why is this true, shouldnt income shift the
curve yet the answer says the curve stays the same
Homework Answers
Answer) True is the correct answer. The optimal consumption bundle of an economy is determined by the equalization of marginal rate of substitution= price of good 1/ price of good 2.
An increase in the level of income shifts the curve in a parallel manner. Such that the equilibrium ratio remains the same. Thereby resulting in the same MRS.
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why is this true, shouldnt income shift the
curve yet the answer says the curve stays...
1. answer it only numerical values. 2. A person has a Cobb Douglas utility function for...
1.
answer it only numerical values.
2.
A person has a Cobb Douglas utility function for two goods X and
Y. If the price of a X increases and the budget stays the same, the
utility maximizing person __________.
Cannot be determined from the information
will consume less of Y
will only consume Y
will consume less of both goods
will have lower utility
Sara has $40 in her budget. Given the following graph, what is the MRS of her...
Sharon is a utility maximizer who consumes only X and Y. Her income (I) stays the...
Sharon is a utility maximizer who consumes only X and Y. Her income (I) stays the same over the months of September and October. You are given the following information about her choices: Px PY X Y Sep. 2016 20 10 10 30 Oct. 2016 10 10 ? ? Sharon’s preferences are Cobb-Douglas. How much Y does she consume in October? 10 20 30 Not enough information to tell.
1. Megan has $50 in their budget. Given the following graph what's the MRS at her...
1. Megan has $50 in their budget. Given the following graph
what's the MRS at her optimal consumption bundle?
2. The demand curve for airplanes is: Qc=15,000 - .2Pc - 800Pg
where Qc is the quantity of airplanes, Pc is the price of airplanes
and Pg is the price of gasoline. By what quantity does the demand
for airplanes change if the price of gasoline goes down by
$.50?
a) 400
b) 800
c) -400
d) -800
e) Can’t be...
Jane commutes to work. She can either use public transport or her own car. Her indifference curve...
Jane commutes to work. She can either use public transport or her own car. Her indifference curves obey the four properties of indifference curves for ordinary goods 1. Draw Jane's budget line (BL,) with car travel on the vertical axis and public transport on the horizontal axis 2. Suppose that Jane consumes some of both goods. Explain how her optimal consumption bundle can be obtained. Then, draw an indifference curve that helps you illustrate that optimal consumption bundle represented by...
Anna spends all her income on wine (good 1) and cheese (good 2). Her utility function...
Anna spends all her income on wine (good 1) and cheese (good 2). Her utility function is u(x1; x2) = x1x2. Her income is m = $200. The prices for the two goods are p1 = $20 and p2 = $10 respectively. Find Annaís optimal consumption bundle. Show the complete calculations, and illustrate your answer graphically (draw the indi§erence curve and the budget constraint). How would your answer change to part (a) if Annaís utility function were given by v(x1;...
Imagine a representative consumer, whose utility for apples (X) and all other goods (Y) can be...
Imagine a representative consumer, whose utility for apples (X) and all other goods (Y) can be represented in a Cobb-Douglas form. 1. Please graphically represent consumer indifference curves, given prices Px and Py and the budget constraint M. 2. What will happen to consumer utility and optimal bundle if consumer income (budget) increases and apples are a necessity good? Please show graphically and explain the intuition. 3. What will happen to consumer utility and optimal bundle if apple price decreases...
2) If the price of automobiles were to increase substantially, the demand curve for gasoline would most likely A) shift...
2) If the price of automobiles were to increase substantially, the demand curve for gasoline would most likely A) shift leftward. B) shift rightward. C) become flatter. D) become steeper. 3) If the price of automobiles were to decrease substantially, the demand curve for automobiles would most likely A) shift rightward. B) shift leftward. C) remain unchanged. D) become steeper. 4) Suppose a market were currently at equilibrium. A rightward shift of the demand curve would cause A) an increase...
number 1 please Problem 2. Consider a consumer has Cobb-Douglas preferences over two goods 21 and...
number 1 please
Problem 2. Consider a consumer has Cobb-Douglas preferences over two goods 21 and 22, given by u (21, 22) = 7 ln 21 + In 22. Let pı = 5 and p2 = 3 be the prices of the two goods, and suppose the agent has income I = 20. Suppose there is rationing of goods, so that in addition to paying for goods, the agent must have the appropriate number of coupons. Suppose, the agent begins...
Assume that Jean has an annual income of $50,000, and she spends her income on milk...
Assume that Jean has an annual income of $50,000, and she spends her income on milk (X) and all other goods (AOG) (Y). The price of milk is $2, and the price of AOG is $1/unit. Her preferences can be represented by convex indifference curves. a. (4 pts) Illustrate her optimal choice (X*,Y*) on a graph, using indifference curve-budget line analysis. (Note: you do not have enough information to have numerical answers for X* and Y*). b. (11 pts) In...
Assume that Jean has an annual income of $50,000, and she spends her income on milk (X) and all o...
Assume that Jean has an annual income of $50,000, and she spends her income on milk (X) and all other goods (AOG) (Y). The price of milk is $2, and the price of AOG is $1/unit. Her preferences can be represented by convex indifference curves. a. (4 pts) Illustrate her optimal choice (X*,Y*) on a graph, using indifference curve-budget line analysis. (Note: you do not have enough information to have numerical answers for X* and Y*). b. (11 pts) In...
1.
answer it only numerical values.
2.
A person has a Cobb Douglas utility function for two goods X and
Y. If the price of a X increases and the budget stays the same, the
utility maximizing person __________.
Cannot be determined from the information
will consume less of Y
will only consume Y
will consume less of both goods
will have lower utility
Sara has $40 in her budget. Given the following graph, what is the MRS of her...
1. Megan has $50 in their budget. Given the following graph
what's the MRS at her optimal consumption bundle?
2. The demand curve for airplanes is: Qc=15,000 - .2Pc - 800Pg
where Qc is the quantity of airplanes, Pc is the price of airplanes
and Pg is the price of gasoline. By what quantity does the demand
for airplanes change if the price of gasoline goes down by
$.50?
a) 400
b) 800
c) -400
d) -800
e) Can’t be...
Jane commutes to work. She can either use public transport or her own car. Her indifference curves obey the four properties of indifference curves for ordinary goods 1. Draw Jane's budget line (BL,) with car travel on the vertical axis and public transport on the horizontal axis 2. Suppose that Jane consumes some of both goods. Explain how her optimal consumption bundle can be obtained. Then, draw an indifference curve that helps you illustrate that optimal consumption bundle represented by...
number 1 please
Problem 2. Consider a consumer has Cobb-Douglas preferences over two goods 21 and 22, given by u (21, 22) = 7 ln 21 + In 22. Let pı = 5 and p2 = 3 be the prices of the two goods, and suppose the agent has income I = 20. Suppose there is rationing of goods, so that in addition to paying for goods, the agent must have the appropriate number of coupons. Suppose, the agent begins...
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