Question 25 (In this question we denote income by Y). The following figure shows the consumption of x and y for two market situations. We can conclude that: x is an inferior good for some market situation. O vis an inferior good for some market situation. O p is greater than P. O xis a normal good for all market situations. O Itis not conclusive.

Question 25 (In this question we denote income by Y). The following figure shows the consumption of x and y for two market situations. We can conclude that: x is an inferior good for some market situation. O vis an inferior good for some market situation. O p is greater than P. O xis a normal good for all market situations. O Itis not conclusive.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section: Chapter Questions

Problem 5CQQ

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Praxilla, who lived in ancient Greece, derives utility from reading poems and from eating cucumbers. Praxilla gets 30 units of marginal utility from her first poem 27 units of marginal utility from her second poem 24 units of marginal utility from her third poem, and so on, with marginal utility declining by three units for each additional poem. Praxilla gets six units of marginal utility for each of her next three cucumbers consumed, five units of marginal utility for each of her next three cucumbers consumed, four units of marginal utility for each of the following three cucumbers consumed, and so on, with marginal utility declining by one for every three cucumber consumed. A poem costs three bronze coins hut a cucumber costs only one bronze coin. Praxilla has 18 bronze coins. Sketch Praxillas budget set between poems and cucumbers, placing poems on the vertical axis and cucumbers on the horizontal axis. Start off with the choice of zero poems and 18 cucumbers, and calculate the changes in marginal utility of moving along the budget line to the next choice of one poem and 15 cucumbers. Using this step-by-step process based on marginal utility, create a table and identify Praxillas utilityâ€”maximizing choice. Compare the marginal utility of the two goods and the relative prices at the optimal choice to see if the expected relationship holds. Hint: Label the table columns: 1) Choice, 2} Marginal Gain from More Poems, 3) Marginal Loss from Fewer Cucumbers, 4) Overall Gain or Loss, 5) Is the previous choice Optimal? Label the table rows: 1) 0 Poems and 18 Cucumbers, 2) 1 Poem and 15 cucumbers, 3) 2 Poems and 12 cucumbers, 4) 3 Poems and 9 Cucumbers, 5) 4 Poems and 6 cucumbers 6) 5 Poems and 3 Cucumbers, 7) 6 Poems and 0 Cucumbers.
7 Asen tries to minimize his cost of using two goods x subscript 1 end subscript and x subscript 2 end subscript. The price of the first good is BGN 12 and the second good BGN 8. His utility function is x subscript 1 superscript 3 divided by 5 end superscript x subscript 2 superscript 2 divided by 5 end superscript and the utility he will get from using both goods, is 32 units. Find the Hicks quantities demanded and what Assen's minimum budget must be to consume these quantities and obtain the above utility. e-412, h2=21, h1=21 e=416, h2=21, h1=21 e=640, h1=32, h2=32 e=422, h2=21, h1=21 e=378, h2=21, h1=21 e-378, h2=20, h1=20 another answer e-378, h2=24, h1=24
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