Suppose our agent's income is $240. Only two goods exist for our agent, good X and...
Suppose our agent's income is $240. Only two goods exist for our agent, good X and good Y. Good X costs $10 per unit and Good Y costs $12 per unit. Assume this agent has indifference curves that look like those typically drawn in class.
Now suppose the price of Good Y decreases to $8 per unit. The price of Good X is still $10 per unit.
A.Given this price change, and given the OCB you selected above, circle which of the following bundles could be Point B (where the change between the OCB and Point B represents the substitution effect):
(10 units X, 12 units Y) (12 units X, 15 units Y) (10 units X, 10 units Y)
B. Explain how you got your answer in part A.
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Suppose our agent's income is
$240. Only two goods exist for our agent, good X and...
Question #2 In this part you are going to use the concepts in the first part...
Question #2
In this part you are
going to use the concepts in the first part to analyze the
following scenario which has 6 parts (A through F).
Suppose our agent's income is
$240. Only two goods exist for our agent, good X and good Y. Good X
costs $10 per unit and Good Y costs $12 per unit. Assume this agent
has indifference curves that look like those typically drawn in
class.
Of the following bundles below,
circle which...
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Suppose that there two goods, X and Y , available in arbitrary nonnegative quantities (so the the consumption set is R 2 +). The consumer has preferences over consumption bundles that are monotone, strictly convex, and represented by the following (differentiable) utility function: u(x, y) = α √ x + (1 − α) √ y, where x is the quantity of good X, y is the quantity of good Y , and α ≥ 0 is a utility parameter. The...
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Suppose that a there are two goods, X and Y. The price of Good X is...
Suppose that a there are two goods, X and Y. The price of Good X is $5 and the price of Good Y is $8. The seller of Good X offers a deal where if a consumer buys 1 unit of Good X they pay full price, but the second unit of Good X is only $2. Calculate the slope of the budget constraint between 1 unit of Good X and 2 units of Good X. (Remember to include a...
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Suppose an individual’s utility function for two goods X and Y is givenby U(X,Y) = X^(3/4)Y^(1/4) Denote the price of good X by Px, price of good Y by Py and the income of the consumer by I. a) (2 points) Write down the budget constraint for the individual. b) (4 points) Derive the marginal utilities of X and Y. c) (3 points) Derive the expression for the marginal rate of substitution of X for Y. Write down the tangency...
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Question #2
In this part you are
going to use the concepts in the first part to analyze the
following scenario which has 6 parts (A through F).
Suppose our agent's income is
$240. Only two goods exist for our agent, good X and good Y. Good X
costs $10 per unit and Good Y costs $12 per unit. Assume this agent
has indifference curves that look like those typically drawn in
class.
Of the following bundles below,
circle which...
Suppose that there two goods X and Y, available in arbitrary non- negative quantities (so the the consumption set is R2). The consumer has preferences over consumption bundles that are strongly monotone, strictly convex, and represented by the following (differentiable) utility function: u(x, y)-y+2aVT, where z is the quantity of good X, and y is the quantity of good Y, and a 20 is a utility parameter The consumer has strictly positive wealth w > 0. The price of good...
Suppose that a there are two goods, X and Y. The price of Good X is $5 and the price of Good Y is $8. The seller of Good X offers a deal where if a consumer buys 1 unit of Good X they pay full price, but the second unit of Good X is only $2. Calculate the slope of the budget constraint between 1 unit of Good X and 2 units of Good X. (Remember to include a...
The following graph shows one of Kristen's indifference curves (IC) for goods X and Y. Suppose Kristen has a marginal rate of substitution (MRS) of -2 when she consumes 2 units of X and 4 units of Y, which is represented by point A. On the graph below, use the blue line (circle symbols) to draw a line through all the points on the graph that have the same MRS as point A if the person has homothetic tastes GOOD...
(1 point) Suppose that you have two consumption choices: good X, and good Y. An indifference curve is the set of consumption choices with a CONSTANT utility. For example if consuming 10X and 6Y gives me the same utility as consuming 11X and 5Y, then these are both points on the same indifference curve. An indifference map is the set of all indifference curves with EVERY given utility. Consider the indifference map given by: U = XY, where U is...
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