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A typical consumer has a well-behaved preference structure for his consumption bundle which includes only two goods, A and B. assume that commodity A is normal and commodity B is inferior. By keeping commodity A on the x-axis and commodity B on the y-axis you are required to show the price decomposition for commodity B when $PB increases exogenously relative to $PA. Please Answer the question by using well labelled diagrams
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- Question-1 It is given that a typical consumer has a well-behaved preference structure for his consumption bundle which includes only two goods, A and B. Further assume that commodity A is normal and commodity B is inferior. By keeping commodity A on the x-axis and commodity B on the y- axis you are required to show the price decomposition for commodity B when $PB increases exogenously relative to $PA.An agent has income m that can be spent on frequent flier miles f or on other goods – a “composite good” g. Their respective prices are: pf = 10 per mile and pg = 1 per unit. The flier miles have a stepwise price schedule. After the first 25 miles the price is reduced by 20% and after 50 miles the price is further reduced by another 50%.1. Put g on the vertical axis and f on the horizontal axis. Assume m = 200, and draw the budget constraint with all the intercepts and appropriate slopes. 2. On a separate graph, repeat part (1) for m = 300. 3. On a separate graph, repeat part (1) for m = 600.It is given that a typical consumer has a well-behaved preference structure for his consumption bundle, which includes only two goods, A and B. Further, assume that commodity A is normal and commodity B is Giffen. By keeping commodity A on the x-axis and commodity B on the y-axis, you are required to show the price decomposition for commodity B when $PB decreases exogenously relative to $PA.
- Question-1 It is given that a typical consumer has a well-behaved preference structure for his consumption bundle which includes only two goods, A and B. Further assume that commodity A is normal and commodity B is inferior. By keeping commodity A on the x-axis and commodity B on the y-axis you are required to show the price decomposition for commodity B when $PB increases exogenously relative to $PA. Provide a well-labelled and fully explained-legible diagram.Clara has utility function preferences u(x, y) = x^(1/2)+ you ^(1/2). She has income m = 48 and pays pX= 4, pY= 2. Now pX falls to 2. Provide a labeled diagram that decomposes this price change using the Slutsky decomposition SE (A to B) and TE (B to C) and the Hicksian decomposition SE (A to H) and TE (H to C).Khan lives in a world with two consumption goods x and y. Her utility function is U (x, y) = √x² + y². a. If px = $3,py = $4, and her income, I, is equal to $50, what will be the quantities of x and y that Maya should buy to maximize her utility? Make sure that you write out the Lagrangian and the first-order conditions. (Hint: It may be easier to maximize U² than U). Have you found a true maximum? Explain your answer.
- Assuming, there are two goods: Coffee and Tea. Your budget is 18,000 KRW per day. The price of Coffee ranges between 0 KRW to 6,000 KRW. The price of Tea ranges between 0 and 5,000 KRW Specify your indifference map of your preference relation Specify your utility function Specify a budget constraint based on the assumption above Specify your own-price offer curves for coffee Specify your curve Engel curve for coffeeDerive the relationship between the quantity of X demanded and the price of X if the consumer’s indifference map vis-à-vis X and Y has curves concave to the origin. Let X be games of golf per annum and Y all other goods. Draw the indifference map and budget constraint of: (a) an amateur who pays to play golf; (b) a professional who is paid to play golf. May we conclude that golfers turn professional because they dislike the game?A consumer chooses non-negative consumption levels of two goods x1 and x2 and has a utility function given as: U = = 0xfx% where 0 < a <1 and 0 is a constant. Assume that the prices of goods x1 and x2 are respectively Piand p2 Set up the expenditure minimization problem of the consumer and derive the Compensated (Hicksian) demand function for goods 1 and 2 and investigate whether the two goods are complements or substitutes. i.
- Suppose that a consumer has the utility function u(x1,x2) : quantity of good i consumed, i = 1, 2. The consumer has exogenous income m = prices p1 = 1 and p2 = 1 for goods 1 and 2, respectively. = x1x2, where x; represents the 50 and faces Given the new prices, p 3 and p2 = 4, What is the maximum amount that this consumer would be willing pay in order to prevent the price increases?John’s preferences for apples (A) and berries (B) are represented by U(A,B)= A+2B . Apples cost £2 and berries £1. Given that John’s monthly income is £30 answer the following questions: What type of goods are apples and berries for John? What is the proportion to which John is willing to exchange apples for berries? Illustrate and solve graphically John’s utility maximization problem. If his income increases every month by £10, how will John’s consumption choice be affected? Illustrate graphically the income expansion path and the Engel curve for each good. How will an increase in the price of berries to £6 affect John’s optimal consumption choice? (John’s income is £30) Graph John’s demand curve for each good. Assume that John wins a voucher of £20, redeemable only in apples. How would this affect John’s utility? (Assume that prices and income are as described initially) Assume that John is presented with two options: an apple voucher of £20 or just £6 to spend on any good he wants.…Question-1 A typical consumer has a well-behaved preference structure for his consumption bundle which includes only two goods, A and B. Assume that commodity A is normal and commodity B is inferior. By keeping commodity A on the x-axis and commodity B on the y-axis you are required to show the price decomposition for commodity B when $PB increases exogenously relative to $PA. Provide a well-labelled and fully explained-legible diagram.
