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10 May 2019

John has utility U=5x^2 +8y^3 Px=1Py=2

At what income is Ted indifferent between buying only x or only y?

If income were above the level found in part a, which good would he buy exclusively?

If income were below the level found in part a, which good would he buy exclusively?

Would the same answers for parts a, b, c hold true if utility were U = 10x^2 + 16y^3 and why or why not?

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Elin HesselLv2

13 May 2019

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Related questions

Cero has utility U = -{(x -50)^2+ (y -40)^2}, Px = Py = 1 and M = 100.

a.If he receives an additional 10 income how does he spend it? Just on x, just on y or some on x and some on y or on neither? Ted has utility U = 5x^2+ 8y^3 Px = 1 Py = 2 a.At what income is Ted indifferent between buying only x or only y?

b.If income were above the level found in part a, which good would he buy exclusively?

c.If income were below the level found in part a, which good would he buy exclusively?

d.Would the same answers for parts a, b, c hold true if utility were U = 10x^2+ 16y^3and why or why not?

Josh has utility U= -min{4x, 5y} Px=7 Py=10 M=140

a.What is the highest utility he can get?

b.What is his optimal point?

Antonio has strictly convex preferences. He is considering buying a bundle A with positive amounts of good X and good Y. Bundle A costs all of his income and the prices are Px=1 and Py=2. At bundle A his MRS=-3/4.

a. If you were to offer advice to Antonio would you tell him to buy more x and sell back some y or buy more y and sell back more x or to do nothing since he is already maximizing his utility. Explain.

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1. Suppose that the total utility from consuming one unit of good X is 54 utils, the total utility of two units of good X is 74 utils, and the total utility of three units of good X is 84 utils. The marginal utility of the third unit is

a.70.67 utils.

b.10 utils.

c.12.25 utils.

d.20 utils.

2. If income rises, the budget constraint

a. Moves outward away from the origin

b. Does not move

c. Moves inward toward the origin

d. Moves farther down the vertical axis

3. Economists assume that the goal of consumers is to maximize total utility.

true/false

4. The budget constraint cuts the horizontal axis at 12 units of good X and it cuts the vertical axis at 20 units of good Y. If the price of good X is $20 and the price of good Y is $12, then what does income equal?

a. $200

b. $240

c. $520

d. $280

e. not enough information to answer this question

5. Consumer equilibrium exists when an individual

a. can be made better off by buying more of a normal good and less of an inferior good.

b. is receiving the same total utility from each of the goods he or she purchases.

c. is receiving the same marginal utility from each of the goods he or she purchases.

d. has the same MU/P ratio for each of the goods he or she purchases.

e. none of the above

6. Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 30, 50, 65, 72, respectively. In this situation we have __________ marginal utility, which is generally __________ in the analysis of consumer choice.

a. diminishing; not assumed

b. increasing; assumed

c. diminishing; assumed

d. increasing; not assumed

7. Which of the following best describes an interpersonal utility comparison?

a. Usually, Smith seems a lot happier than Jones.

b. Smith gets more utility from working on his computer than Jones gets from working on his computer.

c. Smith usually eats more in a day than Jones eats in a day.

d. ones likes computers produced by Dell Computer Corporation and Smith likes computers produced by Apple Computer Inc

e. Smith got less utility from eating the 30th cookie than eating the 29th cookie, and the same holds for Jones.

8. We would expect the total utility of water to be high but its marginal utility to be low. Why?

a. Because we need water to live and there is so much of it.

b. Because we need water to live and there is very little of it.

c. Because water is a fluid and we don't need fluids to live as much as we need food

d. Because water's price is low.

9.The marginal utility curve for units 6 through 8 of good Z lies below the horizontal axis. What does this imply must be true about the total utility curve for units 6 through 8 of good Z?

a. That portion of good Zâs total utility curve must also lie below the horizontal axis.

b. That portion of good Zâs total utility curve must be upward sloping.

c. That portion of good Zâs total utility curve must be horizontal.

d. That portion of good Zâs total utility curve must be downward sloping.

10. Research presented in the text shows that people are more concerned with their absolute income position in a group than their relative income position in the group.

true/false