11. Angela works farmland owned by Bruno. The diagram below illustrates their joint feasible frontier. Angela's indifference curves are all assumed to have an identical slope, for any given amount of free time, and at point D the slope of Angela's indifference curve is identical to the slope of the feasible frontier at point C. Angela's reservation indifference curve, IC, 12 8. IC Feasible frontier: Angela and Bruno combined 16 20 24 Angela's hours of free time a) Assume that Angela's reservation option is point F. Use the framework above and a test for Pareto efficiency to establish that point F is not Pareto-efficient while points on the line CD are. b) How might Angela and Bruno achieve a Pareto-efficient outcome? Show diagrammatically where this will be on the diagram. Bushels of grain
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- Suppose that Abel and Eden spend their incomes on two goods, food (F) and clothing (C).Abel’s preferences are represented by the utility function U(F,C)=10FC, while Eden’spreferences are represented by the utility function U(F,C)= 0.20F2C2A) With food on the horizontal axis and clothing on the vertical axis, identify on a graph theset of points that give Abel the same level of utility as the bundle (10, 5). Do the same forEden on a separate graph.B) On the same two graphs, identify the set of bundles that give Abel and Eden the samelevel of utility as the bundle (15, 8).C) Do you think Abel and Eden have the same preferences or different preferences? ExplainExplain why the lifetime budget constraint must be satisfied as a strict equalityGinny likes to eat Bertie Bott’s Every Flavour Beans (b), and Chocolate Frogs (f). Herpreferences over these lollies are Cobb-Douglas, and can be presented by the utility functionu(b, f) = 1/5(b − 2)(f + 3). Each Every Flavour Bean costs 25 Knuts and each Chocolate Frogcosts 12 Knuts. Ginny has 314 Knuts to spend. Assume that beans and frogs are both perfectlydivisible goods.(a) Find Ginny’s optimal bundle.(b) Suppose that Ginny is mugged by Draco on her way to the lolly cart, so that by the timeshe is there, she is left only with 75 Knuts. What is her optimal bundle now?(c) Now, consider the general case, where Ginny’s income is m, the price of Every FlavourBeans is pb, and the price of Chocolate Frogs is given by pf . In other words, treat ChocolateFrogs as the numeraire. Find Ginny’s demand for each good in terms of m, pb and pf .(d) Find the good on which Ginny will always spend more than half of her income.(e) Find the own-price, cross-price, and income elasticities of good 2.
- Ginny likes to eat Bertie Bott’s Every Flavour Beans (b), and Chocolate Frogs (f). Herpreferences over these lollies are Cobb-Douglas, and can be presented by the utility functionu(b, f) = 1/5(b − 2)(f + 3). Each Every Flavour Bean costs 25 Knuts and each Chocolate Frogcosts 12 Knuts. Ginny has 314 Knuts to spend. Assume that beans and frogs are both perfectlydivisible goods.(a) Find Ginny’s optimal bundle.(b) Suppose that Ginny is mugged by Draco on her way to the lolly cart, so that by the timeshe is there, she is left only with 75 Knuts. What is her optimal bundle now?(c) Now, consider the general case, where Ginny’s income is m, the price of Every FlavourBeans is pb, and the price of Chocolate Frogs is given by pf . In other words, treat ChocolateFrogs as the numeraire. Find Ginny’s demand for each good in terms of m, pb and pf .(d) Find the good on which Ginny will always spend more than half of her income.(e) Find the own-price, cross-price, and income elasticities of good 2…Preview File Edit View Go Tools Window Help 81% Wed Mar 25 5:10 PM Eco4100MidtermSpring2020.pdf (page 9 of 9) Search Eco4100MidtermSpring2020.. creen Shot -0....01.06 PM _13) The graph below shows George's indifference curves and budget lines. From A to B, we Goods Per Day B2 creen Shot -0....02.41 PM B1 creen Shot -0...09.34 PM thigern e f da 12 creen Shot -0...09.46 PM 8. L'L2 24 Leisure Hours Per Day creen Shot -0....10.04 PM can conclude A) leisure is a normal good. B) leisure is an inferior good. C) George will increase his working time with a higher wage. D) the substitution effect is greater than the income effect. De heine 3. PAGES MAR 2516.11. Ted and Joe each consume peaches, x, and plums, y. The consumers have identical 10y7x7, MRS = 10yr^TTogether, they have 10 peaches MRSJoe utility functions, with and 10 plums. Verify whether each of the following allocations is on the contract curve: a) Ted: 8 plums and 9 peaches; Joe: 2 plums and 1 peach. b) Ted: 1 plum and 1 peach; Joe: 9 plums and 9 peaches. %3D
