Good X B - ICz A - IC • E Good Y Moving from B to D, the person is giving up Good X and getting Good Y. Whether the person prefers B over D depends on whether he values the extra Y more than the X he loses. D must be on a lower indifference curve than B. Bis preferred to D. O Any bundle of goods on IC2 is preferred over any bundle of goods on IC1. O If a person moves from a bundle on IC1 to a bundle on IC2 he is happier.

Good X B - ICz A - IC • E Good Y Moving from B to D, the person is giving up Good X and getting Good Y. Whether the person prefers B over D depends on whether he values the extra Y more than the X he loses. D must be on a lower indifference curve than B. Bis preferred to D. O Any bundle of goods on IC2 is preferred over any bundle of goods on IC1. O If a person moves from a bundle on IC1 to a bundle on IC2 he is happier.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.4P

See similar textbooks

Similar questions

Take Jeremys total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremys utility.
ceriuppose that Isaiah has a weekly fixed budget and spends it all on haircuts and ice cream. At his current combination arof consumption, the marginal utility of the last dollar spent on haircuts is greater than the marginal utility of the last dollar spent on ice cream. Has Isaiah maximized his utility? A C E Yes, because changing his current consumption combination will reduce his total utility B No, because he can increase his total utility by purchasing more haircuts and D fewer ice creams Yes, because he has purchased 2 goods in proportion so that he can get- the maximum utility from each Yes, because he purchased the maximum possible with a limited budget No, because he can increase his total utility by purchasing fewer haircuts and more ice creams
Need correct answer . and plaease explain, thank you ! The price of a hot dog is $1, the price of a movie ticket is $,5 and the consumer has $13. A consumer has purchased 3 hot dogs and two movie tickets receiving 10 units of utility for the last hotdog and 10 units of utility for the last movie. The set of goods A. is an optimum since the entire income is spent and the marginal utility is the same for the last unit of each good. B. is an optimum because the consumer has maximized her utility given the limited income she had. C. is not an optimum because the marginal utility per dollar spent is greater for the hotdog than for the movie. D. is not optimum because the marginal utility for the second hotdog was less than the marginal utility for the first hotdog.
I like drinking Smirnoff and Stoli Vodka, but I really only careabout the total amount of alcohol I get out of it. They areperfect substitutes. Smirnoff is sold in liter bottles that are100 proof (that’s 50% alcohol). Stoli is sold in liter bottlesthat are 80 proof (40% alcohol). What is my utility functionfor bundles of these two vodkas? What do my indifferencecurves look like?
39. The following chart shows thec total utility-that Ammar receives from çonşuming various amounts-of chocolate.candy bars each day: Number candy, bars consumed për đay Total'utility 1' 40- 2 70 90 100 4. 80 Which of the following statements about Ammar's marginal utility is correct? Hiş marginal utility from the first candy bar is greater-than his marginalutility from the second candy' bar
1) The local breakfast restaurant has a new offer: those who buy more than 10 sandwiches a month get a 50% discount on additional sandwiches. a b. Jack says he is not interested. In a different graph that includes his budget line before and after (again measure EOG on the Y axis and sandwich consumption on the X axis) and his preferences, show his sandwich consumption before and after. In your graph what indicates that he is NOT better off with this deal? Explain
Matt has $14 to spend on fruit today at the grocery store. The only fruits he likes are apples and oranges. Both cost $2 per pound. Matt's preferences between these fruits are presented in the table below. How many apples and oranges will he buy if he were a utility maximizer? a b с Pounds of Apples 1 2 3 4 5 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. d Pounds of Oranges 1 2 3 4 5 Apples = 1 pound, Oranges = 2 pounds Apples = 2 pound, Oranges = 5 pounds Apples = 1 pound, Oranges = 1 pound Marginal Utility from Apples Apples = 3 pounds, Oranges = 3 pounds. 200 300 380 440 480 Marginal Utility from Oranges 100 200 250 280 300
You consume only soda and pizza. One day, the priceof soda goes up, the price of pizza goes down, andyou are just as happy as you were before the pricechanges.a. Illustrate this situation on a graph.b. How does your consumption of the two goodschange? How does your response depend onincome and substitution effects?c. Can you afford the bundle of soda and pizza youconsumed before the price changes?
Intialy mr. John is at equilibrium such that the last dollar spent on each of several products gives hi identical marginal utility i.e MUorange/porange=MUApple/pApple=...=MUn/pn where Mu orange =aditional utility derived from consuming one more unit of Apple ,pApple=price of a unit of Apple etc Q.how will Mr.Jhon react if the price of orange and other goods remain constant?and how can the equilibrium be restored?
(a) I like to consume two olives with every shot of vodka. If Ihave more olives or more vodka than that ratio, I just toss theextra in the trash (they are perfect complements). What is myutility function? What do my indifference curves look like? (b) I like drinking Smirnoff and Stoli Vodka, but I really only careabout the total amount of alcohol I get out of it. They areperfect substitutes. Smirnoff is sold in liter bottles that are100 proof (that’s 50% alcohol). Stoli is sold in liter bottlesthat are 80 proof (40% alcohol). What is my utility functionfor bundles of these two vodkas? What do my indifferencecurves look like? (c) Antonin notices he is currently spending all of his money ona bundle (x1, x2) where his marginal rate of substitution isgreater than the relative prices (p1/p2). Can Antonin reach abundle on a higher indifference curve with his current income?Explain clearly and provide a graph with your response. * Note that in (a) and (b), there are different utility…
Vani eats only green eggs and ham. He has an income of $36. Green eggs have a price of Priceof Green eggs = $2 and ham has a price of Price of Ham = $6. Sam’s preferences are represented bythe utility functionUtility = 10Eggs + 40Hama) Draw vani's budget constraint