y). A trip to the movies takes 3 hours, and each visit to the climbing gym lasts 5 hours. Further, suppose that Ronald has a fixed monthly monetary budget to spend on leisure activi- ties. He currently exhausts this entire budget by watching two movies and visiting the climbing gym fifteen times. With this monthly budget, he would also have been able to afford exactly seven movies and six visits to the climbing gym. Assume that both goods are perfectly divisible. (a) Write down Ronald's money and time constraints as algebraic inequalities. (b) Show, using algebra, that Ronald's two budget lines intersect at the bundle (x, y) (5.5, 8.7). (c) Plot Ronald's money constraint using a red dotted line. Plot Ronald's time constraint using a blue dotted line. Clearly label each constraint, any axis intercepts, and any points of intersection between the two constraints. Shade in Ronald's budget set, using solid black lings to indicato where the boundaries of the budget got

(y). A trip to the movies takes 3 hours, and each visit to the climbing gym lasts 5 hours. Further, suppose that Ronald has a fixed monthly monetary budget to spend on leisure activi- ties. He currently exhausts this entire budget by watching two movies and visiting the climbing gym fifteen times. With this monthly budget, he would also have been able to afford exactly seven movies and six visits to the climbing gym. Assume that both goods are perfectly divisible. (a) Write down Ronald's money and time constraints as algebraic inequalities. (b) Show, using algebra, that Ronald's two budget lines intersect at the bundle (x, y) (5.5, 8.7). (c) Plot Ronald's money constraint using a red dotted line. Plot Ronald's time constraint using a blue dotted line. Clearly label each constraint, any axis intercepts, and any points of intersection between the two constraints. Shade in Ronald's budget set, using solid black lings to indicato where the boundaries of the budget got

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.14P

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