Suppose Naomi consumes two goods: good 1 and good 2. Last year, the price of good 1 was $2.00 and the price of good 2 was $3.20. Given these prices, Naomi maximized satisfaction consuming bundle A, as indicated in the figure to the right. However, this year, the price of good 1 has increased to $6.00 and the price of good 2 has changed to $2.40. Given these prices, Naomi would be equally well off at consumption bundle B. Calculate a Laspeyres cost-of-living index for Naomi using 100 as the base for last year. In particular, the Laspeyres index for this year is. (Enter your response rounded to two decimal places.) The Laspeyres index suggests inflation has been percent over the year. (Enter your response rounded to two decimal places.) The Laspeyres cost-of-living index overstates the rate of inflation because it assumes that consumers do not alter their consumption patterns as prices change. Naomi's true cost-of-living increase has been percent. (Enter your response rounded to two decimal places.) Good 2 100- 90- 80- 70- 60- 50- 40- 30- 20- 10- 0- to FO 10 B

Suppose Naomi consumes two goods: good 1 and good 2. Last year, the price of good 1 was $2.00 and the price of good 2 was $3.20. Given these prices, Naomi maximized satisfaction consuming bundle A, as indicated in the figure to the right. However, this year, the price of good 1 has increased to $6.00 and the price of good 2 has changed to $2.40. Given these prices, Naomi would be equally well off at consumption bundle B. Calculate a Laspeyres cost-of-living index for Naomi using 100 as the base for last year. In particular, the Laspeyres index for this year is. (Enter your response rounded to two decimal places.) The Laspeyres index suggests inflation has been percent over the year. (Enter your response rounded to two decimal places.) The Laspeyres cost-of-living index overstates the rate of inflation because it assumes that consumers do not alter their consumption patterns as prices change. Naomi's true cost-of-living increase has been percent. (Enter your response rounded to two decimal places.) Good 2 100- 90- 80- 70- 60- 50- 40- 30- 20- 10- 0- to FO 10 B

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter6: Consumer Choice And Demand

