The graph illustrates Jessica's preferences for pizza and Coke using indifference curves (1₁, 12, 13, and 14). Use the point drawing tool to indicate a bundle of pizza and Coke that Jessica would prefer to bundle A (Bundle B), a bundle for which Jessica would be indifferent with bundle A (Bundle C), and a bundle that would be inferior to bundle A (Bundle D). Draw each bundle such that it corresponds to a level of utility represented by one of the indifference curves shown in the graph. Properly label the points. Carefully follow the instructions above, and only draw the required objects.
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- GLASS-1: Short Individual Assessment 10 A B E D 1 2 4 cheeseburgers 1. Refer to the figure as you answer the following questions: Bundle C is preferred to Bundle A because Bundle C represents a more balanced Bundle. Do you agree or disagree with this statement and why? Calculate the MRSXY between points A and B, and between points C and D. Interpret your computed values. c. What assumption about preferences would allow you to say that Bundle E is preferred to Bundle B? Briefly explain. Bundle E has one less cheeseburger than Bundle D. What assumption(s) would still allow you to say that Bundle E is preferred to Bundle D? Briefly explain. а. b. d. Consider the utility function of individual A given by UA (X,Y) = Xº.5y0.5 in answering the items below: 2. Calculate the marginal utility for each good (MU,x & MUy) of individual A and the marginal rate of substitution (MRSxY). Interpret your computed values If Px = 0.5, Py = 1, and I = 10, solve for X*, Y*, and U* using the Lagrange a. b.…A. Bundle C is preferred to Bundle A because Bundle C represents a more balanced Bundle. Do you agree or disagree with this statement and why? Calculate the MRSXY between points A and B, and between points C and D. Interpret your computed values. What assumption about preferences would allow you to say that Bundle E is preferred to Bundle B? Briefly explain. Bundle E has one less cheeseburger than Bundle D. What assumption(s) would still allow you to say that Bundle E is preferred to Bundle D? Briefly explain. B. Consider the utility function of individual A given by UA (X,Y) = X0.5Y0.5 in answering the items below: 1.Calculate the marginal utility for each good (MUX & MUY) of individual A and the marginal rate of substitution (MRSXY). Interpret your computed values. 2. If PX = 0.5, PY = 1, and I = 10, solve for X*, Y*, and U* using the Lagrange Multiplier MethodThe graph show some of Martha's indifference curves (over goods X and Y). About them, choose the correct alternative: Y D 8 X O Even if we knew Martha's preferences satisfy the "more is better and transitivity assumptions, we could not know whether she likes bundle D better than bundle B. ● If her preferences satisfy the completeness and transitivity assumptions, then we know that, for Martha, either A > D or D>A. O If her preferences satisfy the "more is better" and transitivity assumptions, then Martha ranks the four bundles D > C > B>A. O Martha's MRSxy at bundle A is greater than her MRSxy at bundle B.
- Suppose a consumer enjoys coffee and tea with utility U-CT. The marginal utility of coffee is MUC-T and the marginal utility of tea is MUT-C. If the price of a cup of coffee is $1.00 and the price of a cup of tea is $1.00 and income is $100, the initial optimal bundle is C-50-T Suppose that the price of tea increases to $2.00 per cup. What is the exact amount of money that would make our consumer just as well off before the price change (find the compensating variation)? (graph it)The following table shows Ellie's utility from consuming slices of pie and cans of 7 - Up. Slices of Pie 0 1 23456 Marginal Utility Cans from Last Slice of 7-Up 0 1 2 120 100 80 60 40 20 234 5 6 Marginal Utility from Last Can 120 60 45 30 20 15 Suppose Ellie has $6 per week to spend on pie and 7 - Up and that the price of a slice of pie is $1.00. 1.) Use the point drawing tool to plot Ellie's demand for 7-Up at a price of $2.00. Label this point 'A'. 2.) Use the point drawing tool to plot Ellie's demand for 7- Up at a price of $0.50. Label this point 'B'. 3.) Use the line drawing tool to connect the dots to form Ellie's demand curve. Properly label this line. Carefully follow the instructions above, and only draw the required objects. Price of 7-Up 12 4.5- 4- 3.5- 3- 2.5- 2- 1.5- 1- 0.5- 0- 3 4 Quantity of 7-Up 5Joon has preferences over two goods only-beer and pizza, both of which he loves. His initial budget line goes through bundles A and B; he chooses A. When prices change such that he faces budget line through bundles B and D, Joon chooses B. Qpizza a f b B h g D I Qbeer We want to determine which bundles are better for Joon than bundle B and which bundles are worse. For each of the areas on the graph, labeled from (a) to (j) we can say, given the information provided, that
