MICROECONOMICS(LL); CNCT 21 2018 >IP<
21st Edition
ISBN: 9781260389470
Author: McConnell
Publisher: MCG CUSTOM
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Question
Chapter 7.A, Problem 2ARQ
To determine
The income per capita in DVC.
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True or false with reasoning:
1)Ā _______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.
22. Peanut butter (PB) sells for 10 dollars per pound and Oysters (O) sell for 50 dollars perpound. Suppose Pat buys 5 pounds of peanut butter and one pound of oysters each month.With this consumption bundle, his MRSP B,O = 3. Which of the following is true (assumingPatās preferences satisfy all the basic assumptions of consumer theory)?(a) Pat could increase his utility by buying more oysters and less peanut butter.(b) Pat could increase his utility by buying more peanut butter and less oysters.(c) Pat could increase his utility by buying more peanut butter and more oysters.(d) Pat could increase his utility by buying less peanut butter and less oysters.
Johnās preferences for Orange (O) and lemons (L) are represented byĀ the funtion U(O, L)= O+2L. The oranges cost Ā£2 and the lemons Ā£1. Given that Johnās monthly income is Ā£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 Johnās utility maximization problem.
If his income increases every month by Ā£10, how will Johnās 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 Ā£6 affect Johnās optimal consumption choice? (Johnās income is Ā£30)
Graph Johnās demand curve for each good.
Assume that John wins a voucher of Ā£20, redeemable only in Oranges. How would this affect Johnās utility? (Assume that prices and income are as described initially)
Assume that John is presented with two options: an Orange voucher of Ā£20 or just Ā£6 to spendā¦
Chapter 7 Solutions
MICROECONOMICS(LL); CNCT 21 2018 >IP<
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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