🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
Economics
1
answer
0
watching
161
views

Consider an individual making choices over two goods, x and y with prices px and py, and who has income:

Suppose that, as a result of changes in the individual'­s economic circumstances, the budget line rotates outward, with the vertical (good y) intercept remaining unchanged but the horizontal (good x) intercept shifting to the right. Explain how this could have happened if the price of good x did not change?

If the individual'­s utility function is u(x; y) = x 2 + 4y 2 , are these preferences convex? Are they monotonic? Explain.

Watch
1
answer
0
watching
161
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Chika Ilonah
Chika IlonahLv10
29 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

Consider an individual making choices over two goods, x and y with prices px = 2 and py = 6, and who has income I = 50.

(a) If the individual's preferences can be represented by the utility function u(x; y) = 2x+5y how much of each good does the individual buy in order to maximize his/her utility and what is his/her utility level? If py decreases to $4 (all other things staying the same), what are the individual'­s new utility-maximizing choices, and what is his/her new utility level? Explain.

(b) If the individual's preferences can be represented by the utility function u(x; y) = min( x2 ; y), how much of each good does the individual buy in order to maximize his/her utility, and what is his/her utility level? If py decreases to $4 (all other things staying the same), what are the individual'­s new utility-maximizing choices, and what is his/her new utility level? Explain.

Consider an individual making choices over two goods, x and y with prices px and py, and who has income I

a) If utility is given by u(x; y) = x + y, are the tastes represented homothetic? Are the tastes quasi-linear? Explain.

b) Donald says that since all consumers face the same prices, their budget constraints all have the same slope, and so they should all consume roughly the same quantities of goods if their incomes were the same. Barry disagrees. Who is right and why?

suppose you are given a coupon for pizza. This coupon lowers the price for each additional pizza you buy by 5%. What happens to your budget constraint (compared to the budget with no coupon). Explain.

1.

Suppose all consumers are maximizing utility with convex indifference curves. All face the same prices, and are perfectly rational. According to microeconomic models, at the maximization bundle they should

A. All have the same marginal rate of substitution

B. All buy more of the least expensive good

C. All end up with the same bundle of goods

D. All have the same level of satisfaction

2.

Consider an indifference map with food on the vertical axis and shelter on the horizontal axis.

If a consumer is willing to give up 3 units of food in exchange for 1 unit of shelter and food is priced at $5 per unit and shelter at $10 per unit, then the consumer is:

A. Purchasing too much food for utility maximization

B. Purchasing too much shelter for utility maximization

C. Purchasing just the right amount of each good for utility maximization

D. Purchasing less than the budget would allow

3.

If a consumer with convex indifference curves moves along her budget line, closer and closer to the horizontal axis, as she is moving:

A. The marginal utility she gets from good Y declines.

B. The marginal utility she gets from good X declines.

C. The marginal utility she gets from good X increases.

D. The price ratio of the two goods changes.

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in