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- Derive with the help of indifference curves and the budget constraint the optimal consumption plan. How do you transfer the optimal consumption plan into an individual demand function?What are the determinants for an individual demand? Receive with the help of indifference curves and the budget outline the optimal consumption plan. How do you transfer the optimal consumption plan into an individual demand function?Assume you consume two goods, X and Y. Your utility function is U = 2X + 4Y. Let PX= $4, PY= $2, and assume that your income is $100. What's your optimal consumption of Y?
- Why does the optimal consumption bundle occur where the budget line is tangent to the indifference curve?suppose you have a fixed income of $3000 per month and you want to allocate your budget between two products: X and Y. Let's say the price of good x is $10 per unit, and the price of good y is $20 per unit. What is the budget constraint? Draw it on a graph and label the intercepts and the slope.Rhea is determining how many gallons of milk (M) and loaves of bread (B) to purchase. Use the information in italics to answer the bolded question below: Rhea's marginal utility function for milk: MUN • Rhea's marginal utility function for bread: M = 0.5M-2 MUB = 0.5MB-1/2 • Rhea has $60 to spend on bread and milk. • The price of milk (Pm) is $3/gallon of milk. • The price of bread (Pb) is $1/loaf of bread. • For the sake of computation, assume that bread is the horizontal axis good (i.e., good X) and milk is the vertical axis good (i.e., good Y). When you set up the optimal budget decision rule for Rhea's consumer problem, which of the following statements best describes how much she will buy of both goods at her consumer equilibrium? O For each gallon of milk, Rhea will buy 1/3 loaf of bread. O For each gallon of milk, Rhea will buy 3 loaves of bread. For each gallon of milk, Rhea will buy 1 loaf of bread. O For each gallon of milk, Rhea will buy 6 loaves of bread.
- Amanda consumes three different products: apple (x), orange (y) and banana (z). Her utility function is U=xy^2z^3. The prices of the products: px=20, py=30, pz=40. Her income that she spends for fruits is 3,000. How many apple (x), orange (y), and banana (z) does she buy in case of optimal consumption?This module considers important concepts in economics: Total Utility, Marginal Utility, Diminishing Marginal Utility, and Utility Maximization within a budget constraint. These tools can be applied to personal decision making, particularly the consumption choices we make. Microeconomics often considers rational optimizing behavior by individuals, including consumers. Use the Law of Diminishing Marginal Utility to discuss why Market Demand has to have a downward slope. In other words, in order for consumers to demand a higher quantity of an item, its price must fall. Also use the Law of Diminishing Marginal Utility to explain why consumers often prefer to purchase a variety of goods and services (in other words, we are unlikely to fill a grocery cart with many units of the exact same product). Finally, use the utility optimizing condition that the ratio of Marginal Utility to Price for any good has to be the same across all goods to justify why it may be rational behavior to buy an…What can you use to establish whether a budget has been allocated to maximise total utility? Market equilibrium Budget line Consumer equilibrium Marginal utility Total utility
- If people do not have a complete mental picture of total utility for every level of consumption ,how can they find their utility-maximizing consumption choice?Please can i get help with the illustrating the graphs? An individual has a utility function, U(x, y) = x ∙ y, with a budget constraint, 120 = 2x + y.(a) Derive the individual’s optimal consumption for x and y, as well as the utility level associated with them. Graph the utility function and budget line. Indicate the point corresponding to your answer.(b) Evaluate the price effect when the budget constraint changes to 120 = 4x + y, specifying the income and substitution effect. Illustrate these on the graph indicating the points corresponding to your answer.(c) Based on (b), what type of goods are x and y?Discuss how the utility-maximization model helps highlight the income and substitution effects of a price change.