Question

You have a perfect substitutes utility function between burritos and staplers. When do you know for...

You have a perfect substitutes utility function between burritos and staplers. When do you know for sure that a change in the price of burritos will have absolutely no effect on your consumption of burritos?

a)You are currently consuming only burritos and the price of burritos goes up

b)You are currently consuming only staplers and the price of burritos goes up

c)You are currently consuming only staplers and the price of burritos goes down

d)You are currently consuming only burritos and the price of burritos goes down

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Option

b)You are currently consuming only staplers and the price of burritos goes up

===

the goods are perfect substitute so the person purchase one of the good with higher MU per dollar

if you are consuming burrito and price goes up then MU per dollar goes down and you mat consume staplers or you reduce consumption of burritos

If You are currently consuming only staplers and the price of burritos goes down then you might consume burritos

if You are currently consuming only burritos and the price of burritos goes down then you will consume more of burritos

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider a consumer whose utility function is u(x, y) = x + y (perfect substitutes) a....
Consider a consumer whose utility function is u(x, y) = x + y (perfect substitutes) a. Assume the consumer has income $120 and initially faces the prices px = $1 and py = $2. How much x and y would they buy? b. Next, suppose the price of x were to increase to $4. How much would they buy now?    c. Decompose the total effect of the price change on demand for x into the substitution effect and the...
Suppose, alternatively, that leisure and consumption goods are perfect substitutes. In this case, an indiference curve...
Suppose, alternatively, that leisure and consumption goods are perfect substitutes. In this case, an indiference curve is described by the equation i = al + bC, where a and b are positive constants, and u is the level of utility. That is, a given indiference curve has a particular value for u, with higher indiference curves having higher values for u. (a) Show what the consumer’s indiference curves look like when consumption and leisure are perfect substitutes, and determine graphically...
Ralph considers x and y to be perfect substitutes. (a) Compute Ralph’s expenditure minimizing bundle of...
Ralph considers x and y to be perfect substitutes. (a) Compute Ralph’s expenditure minimizing bundle of reaching a utility level of 10, when the price of x is 2 and the price of y is 4. (b) Argue that if the price of y is above 2 and the price of y rises, then his minimum expenditure for reaching utility of 10 will not change. (c) Argue that if the price of y is below the price of x and...
1. A new ________ that is parallel to the first one, but just tangent to the...
1. A new ________ that is parallel to the first one, but just tangent to the new indifference curve, will reveal the real-income effect. maximization point perfect substitute curve perfect complement curve budget constraint line indifference curve 2. Marginal utility occurs when total utility declines as consumption increases. is the additional satisfaction derived from consuming one more unit of a good or service. is the combination of goods and services that maximizes utility for a given income. occurs when a...
3. Suppose that a consumer has a utility function given by U(X,Y) = X^.5Y^.5 . Consider...
3. Suppose that a consumer has a utility function given by U(X,Y) = X^.5Y^.5 . Consider the following bundles of goods: A = (9, 4), B = (16, 16), C = (1, 36). a. Calculate the consumer’s utility level for each bundle of goods. b. Specify the preference ordering for the bundles using the “strictly preferred to” symbol and the “indifferent to” symbol. c. Now, take the natural log of the utility function. Calculate the new utility level provided by...
1. A consumer has the utility function U = min(2X, 5Y ). The budget constraint isPXX+PYY...
1. A consumer has the utility function U = min(2X, 5Y ). The budget constraint isPXX+PYY =I. (a) Given the consumer’s utility function, how does the consumer view these two goods? In other words, are they perfect substitutes, perfect complements, or are somewhat substitutable? (2 points) (b) Solve for the consumer’s demand functions, X∗ and Y ∗. (5 points) (c) Assume PX = 3, PY = 2, and I = 200. What is the consumer’s optimal bundle? (2 points) 2....
1. Your lifetime utility is a function of: a. your lifetime income. b. today’s consumption only....
1. Your lifetime utility is a function of: a. your lifetime income. b. today’s consumption only. c. the amount of wealth in the utility function. d. today’s consumption and the present value of future consumption. e. the present value of future consumption only. 2. The problem the household must solve is: a. choosing period consumption to satisfy the concurrent budget constraint. b. choosing consumption to ensure some income is left over for future generations. c. choosing lifetime consumption that satisfies...
Claraís utility function is u (x; y) = (x + 2) (y + 1) where x...
Claraís utility function is u (x; y) = (x + 2) (y + 1) where x is her consumption of good x and y is her consumption of good y. (a) Write an equation for Claraís indi§erence curve that goes through the point (x; y) = (2; 8). (b) Suppose that the price of each good is $1 and Clara has an income of $11. Can Clara achieve a utility level of at least 36 with this budget? ( c)...
. Suppose your utility depends on two goods: x and y. The utility function is u(x,...
. Suppose your utility depends on two goods: x and y. The utility function is u(x, y) = ln(x) + ln(y) . Suppose you have an income of $800. Further, assume that the price of x is 8 and the price of y is 10. Write down the equation for the budget constraint. Compute the marginal rate of subsitution between x and y. • Compute the utility maximizing combination of x and y. • Suppose your income increases to $1000...
2. A consumer has the utility function U ( X1, X2 ) = X1 + X2...
2. A consumer has the utility function U ( X1, X2 ) = X1 + X2 + X1X2 and the budget constraint P1X1 + P2X2 = M , where M is income, and P1 and P2 are the prices of the two goods. . a. Find the consumer’s marginal rate of substitution (MRS) between the two goods. b. Use the condition (MRS = price ratio) and the budget constraint to find the demand functions for the two goods. c. Are...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT