
Which of the following combinations of goods 1 and 2 are preferred Suppose an individual has...
4. An individual has preferences over two goods (x and y) that are represented by function U = min{x,y}. The individual has income $60, the price of x is $4 and the price of good y is $2. (a) What kind of goods are these to the individual? (i.e. what "special case” is this?) (b) What is this individual's budget constraint? (c) What is this individual's optimal bundle of x and y? [HINT: You can't take the derivative of this...
An individual has preferences over housing, x (measured in square metres), and other goods, y, represented by utility function u(x,y) = x4y. Her disposable income is $75000, and the price of housing is $1000/m2, while that of other goods is py = $1. b) [5 marks] The government decides to subsidize housing at a rate of 20%. Find the resulting optimal bundle and utility level.
An individual has preferences over housing, x (measured in square metres), and other goods, y, represented by utility function u(x,y) = x4y. Her disposable income is $75000, and the price of housing is $1000/m2, while that of other goods is py = $1. a) [5 marks] Find this consumer’s optimal bundle and utility level, given initial prices and income.
Suppose a consumer’s preferences over goods 1 and 2 are represented by the utility function U(x1, x2) = (x1 + x2) 3 . Draw an indifference curve for this consumer and indicate its slope.
Utility maximization with more than two goods Suppose that there four goods Q, R, X and Y , available in arbitrary non-negative quantities (so the the consumption set is R 4 +). A typical consumption bundle is therefore a vector (q, r, x, y), where q ≥ 0 is the quantity of good Q, r ≥ 0 is the quantity of good R, x ≥ 0 is the quantity of good X, and y ≥ 0 is the quantity of...
Utility maximization with more than two goods Suppose that there four goods Q, R, X and Y , available in arbitrary non-negative quantities (so the the consumption set is R 4 +). A typical consumption bundle is therefore a vector (q, r, x, y), where q ≥ 0 is the quantity of good Q, r ≥ 0 is the quantity of good R, x ≥ 0 is the quantity of good X, and y ≥ 0 is the quantity of...
1. True or False, and explain briefly. 1) The assumption that more is better implies that the indifference curves are upward sloping 2) Convexity of indifference curves implies that consumers are willing to give up more to get an extra the more they have 3) Consider the following three bundles. Bundle Good Goody If Bundles A and B are on the same indifference curve, preferences satisfy all the usual assumptions introduced in the lecture, Bundle Cis preferred to Bundle A...
Question 2. Consider the following 8 bundles of goods x and y: A = (8,4) B = (5,6) C = (5,9) D = (10,3) E =(1,4) F =(6,5) G=(2,8) H =(7,8) (a) Come up with an example of a utility function that will produce the following order of preference for the bundles, where H is most preferred, A and G are equally preferred, and E is least preferred. H , C , B , F , A = G ,...
Question 6: Logan has preferences over olives (x1) and ice creams (x2). He prefers to eat them separately but not together, which is represented by: U(X1, X2) = x + xỉ. Also suppose his income is $100 and the prices of olives and ice creames are px, = $1 and Px2 = $2, respectively. 1. Is this convex preferences or concave preferences? 2. Solve for the bundle that satisfis the tangency condition. 3. What's the level of utility using the...
(38pts) Suppose a consumer spends all of her income on only two goods, z and y. Her preferences over these two goods are represented by the utility function u(r,y) min(, 4y). The price of good y is given to be S8. Her income and price of z are represented by m and ps, respectively. (a) (10 pts) Find the demand for good z as a function of m and pa. (b) (5 pts) Is good z ordinary or Giffen good?...