MICROECONOMICS 21E W/CNCT
21st Edition
ISBN: 9781307005851
Author: McConnell
Publisher: MCG/CREATE
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Chapter 7.A, Problem 2ADQ
Subpart (a):
To determine
The information about an indifference curve.
Subpart (b):
To determine
The information about an indifference curve.
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3. Suppose that Omar’s marginal utility for cups of coffee is constant at 1.5 utils per cup, no matter how many cups he drinks. On the other hand, his marginal utility per doughnut is 10 for the first doughnut he eats, 9 for the second he eats, 8 for the third he eats, and so on (that is, declining by 1 util per additional doughnut). In addition, suppose that coffee costs $1 per cup, doughnuts cost $1 each, and Omar has a budget that he can spend only on doughnuts, coffee, or both. How big would that budget have to be before he would spend a dollar buying a first cup of coffee?
*use tables and/or graphs if possible, please original work
John’s preferences for Orange (O) and lemons (L) are represented by the funtion U(O, L)= O+2L. The oranges cost £2 and the lemons £1. Given that John’s monthly income is £30 answer the following questions:
What type of goods are oranges and lemons for John?
What is the proportion to which John is willing to exchange Oranges for Lemons?
Illustrate and solve graphically John’s utility maximization problem.
If his income increases every month by £10, how will John’s consumption choice be affected? Illustrate graphically the income expansion path and the Engel curve for each good.
How will an increase in the price of Lemons to £6 affect John’s optimal consumption choice? (John’s income is £30)
Graph John’s demand curve for each good.
Assume that John wins a voucher of £20, redeemable only in Oranges. How would this affect John’s utility? (Assume that prices and income are as described initially)
Assume that John is presented with two options: an Orange voucher of £20 or just £6 to spend…
True or false with reasoning:
1) _______When we claim that utility can be ordinally measured, we assume that the consumer is able to measure the total and marginal utility received when one extra unit of a commodity is consumed.
2)_______If MRS between two goods is constant, then having more of one good without having more of the other does not increase utility.
3)_______Marginal Utility increases until total utility is at a maximum and then marginal utility decreases.
Chapter 7 Solutions
MICROECONOMICS 21E W/CNCT
Ch. 7.1 - Prob. 1QQCh. 7.1 - Prob. 2QQCh. 7.1 - Prob. 3QQCh. 7.1 - Prob. 4QQCh. 7.A - Prob. 1ADQCh. 7.A - Prob. 2ADQCh. 7.A - Prob. 3ADQCh. 7.A - Prob. 1ARQCh. 7.A - Prob. 2ARQCh. 7.A - Prob. 1AP
Ch. 7.A - Prob. 2APCh. 7.A - Prob. 3APCh. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 10DQCh. 7 - Prob. 1RQCh. 7 - Prob. 2RQCh. 7 - Prob. 3RQCh. 7 - Prob. 4RQCh. 7 - Prob. 5RQCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7P
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