Section: Chapter Questions

Problem 6QFR

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Suppose Natasha consumes two goods: good 1 and good 2. Last year, the price of good 1 was $2.00 and the price of good 2 was $5.00. Given these prices, Natasha maximized satisfaction consuming bundle A, as indicated in the figure to the right. However, this year, the price of good 1 has increased to $6.00 and the price of good 2 has changed to $3.75. Given these prices, Natasha would be equally well off at consumption bundle B. Calculate a Laspeyres cost-of-living index for Natasha, using 100 as the base for last year. In particular, the Laspeyres index for this year is. (Enter your response rounded to two decimal places.) The Laspeyres index suggests inflation has been percent over the year. (Enter your response rounded to two decimal places.) The Laspeyres cost-of-living index overstates the rate of inflation because it assumes that consumers do not alter their consumption patterns as prices change. Natasha's true cost-of-living increase has been percent. (Enter your response rounded…
Suppose Natasha consumes two goods: good 1 and good 2. Last year, the price of good 1 was $2.00 and the price of good 2 was $5.00. Given these prices, Natasha maximized satisfaction consuming bundle A, as indicated in the figure to the right. However, this year, the price of good 1 has increased to $6.00 and the price of good 2 has changed to $9.60. Given these prices, Natasha would be equally well off at consumption bundle B. 100- 90- 80- Calculate a Laspeyres cost-of-living index for Natasha using 100 as the base for last year. In particular, the Laspeyres index for this year is (Enter your response rounded to two decimal places.) 70- 60- 50- 40- 30- 20- 10- L1 0- 10 20 30 70 80 50 60 Good 1 40 90 100 Good 2
Rohan’s current marginal utility from consuming peanuts is 100 utils per ounce and his marginal utility from consuming cashews is 200 utils per ounce. If peanuts cost $0.10 per ounce and cashews cost $0.50 per ounce, is Rohan maximizing his total utility from the kinds of nuts? Instructions: Enter your responses as whole numbers. At the current level of peanut consumption, Rohan receives: utils per dollar.At the current level of cashew consumption, Rohan receives: utils per dollar.Therefore, Rohan maximizing his total utility because MUp/Pp is MUc/Pc.
Rohan’s current marginal utility from consuming peanuts is 100 utils per ounce and his marginal utility from consuming cashews is 200 utils per ounce. If peanuts cost $0.10 per ounce and cashews cost $0.50 per ounce, is Rohan maximizing his total utility from the kinds of nuts? Enter your responses as whole numbers. At the current level of peanut consumption, Rohan receives: utils per dollar.At the current level of cashew consumption, Rohan receives: utils per dollar.Therefore, Rohan maximizing his total utility because MUp/Pp is MUc/Pc.
70- 60- B 50- 40- 30- Suppose Naomi consumes two goods: good 1 and good 2. Last year, the price of good 1 was $2.00 and the price of good 2 was $3.20. Given these prices, Naomi maximized satisfaction consuming bundle A, as indicated in the figure to the right. However, this year, the price of good 1 has increased to $6.00 and the price of good 2 has changed to $2.40. Given these prices, Naomi would be equally well off at consumption bundle B. Calculate a Laspeyres cost-of-living index for Naomi using 100 as the base for last year. In particular, the Laspeyres index for this year is ☐. (Enter your response rounded to two decimal places.) The Laspeyres index suggests inflation has been percent over the year. (Enter your response rounded to two decimal places.) The Laspeyres cost-of-living index overstates the rate of inflation because it assumes that consumers do not alter their consumption patterns as prices change. Naomi's true cost-of-living increase has been ☐ percent. (Enter your…
This week you have gone to two parties. Assume the total utility you gained from these parties is 100 utils. Then you go to a third party, and your total utility rises to 110 utils. What is the marginal utility of the third party attended per week? Given the law of diminishing marginal utility, what will happen to total utility and marginal utility when you go to a fourth party this week? Consider the table below which lists John's marginal utility schedule for steak and hamburger meals: Steak meals per month MU of steak meals Price per steak meal Hamburger meals per month MU of hamburger meals Price per hamburger meal 1 20 $10 1 15 $5 2 15 10 2 8 5 3 12 10 3 6 5 4 10 10 4 4 5 5 8 10 5 2 5 Given a budget of $45, how many steak and hamburger meals will James buy per month to maximize his total utility? What is the total utility realized?
Megan enjoys consuming both cheese and fruit. Each pound of cheese costs Pc = $1, and each pound of fruit costs Pp = $2. Suppose that Megan buys 30 pounds of cheese and 20 pounds of fruit per week. The following graphs show her marginal utility curves for cheese and fruit. At her current consumption level, Megan's marginal utility from consuming the last pound of cheese she bought is MUC = 12 utils per pound, and her marginal utility from consuming the last pound of fruit she bought is MUR = 12 utils per pound. MU OF CHEESE (Utils per pound) 24 20 16 12 m 0 10 40 20 30 CHEESE (Pounds per week) Is Megan currently maximizing her utility? 50 60 ? MU OF FRUIT (Utils per pound) 24 20 16 12 8 4 0 0 10 40 20 30 FRUIT (Pounds per week) 50 Yes; the marginal utility she receives from her last pound of cheese equals that of her last pound of fruit. No; she likes fruit and cheese more than other goods, so she should buy more of both. No; she could buy less fruit and more cheese, not spend any more…
this week you have gone to two parties. assume the total utility you gained from these parties is 100 utils. then you go to a third party, and your total utility rises to 110 utils. what is the marginal utility of the third party attended per week? given the law of diminishing marginal utility, what will happen to total utility and marginal utility when you go to a fourth party this week?
Mrs. Simpson buys loaves of bread and quarts of milk each week at prices of $1 and 80 cents, respectively. At present she is buying these products in amounts such that the marginal utilities from the last units purchased of the two products are 80 and 70 utils, respectively. Is she buying the utility-maximizing combination of bread and milk? If not, how should she reallocate her expenditures between the two goods?
Caroline has a $10 dessert budget that she uses to buy pie and cake. Assume the price of pie (Pp) is fixed at $2. Table A shows Caroline's marginal MU utility (MU) and marginal utility per dollar () she receives from the first through fifth slices of pie she buys each week. Table B shows the same information for cake when the price of a slice of cake (Pc) is either $4 or $2. Assume that Caroline is rational consumer who wants to maximize her utility. Table A MU/P (If P=2) Pie MU (Slices) (Utils) 30 15 1 24 12 20 10 14 7 Table B Cake MU MU/P (Slices) (Utils) (If P=$4) (If P=$2) 40 10 20 32 8 16 2 24 12 16 4 8 4 1 2. 96 4. 4 5 1.
Consider the figures to the right. Suppose that the individual currently consumes 5 digital apps. What happens to the person's total utility if they reduce their consumption to 4 units? Why does this fact imply that the marginal utility curve cuts through the horizontal axis of the lower figure between the fourth and fifth app consumed? Reducing consumption to 4 apps from 5 apps leaves total utility at utils in the upper , which is the figure. Hence, the marginal utility between these two quantities of apps equals value of the axis in the lower figure. Thus, the marginal utility curve crosses the axis of the lower figure between units 4 and 5. (Enter your responses as whole numbers.) Marginal Utility (utils per week) 6- 4- 22 Total Utility (utils + q r per week) 14- 12- 10- 20 ø Ø 18- 04 0 Downloaded Digital Apps Utilized per Week Downloaded Digital Apps Utilized per Week G Q
Megan likes to eat toast with hazelnut spread and drink wine. She enjoys these items in very specific proportions: For every piece of toast with hazelnut spread she eats, she drinks exactly one glass of wine, and vice versa. Megan can purchase the hazelnut spread for her toast in two jar sizes: 20 ounces and 40 ounces. Megan cares only about the total amount of hazelnut spread she has available and not at all about the jar size. In other words, she's just as happy with two 20-ounce jars as she is with one 40-ounce jar. In this scenario, toast with hazelnut spread and glasses of wine are Two possible bundles of toast with hazelnut spread and glasses of wine are shown on the following graph, labeled A and B. Using three purple points (diamond symbol), plot Megan's indifference curve that passes through point A (11). Then, using three orange points (square symbol), plot Megan's indifference curve that passes through point B (I2). Hint: To plot both indifference curves, place one point on…