ECN 104 Midterm: Econ review test 2.docx

62 views5 pages

orchidsea-lion570

21 Apr 2015

School

Ryerson University

Department

Economics

Course

ECN 104

Professor

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

Questions 1-16: consider a consumer who has to spend and decides how to optimally allocate between two goods: good 1 and good 2. The following table gives the total utility that this consumer gets from different units of these two goods. Suppose the price of good 1 is and the price of good 2 is . Let x = the units of good 1 and y = units of good 2. This switch: (a) increases the expenditure as well as the utility (b) reduces the expenditure as well as the utility (c) reduces the expenditure, but increases the utility (d) does not change the expenditure, but increases the utility. A point is a candidate for optimality if at that point, dollar value of good 1 is the same as the dollar value of good 2. Questions 19-24: consider a firm that operates under perfect competition.

Related Questions

Assume that an individual consumes two goods, X and Y. The total utility of each good is independent of the rate of consumption of the other good. The price of X and Y are $40 and $60 respectively. Use the following table of total utilities to answer the following questions. Good 571Total Utility of X Total Utility of Y 1 20 45 2 38 78 3 54 108 4 68 135 5 80 159 6 90 180 a. The marginal utility of the fourth unit of Y is __________. b. The marginal utility of the fifth unit of X is ___________. c. The marginal utility per dollar spent on the third unit of X is __________. d. The marginal utility per dollar spent on the second unit of Y is __________. e. If the consumer has $420 to spend, ______ unit of X and _______ units of Y maximize utility subject to the budget constraint. Explain. f. If the consumer has $220 to spend, _______ units of X and _______ units of Y maximize utility subject to the budget constraint. Explain.

indigomouse210

Assume that an individual consumes two goods, X and Y. The total utility (assumed measurable) of each good is independent of the consumption rate of other goods.
The price of X and Y are respectively $40 and $60. Use the following table of total utilities to answer the following questions.

Good	Total utility X	Total utility Y
1	20	45
2	38	78
3	54	108
4	68	135
5	80	159
6	90	180

a. The marginal utility of the fourth unit of Y is__________.
b. The marginal utility of the fifth unit of X is___________.
c. The marginal utility per dollar spent on the third unit of X is__________.
d. The marginal utility per dollar spent on the second unit of Y is__________.
e. If the consumer has $420 to spend, ______ unit of X and _______units of Y maximize utility subject to the budget constraint. Explain.
f. If the consumer has $220 to spend, _______ units of X and_______ units of Y maximize utility subject to the budget constraint. Explain.
g. If the consumer wanted 4 units of X and 6 units of Y, what would have to be his/her budget constraint in order to maximize his/her utility? Explain.

sangrializard991

Assume that an individual consumes three goods, X, Y, and Z. The marginal utility (assumed measurable) of each good is independent of the rate of consumption of other goods. The prices of X, Y, and Z are, respectively, $1, $3, and $5. The total income of the consumer is $65, and the marginal utility schedule is as follows:

Units of good	Marginal utility of X (units)	Marginal utility of Y (units)	Marginal utility of Z (units)
1	12	60	70
2	11	55	60
3	10	48	50
4	9	40	40
5	8	32	30
6	7	24	25
7	6	21	18
8	5	18	10
9	4	15	3
10	3	12	1

(a)Given a $65 income, how much of each good should the consumer purchase to maximize utility?

(b)Suppose income falls to $43 with the same set of prices; what combination will the consumer choose?

(c)Let income fall to $38; let the price of X rise to $5 while the prices of Y and Z remain at $3 and $5. How does the consumer allocate income now? What would you say if the consumer maintained that X is not purchased because he or she could no longer afford it?

ECN 104 Midterm: Econ review test 2.docx

Document Summary

Get access

Related Documents

ECN 104 Lecture Notes - Lecture 7: Tangent, Giffen Good, Utility

ECN 104 Lecture Notes - Marginal Product, Bell Canada, Indifference Curve

ECN 104 Study Guide - Midterm Guide: Monopoly Price, Monopolistic Competition, Product Differentiation

Related Questions