Question
In: Economics
Sandra has the following preferences over cookies (x) and tea (y) u(x, y) = min(4x, 2y)...
Sandra has the following preferences over cookies (x) and tea (y) u(x, y) = min(4x, 2y)
(a) Are Sandra’s preferences complete, transitive, and continuous? Explain/Prove your answer and state the definitions for completeness, transitivity, and continuity. (6 points) 4
(b) Are Sandra’s preferences monotone? If yes, are they strongly monotone or weakly monotone? Define weak and strong monotonicity and then prove your answer. (5 points)
(c) Are Sandra’s preferences strictly convex? Prove your answer (3 points) 5
(d) Graph Sandra’s indifference curves that go through points (2,2), (4,4), (6,6), (8,8). Be sure to label the axis and the utility levels of the indifference curves. (Hint: You should be graphing 4 indifference curves) (5 points)
Solutions
Rahul Sunny answered 3 months agoRelated Solutions
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Suppose a consumer has preferences represented by the utility
function U(X,Y) = MIN[X,2Y]. Suppose PX = 1 and PY = 2. Draw the
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A consumer has his preferences represented by the utility
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a. -4/7
b. -5/4
c. -4/5
d. -7/4
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Suppose a consumer has preferences given by U(X,Y) = MIN[2X,Y]. Suppose PX = 1 and PY...
Suppose a consumer has preferences given by U(X,Y) = MIN[2X,Y].
Suppose PX = 1 and PY = 2. Draw the Income Consumption Curve for
this consumer for income values
• M = 100
• M = 200
• M = 300
To do this, carefully draw the budget constraints associated
with each of the prices for good X, and indicate the bundle that
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Ella’s preferences can be represented by the utility function u(x,y) = min{5x, y}. If the price...
Ella’s preferences can be represented by the utility
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to be able to purchase a bundle that she likes as well as the
bundle (10, 25).
Select one:
a. $475.
b. $85.
c. $425.
d. $209.
e. $440.
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substitution (b) Income and (c) total effect of the price decrease
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Brianna’s preferences can be represented by the utility function u(x,y) = min{x,y}. Initially she faces prices...
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change to ($3,$1) then the compensating variation
Select one:
a. There is not enough information to
determine which variation is greater.
b. is $2 more than the equivalent
variation.
c. is $1 less than the equivalent
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d. equals the equivalent variation.
e. is $1 more than the equivalent
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(a) If your utility is represented by u(x; y) = min(x+2y;
2x+y);what
do your indi¤erence curves look like?
(b) Given your answer in (a), obtain the MRS (marginal rates of
sub-
stitution).
(c) Suppose the prices of x and y are px = $3 and px = $1 and
you
have 100 dollars. What would you choose?
(d) If px decreases to $1; what would you choose?
(e) Use the Slutsky decomposition to decompose the total price
e¤ect
into the...
(a) If your utility is represented by u(x; y) = min(x+2y; 2x+y);what do your indi¤erence curves...
(a) If your utility is represented by u(x; y) = min(x+2y;
2x+y);what do your indi¤erence curves look like?
(b) Given your answer in (a), obtain the MRS (marginal rates of
sub- stitution).
(c) Suppose the prices of x and y are px = $3 and px = $1 and
you have 100 dollars. What would you choose?
(d) If px decreases to $1; what would you choose? (e) Use the
Slutsky decomposition to decompose the total price e¤ect into the...
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