Following up on the preceding question, instead of assuming Ming has "standard-looking indifference curves," assume that he views X and Y as perfect complements. Everything else in the preceding question stays the same, including the fact that Ming consumes more X and more Y when the price of X decreases and everything else stays the same. Given this new information about Ming's preferences, which of the following statements must be true? O X is a normal good. O Y is a normal good. O The income effect dominates the substitution effect for X. O The income effect dominates the substitution effect for Y. O Each of the preceding statements must be true.

Following up on the preceding question, instead of assuming Ming has "standard-looking indifference curves," assume that he views X and Y as perfect complements. Everything else in the preceding question stays the same, including the fact that Ming consumes more X and more Y when the price of X decreases and everything else stays the same. Given this new information about Ming's preferences, which of the following statements must be true? O X is a normal good. O Y is a normal good. O The income effect dominates the substitution effect for X. O The income effect dominates the substitution effect for Y. O Each of the preceding statements must be true.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section: Chapter Questions

Problem 1PA

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. Consider a consumer with preferences defined over x and y. Demonstrate that it is possible theywould choose to consume some of both commodities when their income is I but would choose toconsume only x when their income is I’ > I. (Remember: if you can draw it without violating anyof the basic assumptions on preferences, it could happen.)
I like drinking Smirnoff and Stoli Vodka, but I really only careabout the total amount of alcohol I get out of it. They areperfect substitutes. Smirnoff is sold in liter bottles that are100 proof (that’s 50% alcohol). Stoli is sold in liter bottlesthat are 80 proof (40% alcohol). What is my utility functionfor bundles of these two vodkas? What do my indifferencecurves look like?
Evelyn loves to eat chocolate. However, every piece of chocolate that Evelyn eats provides her with less total utility. What can we conclude about Evelyn's utility from this information? O Her marginal utility is negative. Her marginal utility is constant. O Her marginal utility is diminishing. Her marginal utility is increasing.
Vinny consumes tacos and chicken wings. To keep his utility constant, he must consume more tacos if he consumes fewer chicken wings. This means that O Vinny's indifference curve for tacos and chicken wings must have a negative slope. Vinny's marginal utility from each good must be constant along his convex indifference curves for tacos and chicken wings. O the prices Vinny pays for tacos and chicken wings are always the same. O Vinny's marginal rate of substitution must be constant along his indifference curves for tacos and chicken wings.
What do we mean by well-behaved preferences? How do the indifference curves look like for suchpreferences? Provide an example, in terms of a utility function, where preferences are not well-behavedand illustrate. Provide a figure with indifference curves and a budget line where there are exactly twosolutions to the utility maximization problem.
If the preferences are concave will the consumer ever consume both ofthe goods together?
Joe is currently in consumer equilibrium by consuming cheese and crackers, such that the last cracker consumed yielded 8 utils and the last piece of cheese consumed yielded 12 utils. Assume the price of crackers is two cents per cracker and the price of cheese is three cents per piece. If the price of crackers increases to four cents, Joe should his consumption of crackers and his marginal utility from crackers will and also his consumption of cheese and his marginal utility from cheese will (Assume he is in the downward sloping portion of the MU curve.) Ο Ο Ο decrease; increase; increase; decrease increase; increase; increase; increase increase; decrease; increase; decrease increase; increase; decrease; decrease
Let the following table represent the total utility of a given consumer,In the cardinal utility approach. A) Calculate the MUx and MUy and fill the table in the 4th and 5th rows. B) If the two products (X&Y) are free goods how many of X and Y should the cons consumer take to maximize utility? C) What is the maximum utility of X and Y if they are free?. D) Assuming the consumer has any amount of money (enough budget) how many of X and Y should the consumer buy, to maximize utility? E) What is the total utility of X and Y? F) Let now price of X is 4 birr per unit and price of Y is 2 birr per unit and budget of the consumer for consumption of X and Y is 20 birr. Given budget constraint how many of X and Y should the consumer buy to maximize utility? G) What are the total utility of X and Y
| 3.9. Preferences and indifference curves. Assume that a con- sumer purchases only two goods, x and y. Based on the information 3.3. THE MARGINAL RULE 124 in each of the following questions, sketch a plausible set of indiffer- ence curves (that is, draw at least two curves, and indicate the direc- tion of higher utility). (a) Nomis enjoys muffins (x) and chai latte (y) if they are consumed together. (b) Tra likes chocolate (x) but he hates broccoli (y). (c) Aras likes steaks (x) but she doesn't care one way or the other about apples (y). (d) Fernando always buys five Polo-shirts (x) with every pair of jeans (y).
Question 1 Considering a consumer's indifference curves, which statement is true? O utility is the same along any given indifference curve O indifference curves can cross, but only at the axes O a consumer is indifferent between any bundles on an indifference curve O both a and care correct O all of the above Question 2 Consider a utility function given by U = X2 x2. what is the marginal utility of good 2? O MU; = x^ x;2 O MU; = X2 X;2 -1/2 O MU = O MU: = X x2 O MU: = x
A consumer is making purchases of products Alpha and Beta such that the marginal utility of product Alpha is 63 and the marginal utility of product Beta is 40. The price of product Alpha is $9, and the price of product Beta is $5. The utility-maximizing rule suggests that, to stay within a given budget constraint, this consumer should Multiple Choice O O O increase consumption of product Beta and increase consumption of product Alpha. make no change in the consumption of Alpha or Beta. increase consumption of product Beta and decrease consumption of product Alpha. increase consumption of product Alpha and decrease consumption of product Beta.
Let the following table represents the total utility of a given consumer, in the cardinal utility approach A) Calculate the MUx and MUy and fill the table in the 4th and 5th rows. B) If the two products (X&Y) are free goods how many of X and Y should the cons consumer take to maximize utility? C) What is the maximum utility of X and Y if they are free?. D) Assuming the consumer has any amount of money (enough budget) how many of X and Y should the consumer buy, to maximize utility? E) What is the total utility of X and Y? F) Let now price of X is 4 birr per unit and price of Y is 2 birr per unit and budget of the consumer for consumption of X and Y is 20 birr. Given budget constraint how many of X and Y should the consumer buy to maximize utility? G) What are the total utility of X and Y