Loose-leaf Microeconomics With Connect Access Card
2nd Edition
ISBN: 9780077716325
Author: B. Douglas Bernheim Lewis & Virginia Eaton Professor
Publisher: McGraw-Hill Education
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Question
Chapter 5, Problem 5P
To determine
Explain Person S’s marginal rate of substitution with an indifference curve.
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Students have asked these similar questions
Sandra’s utility function is U(x,y) = x + 2y - y. If we draw her indifference curves with x on the horizontal axis, and y on the vertical axis, then these indifference curves are everywhere downward sloping and get flatter as one moves from left to right. is this ture or false?
Emma has a utility function U(x1, x2, x3) = log x1 + 0.8 log x2 + 0.72 log x3 over her incomes x1, x2, x3 in the next three years. This is an example of
(A) expected value;
(B) quasi-hyperbolic utility function;
(C) standard discounted utility;
(D) none of the above.
Emma’s preferences can exhibit which of the following behavioral patterns?
(A) preference for flflexibility;
(B) context effffects;
(C) time inconsistency;
(D) intransitivity.
Which of the FF. statements is correct regarding the preference of the consumers when the income of the consumer can only be spent between apples and oranges? Assume that apples are written on the vertical axis while oranges are written on the horizontal axis
A. when the consumer has few oranges, he is willing to trade more apple to get another orange
B. when the consumer has so many oranges already, he will only exchange less apples for an orange
C. the declining slope of the indifference curve shows the marginal value of oranges is declining
D. all are correct
E. none is correct
Chapter 5 Solutions
Loose-leaf Microeconomics With Connect Access Card
Ch. 5 - Prob. 1DQCh. 5 - Prob. 2DQCh. 5 - Prob. 3DQCh. 5 - Prob. 4DQCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Prob. 6P
Ch. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10PCh. 5 - Prob. 11PCh. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 1CPCh. 5 - Prob. 2CPCh. 5 - Prob. 3CPCh. 5 - Prob. 4CPCh. 5 - Prob. 5CPCh. 5 - Prob. 6CPCh. 5 - Prob. 7CPCh. 5 - Prob. 8CP
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Similar questions
- So is this an example of: hometheic preferences, quasilinear preferences, or revealed preferences?arrow_forwardProve that the utility maximization conditions as suggested by the “marginal utility framework” are consistent with the “indifference curves approach”.arrow_forward1. What is the relationship between pS/pC and pC /pB? What feature of the utility function is responsible for these ratios?2. Now suppose that the moment before the above prices are elicited, the subject gets $10, which does not become part of her reference point. Again calculate the three prices pS, pB, and pC. What is the relationship between pS/pC and pC /pB? Why? 3. In some actual experiments, subjects were not given money, and pS/PC was found to be about 2, and PC/pB was found to be about 1. Write down a utility function that can produce these ratios.arrow_forward
- Joyce consumes x1 and x2 together in fixed proportions. She always consumes 1 unit of x2 for 2 units of x1. What is the utility function that describes her preference?arrow_forwardUnder the ordinal theory, a consumer is expected to rank his or her scale of preference from the least to the most satisfying. From this knowledge, describe the assumptions of the ordinal utility theory With the help of illustrations, show how the consumer attains equilibrium under the indifference curve approach As a student of microeconomics, use the knowledge attained during the teaching-learning process and show how the demand curve is derived under the cardinal theory approach .arrow_forwardWhich of the following statements is false? Group of answer choices If marginal utility is negative, then total utility is downward-sloping. If marginal utility is decreasing, then total utility is decreasing. If marginal utility is diminishing, then total utility is concave. If marginal utility is diminishing, then total utility is increasing but at a decreasing rate.arrow_forward
- The non-satiation assumption we make about people's's preferences entails that the indifference curves never cross. True or Falsearrow_forwardWhich of the following statements is true? Select one or more options: -If two different individuals have exactly the same budget constraint but different preferences (different appearance of the indifference curves) then they will have different equilibrium conditions for optimal choice -The marginal substitution ratio is always equal to 1 for perfect substitutes -If item X costs SEK 10, item Y costs SEK 20 and if the marginal benefit for X is 20 and the marginal benefit for Y is 30, then the individual should buy more of Y and less of X -In the case of a corner solution for an individual, the marginal substitution ratio for two goods is not equal to the relative price of the two goodsarrow_forwardConsider an individual whose preferences are represented by the utility function U(x1,x2) = min {3x1+x2 , x1+3x2}. For this individual, Plot the indifference curve giving a utility level of 6. Calculate her MRS at consumption bundle (x1,x2), does MRS depend on the value of (x1,x2)? Calculate her optimal consumption bundle when she has an income of 24, and P1=1, P2=2. Calculate her optimal consumption bundle when she has an income of 24, and P1=1, P2=4. Calculate the income and substitution effects resulting from the change in price of Good 2 (on the level of Good 2 consumption!) Calculate her demand function X1* (P1, P2,m) Calculate her own price, cross price, and income elasticities at X1*(1, 2, 24) and at X1*(1, 4, 24). Based on these, can you say the goods 1 and 2 are (gross, or Marshallian) complements or substitutes?arrow_forward
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