Consider Figure 1. Which of the following statements is correct?Figure 1YU2U;\UoY2Y1YoX, X1 X2Xx and y are both Giffen goodsOb. x is a Giffen good and y is a normal goodOc x is a Giffen good and y is an inferior goodOa x is a normal good and y is a Giffen goodC.Oe x and y are both normal goodsOf x is a normal good and y is an inferior gooda x is an inferior good and y is a Giffen goodOh. x is an inferior good and y is a normal goodx and y are both inferior goodsOi.

The given graph show the utility the consumer gets by consuming two sets of goods X and Y. With…

Answered: Consider Figure 1. Which of the…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 15CTQ: Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the...

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15. Consurmer sumlus is: 2. The quantity of a good consumers get but did not have to pay for b. the amount a consumer has to pay less the amount the consume: was willing to pay O e amount the coORJIMa waswillingay leid ho'amouns thconsumer paid d. the total value of a good to a consum
Consider a situation with two goods. Which of the following statements are true, which are false? If a good is a Giffen good, then it is an inferior good. O True O False A good is a Giffen good if the demand for this good decreases O True False when income increases. A good is an inferior good if the demand for this good increases when its price increases. O True False
QUESTION 3 A buyer's willingness to pay for a good is the O maximum demand for, is willing to pay for that good. It measures how much the buyer the good. Oprice of, values Omaximum amount the buyer is willing to pay for, values minimum amount the buyer is willing to pay for, needs actual amount the buyer pays for, values
Raj consumes only cheese and crackers.a. Could cheese and crackers both be inferior goodsfor Raj? Explain.b. Suppose that cheese is a normal good for Rajwhile crackers are an inferior good. If the price ofcheese falls, what happens to Raj’s consumptionof crackers? What happens to his consumption ofcheese? Explain
5. Study Questions and Problems #5 C Suppose you consume 3 pounds of beef and 5 pounds of pork per month. The price of beef is $1.50 per pound, and pork is $3.00 per pound. C de SE in O T 0 Assuming you have studied economics and achieved consumer equilibrium, the ratio of your marginal utility of beef to your marginal utility of pork is E a a 0 W Onl C O UPRE CHERSTE 3 2005-2 I C 31000 F 20 CASE 2042 slidery $1995 STATE
The following table shows Madison's utility from consuming popcom and Coke Suppose that Madison han income of $21.00, the price of popcom is 6.00 and the price of Coke in $4 50 FMadson wants to maiire her y how much popcom and Coke should she buy? ITT Popcorn Marginal Unity 192 144 Coke Marginal Uity 144 100 72 36 18 Quantity 48 24 12 Madison should buy boxes of popcom and cans of Coke Enter your reponses as negers)
1. Hatfield and McCoy hate each other. The only good they both consume WH W2 40 Mand McCoy's is whiskey. Hatfield's utility function is UH utility function is UM = WM-W, where WHI is Hatfield's consumption 40' Η of whisky and WM is McCoy's consumption of whiskey. The sheriff has confiscated a total of 60 litres of whiskey which he could give back to them or throw in the creek. Say that the Sheriff wants them both to be as well off as possible and weighs their "happiness" equally. How much whiskey should the sheriff give to each of them? Should he throw any whiskey in the creek; if so how much? =
When Pam's income increased by 10 percent, she bought 5% fewer containers of yogurt. What kind of good does Pam consider yogurt? O A normal luxury O A normal necessity O An inferior good O Substitute for eggs
Figure 4.2 P3 P2 P1 A C Q Q2 Q3 Q4 Qs Qs Q7 Refer to Figure 4.2. The demand curve A indicates that O the smallcst price change will cause consumcrs to change their consumption by a large amount, O therc is no change in quantity demandcd as the price changes. consumcrs can purchase any quantity they want regardless of the price, Oithc smalcst price incrcasc wil.causc.consuners to switch to the producer with thc lowest
Table 6.2 Units Consumed Total Utility 1 30 65 85 4 89 88 Refer to Table 6.2, which shows the total utility derived from the consumption of a good. The first column of the table shows the number of units of the good consumed in a day, and the second column of the table shows the total utility derived from that consumption. What is the marginal utility of consuming the third unit? Oa 65 O b. 20 OC. 35 Od. 0 O e. 30
Praxilla, who lived in ancient Greece, derives utility from reading poems and from eating cucumbers. Praxilla gets 30 units of marginal utility from her first poem 27 units of marginal utility from her second poem 24 units of marginal utility from her third poem, and so on, with marginal utility declining by three units for each additional poem. Praxilla gets six units of marginal utility for each of her next three cucumbers consumed, five units of marginal utility for each of her next three cucumbers consumed, four units of marginal utility for each of the following three cucumbers consumed, and so on, with marginal utility declining by one for every three cucumber consumed. A poem costs three bronze coins hut a cucumber costs only one bronze coin. Praxilla has 18 bronze coins. Sketch Praxillas budget set between poems and cucumbers, placing poems on the vertical axis and cucumbers on the horizontal axis. Start off with the choice of zero poems and 18 cucumbers, and calculate the changes in marginal utility of moving along the budget line to the next choice of one poem and 15 cucumbers. Using this step-by-step process based on marginal utility, create a table and identify Praxillas utilityâ€”maximizing choice. Compare the marginal utility of the two goods and the relative prices at the optimal choice to see if the expected relationship holds. Hint: Label the table columns: 1) Choice, 2} Marginal Gain from More Poems, 3) Marginal Loss from Fewer Cucumbers, 4) Overall Gain or Loss, 5) Is the previous choice Optimal? Label the table rows: 1) 0 Poems and 18 Cucumbers, 2) 1 Poem and 15 cucumbers, 3) 2 Poems and 12 cucumbers, 4) 3 Poems and 9 Cucumbers, 5) 4 Poems and 6 cucumbers 6) 5 Poems and 3 Cucumbers, 7) 6 Poems and 0 Cucumbers.
Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either call her on the land-line phone for five cents per minute or he can drive to see her, at a roundâ€”trip cost of 2 in gasoline money. He has a total of 10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses a handy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values in Table 6.6, figure out the points 011 Jeremys consumption choice budget constraint (it may be helpful to do a sketch) and identify his utility-maximizing point.

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