Question

True or false justify your answer:

The indifference curve exhibits an increasing MRS between goods (x
,y)

Budget constraint reflects the matching between willingness and
ability of the consumer

If income increases then the B.L shifts inward other things
constant

Answer #1

1. This given statement is TRUE as the indifference curve is exhibiting an increasing marginal rate of substitution between goods as it is concave in nature.

2. Budget constraints doesnot reflect the matching between the willingness and the ability of the customer as this statement is FALSE.

Demand of a product reflects the matching between the willingness and the ability of the customer to buy a product.

3. This given statement is FALSE as when the income is increasing, the BL shift towards outwards as other thing remaining constant as it is leading to increase in potential demand.

2. Answer true, false, or it depends. Explain your answer using
indifference curve analysis for a, b, and e, and using the formula
for price elasticity of demand for (c) and (d).
a- Suppose that X and Y are perfect substitutes,
MRSxy = 3, Px = $4, Py = $2, and I
= $10. Then, the consumer will spend all her income on good Y,
purchasing 5 units.
b- For an inferior good, the substitution and income effects
work in...

a) The Indifference Curve (IC) shows the level of satisfaction. Now
discuss the properties of indifference curve elaborately. Why is
the concept of Marginal Rate of Substitution (MRS) important for
measuring the level of satisfaction? Design your answer by using
graphs and relevant examples.
b) Distinguish between nominal income and real income.
Suppose, the price of good X is Tk. 20 and the price of good Y is
Tk. 30. If the nominal income of consumer is Tk. 1000, then...

Question 1
The following are key characteristics of Indifference Curves,
EXCEPT:
A. Each indifference curve identifies the combinations of X and
Y where the consumer is equaly happy.
B. Indifference curves are convex to the origin because X and Y
are assumed to be close substitutes.
C. For any combination of X and Y there is one and only one
Indifference Curve.
D. Indifference curves cannot logically cross between them if
preferences are well defined.
Question 2
The following are...

Q15). True or False
• 1. If we measure the quantity of French fries on the
horizontal axis and the quantity of hamburgers on the vertical
axis, and if the price of French fries is $0.60 and the price of a
hamburger is $2.40, then the slope of the budget constraint is 1/4
(and it is negative).
• 2. A budget constraint is a set of commodity bundles that
provide the consumer with the same level of satisfaction
• 3....

1a) According to Cardinal utility
theory, at the utility maximizing equilibrium combination for two
goods, X and Y, which of the following must be TRUE?
The marginal utility per dollar spent on X will exceed the
marginal utility per dollar
spent on Y.
The total expenditure will be the same for each good.
The marginal utility per dollar from X equals the marginal
utility per dollar from Y.
The marginal utility will be the same for each good.
1B) In...

True or false justify your answer
1-The higher the price of X1 the flatter the B.L would be
2-Consumer equilibrium requires that indifference curve intersects
the B.L
3-If B.L slope =zero, then a consumer can have an extra unit of
good X without paying additional money
4-Cash subsidy is preferred to gift certificate from the store
owner view point

Jasina has preferences for two goods x,
y and her marginal rate of substitution (MRS) between
x and y is given
by 3y/x. Her budget constraint takes
the form m ≥ pxx +
pyy,
where m is income
and px, py
are the prices
of x, y respectively.
(a) Someone says that Jasina’s expenditure on
y (i.e., pyy) is
always one third of her expenditure
on x (i.e.,
pxx). Is this correct? Are
x and y normal goods?
(b) Jason has different preferences to Jasina: his marginal rate
of substitution (MRS) between x
and y is...

1. Emily has preferences for two goods x, y while her marginal
rate of substitution (MRS) between x and y is given by 3y/x. Her
budget constraint is m ≥ pxx + pyy, where m = income and px, py are
prices of x, y respectively. (a) Emily's expenditure on y (i.e.,
pyy) is 1/3 of her expenditure on x (i.e., pxx). Is this true Are x
and y normal goods? (b) Andrew has different preferences: his
marginal rate of...

Jasina has preferences for two goods x, y and her marginal rate
of substitution (MRS) between x and y is given by 3y/x. Her budget
constraint takes the form m ≥ pxx + pyy, where m is income and px,
py are the prices of x, y respectively. (Word limit per question:
400 words (200 words per part of question).
(a) Someone says that Jasina’s expenditure on y (i.e., pyy) is
always one third of her expenditure on x (i.e.,...

A consumer has 250 dirhams to spend on goods X and Y. The market
prices of these two goods are Px a) b) c) d) = 10 and Py = 25
Determine the equation for the consumer’s budget line. Illustrate
the consumer’s opportunity set in a carefully labeled diagram. What
is the MRS between goods X and Y? Show how the consumer’s
opportunity set changes if income increases by 250. e) How does
this increase affect the MRS?
justify your...

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