Question

Cavaduo /2011/ 0 2 /take This continues the previous problem The ratios x/y.v/sand /r of the utility maximizing quantities that the household should consume each month are.. constant, they don't change when the budget changes decreasing when the budget increases ... Increasing when the budget increases. not defined Question 3 This continues the previous problem If critical value of the multiplier is and the household increases their budget from B 3600 to 3-5610 and nothing else changes then their mandimum possible utility will increase by a 3000 AU.. 104 ALIENWARE R *

Answer 1

2. While thed ata is not given for previous question- I am assuming that the goods are normal goods. And if the goods are normal goods, the right answer is option A.

For normal goods, the ratio of utility maximizing quantites will not change since they all are already at utility maximizing quantities and all will increase or decrease in the same manner when budget increases or decreases.

3. The correct option is C-10 lambda

This is because critical value of multiplier is the maximum value by which utility will multiply given an increase in income. Since income has increased by 10, the maximum utility increase is 10lambda.