John only values food until he has consumed 10 units of it, and after that, he values only shelter. 1) Sketch John's indifference curves between food and shelter.
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- John only values food until he has consumed 10 units of it, and after that, he values only shelter. 1) Sketch John’s indifference curves between food and shelter.1. Suppose that there are two breakfast options, pancakes and waffles. Kwame only cares about the calories he gets from his breakfast he wants to consume as much as possible, no matter the food. Suppose that a waffle has thrice as many calories as a pancake. What do Kwame's indifference curves look like, illustrated with waffles on the y axis and pancakes on the x - axis?4 Emily goes camping on the weekend and eats marshmallows (M) and crackers (C) there. She wants to match 1 marshmallow with 2 crackers, but does not eat in different proportion (i.e., perfect com- plement). The price of a marshmallow is 10 cents and the price of a cracker is 5 cents, and she spend up to $3 in total. a) Write down a utility function which represents Emily's preferences over marshmallows and crackers. b) How many marshmallows and crackers is she going to consume? (Hint: the first-order conditions will not help; draw the budget constraint and the indifference curves and look at the highest one that intersect the budget constraint). c) What is the exact value of Emily's indirect utility?
- 8. Normal and inferior goods Larry likes going to the ballpark to watch baseball, and he also is fond of going to the theater to listen to the symphony orchestra. The following diagram shows two of Larry's indifference curves for going to ballgames and symphonies. With Larry's initial budget constraint (BC), he chose to go to two symphonies and six baseball games per month (point X). Then his budget constraint shifted to BC2, and he chose to go to five symphonies and five ballgames per month (point Y). 2 BALLGAMES Z 0 5 10 SYMPHONICS of the following choices, which could have shifted Larry's budget constraint from BC₁ to BC₂? Check all that apply. His income increased while the prices of baseball and symphony tickets stayed the same. The price of symphony tickets increased while his income and the price of baseball tickets stayed the same. The prices of both baseball and symphony tickets decreased while his income stayed the same. His income decreased while the prices of baseball and…While discussing the choice bundle of a consumer, differentiate between Boundary Optimum and Interior Optimum. Show and explain in which cases a consumer faces these types of optimal equilibria?1. Lars has asserted that he prefers bacon to sausage, sausage to chips and chips to bacon. Based on this evidence, can his preferences be complete and transitive? Explain.
- Indicate the answer choice that best completes the statement or answers the question. 1. Ahmed spends all of his money on movie tickets and groceries. Suppose Ahmed is presented with two options: A and B. Option A gives him a voucher of $X that he can only spend on groceries. Option B gives him SX that he can spend on either or both of the goods. Which of the following is correct assuming Ahmed is indifferent between the two options? a. Ahmed spends at least $X on groceries. b. Ahmed spends less than SX on groceries. c. Ahmed must be indifferent between movie tickets and groceries. d. Ahmed spends his entire income on movie tickets.Draw YOUR indifference curve for the consumption of two goods (you pick the goods – be creative!) Make sure to include labels. Why did you choose these two goods? Why do you view these as being a tradeoff? Carefully explain why the indifference curve has the shape you created. (Hint: Discuss the slope. What it means and how it changes) Determine a budget that will be allocated towards your consumption of these two goods. Given the budget, prices for the goods, and your preferences, how will you find the utility-maximizing combination? Give an intuitive answer as well as a graphical answer (make sure to label the graph accordingly).8. Normal and inferior goods Antonio likes going to the ballpark to watch baseball, and he also is fond of going to the theater to listen to the symphony orchestra. The following diagram shows two of Antonio's indifference curves for going to ballgames and symphonies. With Antonio's initial budget constraint (BC1), he chose to go to four symphonies and six baseball games per month (point X). Then his budget constraint shifted to BC2, and he chose to go to five symphonies and three ballgames per month (point Y). BALLGAMES 3 8 10 0 4 5 SYMPHONIES BC 8 BC 10 ? Of the following choices, which could have shifted Antonio's budget constraint from BC₁ to BC2? Check all that apply. His income increased while the prices of baseball and symphony tickets stayed the same. The prices of both baseball and symphony tickets increased while his income stayed the same. His income decreased while the prices of baseball and symphony tickets stayed the same. normal The price of symphony tickets increased…
- 24. What is the difference between total utility and marginal utility? Explain.b. Mary has two dinner options available: eating a home cooked meal for $150 per meal, or at a restaurant for $260 per meal. Her weekly budget is $2500. i. Draw Mary’s budget constraint, (put home cooked meal on the horizontal axis) showing the trade-off between a home cooked meal and eating at a restaurant. ii. Draw an indifference curve showing the optimum choice. Label the optimum as point A. iii. What would be the marginal rate of substitution at the point that corresponds to the optimal consumption choice? Interpret the marginal rate of substitution. iv. Suppose the price of a home cooked meal increases to $200 and income increases to $4200. Show the impact of the new budget line relative to the original budget line. What would be the new marginal rate of substitution that corresponds to the optimal consumption choice? Interpret the marginal rate of substitution.The budget set, or budget constraint, in the graph shows the possible combinations of brownies and ice cream cones that can be purchased. Assume that this person has a total of $18 to spend on brownies and ice cream cones. How much does a brownie cost? $ Assume that at point A, the marginal utility from a brownie is 10 and the marginal utility for an ice cream cone is 18. This person is utility maximizing. should consume more brownies and fewer ice cream cones. should consume more ice cream cones and fewer brownies. Brownies 18- 16- 14- 12- 10- 8- 6- 4 2. 0 1 2 3 1 A 1 + 4 5 Budget constraint 6 7 8 9 10 11 12 13 14 Ice cream cones