Suppose Eric has the utility over two goods X and Y as U(X,Y)= min (2X, 3Y) and the prices and income are p, = 2, py = 2 and I= 100. Now, if the price of X marginally increases to p', what is the total effect of this price change on good X? О а. 9 O b. -3 O c. -9 O d. 3 e. 0
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- : 2, Py Suppose Eric has the utility over two goods X and Y as U(X, Y) = min{2X, 3Y} and the prices and income are px = marginally increases to px, what is the total effect of this price change on good X? a. 3 b. -3 c. 9 d. 0 e. -9 = 2 and I = 100. Now, if the price of XFawlty's utility function is U(x, y) = 2x + 56y – y. His income is £330. If the price of x is £1 and the price of y is £10, how many units of good x will Fawlty demand? А. 50 В. 120 С. 160 D. Е. 150For normal goodsA) the substitution effect of a price decrease will decrease the quantity of the good demanded while theincome effect of a price decrease will increase the quantity of the good demanded.B) the substitution and income effects of a price decrease will both increase the quantity of the gooddemanded.C) the substitution and income effects of a price decrease will both decrease the quantity of the gooddemanded.D) the substitution effect of a price decrease will increase the quantity of the good demanded while theincome effect of a price decrease will decrease the quantity of the good demanded.
- Suppose we observe that an individual's demand for good 1 is: 1/(2p,+p2) (where I- income). From this we can conclude that: Goods 1 and 2 are perfect complements O The price of good 1 is higher than the price of good 2 Two answers are correct O Goods 1 and 2 are perfect substitutes Three answers are correct No answer is correct Goods 1 and 2 are normal goods O These goods may be perfect substitutes or perfect complements, it depends upon the utility function[G] Assuming Good A and Good B satisfy the Law of Demand, how many of the following scenarios indicate that Good A is a normal good? The derivative of Good A's demand function with respect to income is positive When the price of Good B increases, Good A's income effect is negative. When the price of Good B changes, Good A's income and substitution effect are in the same direction. А. В. С. D. None of the above statements are true.Chapter 7 i 3:06 BO ☐ The substitution effect. Multiple Choice is generally so weak that its effect cannot be predicted. for an increase in the relative price of a good is sometimes positive but sometimes negative. refers to the change in the quantity demanded of a good due to a change in its relative price. measures the change in the quantity of a good demanded brought about by a change in real income associated with a change in the price of the good. 60 Saved SEP 6
- 1. A consumer has a utility function defined over two goods X and Y. Let the quantity of Good X be x ≥ 0 and the quantity of Good Y be y ≥ 0. The utility function is given below: u(x, y) = xy + 2y. Assume that the consumer has income m and that prices are px and Py.1. Fawlty's utility function is U(x, y) = 2r + 56y – y°. His income is £330. If the price of x is £1 and the price of y is £10, how many units of good x will Fawlty demand? А. 50 В. 120 С. 160 D. Е. 150 2. Elisabeth's utility function is min{x, 5y + 2}. The price of x is £1, the price of y is £5, and the price of z is £2. Elisabeth's income is £22. How many units of x does Elisabeth demand? A. 9.78 В. 11 С. 5 D. 3 Е. None of the above. 3. Kruder's utility function is min{2x + 2y, 4x + 3y}. Dorfmeister's utility function is min{4x + 4y, 8x + 6y} . Kruder and Dorfmeister have the same income and face the same prices. А. Kruder and Dorfmeister will demand the same amount of good x. Kruder will demand more of good y than Dorfmeister. Dorfmeister will demand more of good y than Kruder. В. С. D. Each will prefer the other's consumption bundle to his own. Е. None of the above.Show that the two utility functions given below generate identical demand functions for goods X and Y UCXY) log(X)+log(Y C) UCxY) (XY05 The demand function for good X and the demand function for good Y for both utility functions equal O A. X= and Y Pv Px О В. Х- and Y 2Pv Ос. X Y= 21 PXPY O D. Х- and Y 2P. 2Py ОЕ. X= Y= РХPY
- ASAP!! ANSWER PLEASE Danish Wali has Rs.70 to spend on apples and bananas and wants to maximize his utility on his purchase. Based on the data in the table: How many apples and bananas should Danish purchase? What is his total utility from the purchase? Does the utility-maximizing rule hold true for his purchase? Explain. Apples Rs.10 Bananas Rs .5 Quantity MU TU Quantity MU TU 0 - - 0 - - 1 28 28 1 12 12 2 24 52 2 10 22 3 20 72 3 8 30 4 16 88 4 6 36 5 12 100 5 4 40 6 8 108 6 2 42 7 4 112 7 0 42 8 0 112 8 -2 40Be fast Suppose there are three (3) consumers in a market for bottles of perfume; Mutumbu, Jasanu and Julius The individual demand for perfumes for each of these consumers is given as 10 bottles for Mutumbu, 15 bottles for Jasanu and 25 bottles for Julius at $60 per bottle for perfume. Thus, the market demand for perfumes if the market price is $60 is: (a)40 bottles (b)60 bottles (c)80 bottles (d) None of the aboveSuppose the price of good Y is $18. Use the information given in the figure below to answer this question. is Quantity of Y 6 Multiple Choice 36 42 n -40; +15; -25 -24; +12; -12 -20;-12-8 -36; +15; -21 11 Quantity of X Quantity demanded of X When the price of Xincreases from point S to point R along the demand curve, the substitution effect of the price increase is the income effect of the price increase is .. and the total effect of the price increase Price of X 15 R Demand for X S