- The following table shows Madison's utility from consuming popcorn and Coke. Suppose that Madison has income of $9.00, the price of popcorn is $3.00, and the price of Coke is $0.75. If Madison wants to maximize her utility, how much popcorn and Coke should she buy? Рорсorn Marginal Utility 192 Coke Quantity Marginal Utility 1 144 144 108 3 96 72 4 48 36 24 18 6. 12 Madison should buy boxes of popcorn and cans of Coke. (Enter your responses as integers.)Joe is currently in consumer equilibrium by consuming cheese and crackers, such that the last cracker consumed yielded 8 utils and the last piece of cheese consumed yielded 12 utils. Assume the price of crackers is two cents per cracker and the price of cheese is three cents per piece. If the price of crackers increases to four cents, Joe should his consumption of crackers and his marginal utility from crackers will and also his consumption of cheese and his marginal utility from cheese will (Assume he is in the downward sloping portion of the MU curve.) Ο Ο Ο decrease; increase; increase; decrease increase; increase; increase; increase increase; decrease; increase; decrease increase; increase; decrease; decreaseMattie consumes milk and cookies. Assume Mattie has a strictly diminishing marginal rate of substitution over these two goods. Suppose Mattie is currently spending all of her available income on a bundle of milk and cookies. At her current bundle of milk and cookies, Mattie's marginal utility from consuming an additional glass of milk is 2 utils and her marginal utility from consuming an additional cookie is 6 utils. If the price of a cookie is $3 and the price of a glass of milk is $1, which one of the following statements must be true? (Select A, B, C, or D) A. Mattie should consume more milk and fewer cookies B. Mattie should consume more cookies and less milk C. Mattie's current bundle of milk and cookies maximizes her utility D. There is not enough information to know whether Mattie should consume more milk or more cookies
- 24. According to the chart below, which bundle is most preferred, assuming TOTAL UTILITY is the product of the quantity of popcorn and the quantity of sodas (i.e. under the TOTAL UTILITY theory)? Bundle A B A) Bundle A B) Bundle B C) Bundle C D) Bundle D C D Quantity of Popcorn 6 5 4 7 Quantity of Sodas 7 8 9 5 13 13 13 12Kai’s current marginal utility from consuming orange juice is 50 utils per ounce and her marginal utility from consuming coffee is 50 utils per ounce. If orange juice costs $0.25 per ounce and coffee costs $0.20 per ounce, is Kai maximizing her total utility from the two beverages? Instructions: Enter your responses as whole numbers. At her current level of consumption, Kai receives: utils per dollar spent on orange juice.At her current level of consumption, Kai receives: utils per dollar spent on coffee.Therefore, Kai maximizing her total utility because MUoj/Poj is MUc/Pc. Kai’s current marginal utility from consuming orange juice is 50 utils per ounce and her marginal utility from consuming coffee is 50 utils per ounce. If orange juice costs $0.25 per ounce and coffee costs $0.20 per ounce, is Kai maximizing her total utility from the two beverages? Enter your responses as whole numbers. At her current level of consumption, Kai receives: utils per dollar…Suppose Kate has a weekly budget of $24 to spend on seltzer water and peanut butter. Seltzer water is priced at $2 per case, and peanut butter is priced at $6 per jar. If Kate spends her entire $24 on seltzer water, she can buy jars of peanut butter. Use the blue line (circle symbol) to plot Kate's budget constraint on the following graph. Next, use the orange point (square symbol) to shade the area that represents combinations of seltzer water and peanut butter that are affordable for Kate. Finally, place the black point (plus symbol) on the point on Kate's budget constraint that corresponds to a scenario in which Kate spends $12 on each good. Note: Dashed drop lines will automatically extend to both axes. PEANUT BUTTER (Jars) 24 22 20 18 16 14 10 4 2 0 0 + 2 + 6 8 10 12 14 16 SELTZER WATER (Cases) 18 cases of seltzer water. If she spends her entire $24 on peanut butter, she can buy 20 22 24 O BC, ($24) 0 Affordable Region + $12 on Each BC₂ ($48) (?)