- Good Y Use this figure of a feasible frontier and a set of an agent's indifference curves to answer the following three questions: A B C D E Good X shot 2024-... i Q Q Economists use the symbol ">" to mean "is preferred to". For example, if for Ash JK, it means that they prefer J to K. Which of the responses below correctly indicates this agent's preferences over the five labeled points on the feasible frontier, listed from most preferred to least preferred? OD C B E A OC B D A E OB A C D E OE D C B>A OA B C D EMultiple choice question Joe and Rita each have some milk and cookies (Milk on the horizontal axis). Joe's MRS ofcookies for milk is 2. Rita's MRS of cookies for milk is 4. Which of the following statements isTRUE?a) No gains from trade are possible.b) Both Rita and Joe can be made better off if Rita gives Joe some cookies in exchange for milk.c) Rita and Joe are on the contract curve.d) Both Rita and Joe can be made better off if Joe gives Rita some cookies in exchange for milk.Suppose that Bartolo and Emilio spend their incomes on two goods, food (F) and clothing (C). Bartolo's preferences are represented by the utility function: 16 15- U(F,C) 10FC 14- 13 while Emilio's preferences are represented by the utility function: U(F,C) 0.20F2C2 12 11 . 10- With food on the horizontal axis and clothing on the vertical axis, identify on a graph the set of points that give Bartolo the same level of utility as bundle (10,5). Do the same for Emilio. Then, identify the set of bundles that give Bartolo and Emilio the same level of utility as bundle (15,8) 8- 1.) Using the three-point curved line drawing tool, graph an indifference curve for Bartolo that includes bundle (10,5) and that also contains bundles with 4 and 5 units of food. Label the curve U 6- 2.) Using the three-point curved line drawing tool, do the same for Emilio including bundle (10,5) and bundles with 4 and 5 units of food. Label the curve U1 3.) Using the three-point curved line drawing tool, graph an…
- Aji Fatou's utility function for Blueberry (b) and Raspberry (r) is given as follows: U = f(b, r); Budget constraint: 100 = 4b + 5r. If Blueberry is graph in the horizontal axis and Raspberry on the Vertical axis. Which of the following is true? %3D a. If Aji Fatou spend her entire income on Blueberry, she will get 25 Blueberries. b. If Aji Fatou spend her entire income on Raspberry, she will get 20 Raspberries. c. The slope of her budget line is 4/5. d. All of the above.Musashi plays the cello as part of a string duo and advertises booking opportunities using brochures he distributes in coffee shops around the city. Making one grayscale brochure costs $0.02, but adding color increases the cost to $0.08 per brochure. Musashi sets aside a monthly budget of $14.00 for creating brochures. The following graph shows three of Musashi's indifference curves for the number of grayscale and color brochures that he makes. Use the green line (triangle symbol) to plot Musashi's budget constraint. Then, place the black point (plus symbol) on the graph to indicate Musashi's optimal consumption choice given that budget constraint. GRAYSCALE BROCHURES 1000 900 800 700 600 500 400 300 200 100 2 0 0 25 50 75 100 125 150 175 200 225 COLOR BROCHURES 250 Budget Constraint Optimum ?. At the optimum that you indicated on the graph, Musashi's marginal rate of substitution is equal to 4 brochures color. in grayscale per brochure inCarol needs to decide how to spend her wealth on sh and chicken.For Carol, 1 lb of sh is equivalent to 2 lb of chicken. Her preferences2Intermediate Microeconomics NYUAD, Spring 2023can be represented by the utility functionu(x; y) = 2x + ywhere x is the quantity of sh (in lbs) and y is the quantity of chicken(in lbs). The consumption set is R2+.(a) Draw two typical indi erence curves for Carol, one correspondingto a utility level of u1 and one corresponding to a utility level u2,where 0 < u1 < u2. Make sure you label the slope of the indif-ference curves and the intercepts with the horizontal and verticalaxes.(b) Suppose the price of sh is $1:5 per lb and and the price of chickenis $1 per lb. Carol has $20 to spend on sh and chicken.(i) Draw Carol's budget set, labeling the slope and the interceptpoints clearly.(ii) How much sh and chicken will Carol choose to purchase?