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a)a strong preference for good X over good Y
b)a weak preference for good Y over good X
c)a weak preference for good X over good Y
d)a strong preference for good Y over good X
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- (1) For each of the three Indifference Curve Maps, what can you infer about the relationship of the goods? What about its substitutability? Provide an example pair of goods for each a) Ug U2 a) Uz QxWhat are the three properties of indifference curves for two goods?What is the difference between good x as a function of price and income and good x as a function of price and utility?
- What is “Compensating Variation”? What is “Consumer’s Surplus”? What is “Equivalent Variation”? What are they trying to measure?4. If we have the utility function, U(x)=(x−7)^2, and we know that there is an indifference set around x = 4 and an upper contour set of x = 6. How to graphically represent this function? I'm confused about how to draw the upper contour set on the graph? I know the concept that upper contour is the area over the convex line, but don't know how to put it on the graph. Could you draw a simple graph to help me identify the upper contour?Explain how an increase in a person’s income can lead to lower consumption of an inferior good such as hamburgers and higher consumption of, say, steak. Use a graph to illustrate your explanation. Tip: On an indifference diagram, show what the shape of the income consumption curve is for an inferior good and then briefly explain how an increase in a person’s income can lead to lower consumption of one of the two goods being purchased.
- What is the difference between the income effect and the substitution effect of aprice increase for a normal good?Anatoly's marginal utility for DVDS (D) is MU X and his marginal utility for Xbox games (X) is MUx D. Anatoly's income is $120, the price of a DVD is $20.00, and the price of an Xbox game is $10.00. How many DVDS and Xbox games does Anatoly consume to maximize his satisfaction? Anatoly consumesDVDs andXbox games. (Enter your responses using integers.)4. John has a utility for the quantity of sandwiches, Xs, and quantity of burgers, Xp, that he consumes, represented by the following equation: U(X,X) = XX His income is Y = $24. The price of a sandwich changes from X, = $1 to X, = $4 while the price of a burger remains at X, = $6. Solve for the compensating variation and equivalent variation associated with this price increase.
- Ques 1. Sally consumes two goods, X and Y. Her utility function is given by the expression U=3XY2. The marginal utility of X and marginal utility of Y are given by the following equations: MUX=3Y2 and MUY=6XY The current market price for X is $10, while the market price for Y is $5. Sally's current income is $500. A) Draw out Sally’s budget line. (show the points where it meets the vertical and horizontal axes) B) Determine the X,Y combination which maximizes Sally's utility, given her budget constraint. (Partial units for the quantities are possible.) [Hint: One of the ways to do this is to use the equal marginal principle to find the optimal ratio of X to Y and then use that in the budget equation]. C) How much is Sally’s utility? Now the price of X increases to $15. What is the ratio in which she will consume X and Y ?Calculate marginal utility and marginal utilty per dollar for the data provided in the table below: (round to two decimal places) The Price of wine is 3 The Price of Cheese is 0.14 The Consumer's budget for wine and Cheese is 9.69 (CHEESE) (CHEESE) (CHEESE) WEDGES OF CHEESE GLASSES (WINE) (WINE) (WINE) MARGINAL UTILITY MARGINAL MARGINAL UTILITY MARGINAL UTIUTY/dollar OF WINE TOTAL UTILITY TOTAL UTILITY UTIUTY/dollar 70 Number Number Number Number 160 35 Number 65 Number 225 3. 41 Number Number Number Number 45 288 Number 61 Number 48 349 The Quantity of Wine this consumer would buy to maximize utlity is: Number Number The Quantity of Cheese this consumer would buy to maximize utilit is : What is the consumer's Total Utility when optimized: Number 1010. Assume an individual's preferences are represented by the following indifference map and he has an income of S400. Which of the following is shown when the price of Good I is $20 and the price of Good 2 increases from $10 to S16? Note: Even though the price of Good 2 is increasing, the steps to determine the income and substitution effects are the same. 50 45 40 35 30 25 20 15 10 10 15 20 25 30 35 40 45 50 Good 1 Good 2 is a normal good. Good 2 is an inferior good, but not a Giffen good. Good 2 does not satisfy the Law of Demand. • Ignoring the Income Effect, the Substitution Effect will cause the individual to consume more of Good I. A. B. 21 C. 3 None of the above statements are true. D. Good 2