Question 7 (- Suppose Scarlett has budget of $100 to spend on pizzas and burritos. A pizza costs $10, and a burrito $5. However, the store where Scarlett shops has a promotion on burritos. After she buys 6 burritos, and price of additional burritos drops to 2 dollars. Draw Scarlett's opportunity set. Please make sure to show all your steps.
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- - Some restaurants offer "all you can eat" meals. How is this practice related of diminishing marginal utility? What restrictions must the restaurant impose on the customer in order to make a profit?image for question a. If she can visit only one of the stores, which one would she go and what would be her optimal bundle there? Could she afford this very bundle at the other store? (b) If she can freely visit both stores, (buying each commodity from the store where it is cheaper !!) what would be her optimal bundle? What would she buy from each store? (c)Back to (a), how much money would she willing to give up (out of her $720 budget) for the ability to visit both stores rather than only one store? (HINT: After giving up that money, she is left with less money with which optimizing utility with the option of visiting both stores -buying each commodity from the cheaper store- she is able to achieve the same level of utility in the scenario with the original uncut budget but having to choose only one of the stores to shop at)Q4) Marginal Utility Use the table to calculate then draw marginal utility, show your calculations, graph, and then answer two questions. Popcorn Consumption 0 First box Second box Third box Fourth box Fifth box Sixth box Total Utility 0 20 35 44 49 50 40 a. With which box of popcorn does marginal utility first diminish? b. With which box does marginal utility become negative?
- 6 Is examining the intersection of budget lines and indifference curves a valid means of assessing consumer behavior? Why or why not? How does your analysis of this topic apply to making business decisions? Something new4. Liam initially has a weekly allowance of €24 to spend on eggs (at €0.40 per egg) and beans (at €0.80 per tin). Liam will only consume 4 eggs with each tin of beans and never changes this proportion. (a) What is the utility maximising amount of eggs and beans that Liam buys each week? (b) Suppose the price of eggs rise to €0.60 per egg but the price of beans falls to €0.60 per tin. At the same time, Liam's weekly allowance rises to €30. How much of each good will Liam now buy? Compare your answer to that in (a) and explain the difference, if there is one. Use a diagram to complement your answer.1. Enumerate and explain the properties of Consumer Preference. 2. Illustrate and explain the Utility Maximization
- 1. Part 1 (a) What are the three basic axioms of preferences in the rational choice model that are sufficient to ensure that a utility function exists? (b) What is it called when one of those axioms is violated? (c) What is a reference point? (d) Draw a graph of the indifference curves of someone who could be influenced by either of two reference points. (e) Is one of the axioms above violated by those indifference curves? If so, which one? (f) Explain how those indifference curves violate the axiom you identified, by labeling some points on the indifference curves and indicating the exact violation.Lee has calculated her marginal utility from buying pizza slices and soda (shown on the table in the worksheet) and wants to use these data to decide how to rationally spend the money she has. The price of pizza is $2.00 and the price of soda is $2.00 question 9 (a) given these prices and your worksheet calculations, what is the first product lee will buy? (b) would lee ever buy four slides of pizza? Why/why not? question 10Given the data in your worksheet, how many pizza slices and sodas lee should buy to maximize her total utility if she rationally spends her budget of 10.00? question 11 when the price of pizza changes, lee's MU/$P changes. If the price of pizza decreases to $1.50 and her budget decreases to $7.50, how many pzza slices and sodas lee should buy to maximize her total utility?2. Theory of Consumer Behaviour 1. Refer to the information provided in Table A below to answer the question(s) that follow. Table A Dozens of Oysters per Day Total Utility Marginal Utility 1 60 2 104 3 134 4 152 5 8 Number of Root Beers per Day Total Utility Marginal Utility 1 40 2 70 3 94 4 114 5 14 Refer to Table A and show your computation i. The total utility of five dozen oysters per day is ii. The total utility of five root beers per day is iii. If the price of a root beer is $4, the price of a dozen oysters is $12, and Tyler has $28 of income, Tyler's utility-maximizing combination of root beers and oysters per day is2 Explain why ?
- PROBLEM (1) Suppose a consumer has just enough money to afford the bundle of 3 apples and 2 oranges, and similarly she also has just enough money to afford the bundle of 2 apples and 4 oranges. (a) Denoting the number of apples with x and oranges with y, plot the two given bundles on a graph, and calculate the relative price of apples; px/ py. (b) If she buys only apples with her budget, how many can she buy? If she buys only oranges, how many can she buy? Write down the budget equation for the consumer. (Notice that knowing two points on the budget line, you can write down the budget equation, even though you weren't given the prices nor the income explicitly!) (c) Suppose MUx = 20 and MUY = 30 at some point on the budget line. Is she maximizing utility by choosing this bundle? If not, should she buy fewer apples (and more oranges), or more apples (and fewer oranges), to increase her utility? (d) Forget about (c); instead, you learn that her utility function is u(x,y) = Axy³. What is…18. Declining MRSXY implies that:(a) The total utility is decreasing along an indifference curve(b) The consumer’s preferences do not satisfy the more-is-better principle(c) The consumer is willing to give up more and more X for additional Y as the consumption of X increases along an indifference curve(d) The consumer is willing to give up less and less X for additional Y as the consumptionof X increases along an indifference curve2. Utility maximization - Trading off labor and leisure The indifference curves on the following graph show Amy's preferences for leisure and consumption for increasing levels of utility, such that her utility increases in both consumption and leisure. Assuming that Amy spends 68 hours each week sleeping, she has a maximum of 100 hours available to her for leisure if she does not work at all. Initially, she works 45 hours (and thus has 55 hours of leisure) and earns $250 per week. Use the grey point (star symbol) to indicate Amy's initial leisure/consumption bundle. Dashed drop lines will automatically extend to both axes. ? CONSUMPTION (Dollars per week) 1000 900 800 700 600 500 400 300 200 100 0 0 10 20 30 40 50 60 70 80 LEISURE (Hours per week) 90 100 110 Initial bundle $200 Unemployment Benefits Equivalent Bundle, $100 Unemployment Benefits Equivalent Bundle Now, suppose that Amy is laid off, but she is eligible to collect unemployment benefits of $200 per week. Use the black point…