In each of the following examples, a consumer purchases just two goods: x and y. Based...

In each of the following examples, a consumer purchases just two goods: x and y. Based on the information provided, select the set of indifference curves that is the best match.

Kieran considers chewing gum (x) to be a perfect substitute for mints (y).

In the previous question, what is the marginal rate of substitution between chewing gum and mints? Enter an integer value

Maeve will only consume toast (x) with two eggs (y).

Efia enjoys both boba tea (x) and sweet tea (y), although she has a slight preference for boba.

Expert Solution

Rahul Sunny answered 2 years ago

A consumer purchases two goods, x and y and has utility function U(x; y) = ln(x)...

A consumer purchases two goods, x and y and has utility function U(x; y) = ln(x) + 3y. For this utility function MUx =1/x and MUy = 3. The price of x is px = 4 and the price of y is py = 2. The consumer has M units of income to spend on the two goods and wishes to maximize utility, given the budget. Draw the budget line for this consumer when M=50 and the budget line when...

Two goods are in the consumer basket, goods X and Y. The consumer income is I,...

Two goods are in the consumer basket, goods X and Y. The consumer income is I, price of good X is Px, and price of good Y is Py. Use the consumer model to derive the demand curve for good X. Explain your answer in details. b. Using your answer in part a, clearly explain and show the substitution effect and the income effect.

(a) Draw the indifference curve for a consumer for two goods X and Y, assuming the...

(a) Draw the indifference curve for a consumer for two goods X and Y, assuming the consumer does not get any utility, positive or negative, from good X. (b) Would such a consumer move to a higher indifference curve with a “buy one, get one free” deal on good X? Please explain. You do not have to draw this on the graph, you just have to give an explanation.

A consumer has an income of $120 to buy two goods (X, Y). the price of...

A consumer has an income of $120 to buy two goods (X, Y). the price of X is $2 and the price of Y is $4. The consumer utility function is given by UX,Y=X2/3*Y1/3 You are also told that his marginal utilities are MUX=23YX1/3 MUY=13XY2/3 Find the slope of the budget constrain. (1 point) Calculate the optimal quantity of good X and Y for this consumer (Point A). (2 points) Assume that the price of good X...

Suppose that a consumer has a choice between two goods, X and Y. If the price of...

Suppose that a consumer has a choice between two goods, X and Y. If the price of X is $2 per unit and the price of Y is $5 per unit, how much of X and Y will the utility maximizing consumer purchase, assuming an income of $19? Use the information on total utility given below. Use a methodology that could be used in answering a more complex problem and show how you used this methodology. Trial and error or summing the different combinations...

If a consumer spends all her income on two goods X and Y , then she...

If a consumer spends all her income on two goods X and Y , then she can just afford either consumption bundle (5, 10) or (10, 7.5). Write the equation of her budget line.

1.Suppose that a consumer buys only two goods, X and Y. At the current consumption bundle,...

1.Suppose that a consumer buys only two goods, X and Y. At the current consumption bundle, the marginal rate of substitution is 3, the price of Good X is $4, and the price of Good Y is $2. a.How many units of Good Y is the consumer willing to give up to obtain one more unit of Good X? How many units of Good X is the consumer willing to give up to obtain more unit of Good Y? b.How...

Consider a consumer with preferences over two goods (good x and good y) given by u...

Consider a consumer with preferences over two goods (good x and good y) given by u ( x , y ) = x ⋅ y. Given income of I and price of good yas $ P yper pound and price of good xgiven as $ P xper pound, the consumer chooses the optimal consumption bundle given as x ∗ = I 2 P x and y ∗ = I 2 P y . Given P x = $ 1per pound...

1. A consumer buys only two goods x and y, with income, I =$40. Price of...

1. A consumer buys only two goods x and y, with income, I =$40. Price of y = $2. In the following problems you are asked to draw the budget lines for the consumer under different situations using Excel. Note the equation of the budget line is given by Pxx+Pyy=I In order to draw the budget line, first create a column of values of x. Then using the equation of the budget line, create a column of corresponding values of...

A consumer spends all of his income only on two goods, X and Y. His utility...

A consumer spends all of his income only on two goods, X and Y. His utility function is given by U=XY. The price of good X is $P and the price of good Y is $2. His income is $400. (4) Derive the PCC (price consumption curve) of this consumer as the price of good X changes . (3) Derive this consumer’s demand function for good X. (3) As the price of good X falls, this consumer’s demand becomes less...

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