While deriving consumer's equilibrium, what is given? (a) Income of the consumer (b) Price of the commodities (c) Both income and price (d) None of the above Qy|
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A: To find : What is meaning of utility.
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- What kind of relationship exist between income and demand of inferior good? (a) Direct (b) Inverse (c) No effect (d) Can be direct or inverseConsumer's surplus is the highest in the case of- (A) Necessities (B) Comforts (C) Luxuries (D) Conventional necessities 1 to IA (C to 35 oubongConsider the utility function uu(xx, yy) 10 for all bundles (xx, yy) (a) What are strict preferences? What are the indifferences? (b) Argue that the preferences represented by this utility function are strictly convex or that they are not. (c) Árgue that the preferences represented by this utility function are complete or that they are not. (d) Argue that the preferences represented by this utility function are strongly monotonic or they are not.
- ADDED DISCUSSION WITH QUESTIONS TOPIC: MARGINAL UTILITY 5 6 7 No. of Pieces Total Utility (Q) 1 2 3 4 (TU) 150 225 250 220 8 9 10 11 Marginal Utility is calculated using the formula given below 12 Marginal Utility (TU-TU)/(Q-Q) 13 14 D For 1 Piece For 2 Piece For 3d Piece (86-0)/(A6-0) -(87-86)/(A7-A6) 150 75 (88-87)/(AS-A7) 25 Marginal 15 Utility Formula 16 Marginal Utility 17 For 1st Piece of the Cake Marginal Utility1 = (150-0)/(1-0) Marginal Utility1 = 150 For 4th Piece (89-88)/(AS-AS) -30 For 2nd Piece of the Cake Marginal Utility2=(225-150)/(2-1) Marginal Utility2 = 75 For 3rd Piece of the Cake Marginal Utility3 = (250-225)/(3-2) Marginal Utility3 = 25 For 4th Piece of the Cake Marginal Utility4 = (220-250) / (4-3) Marginal Utility4 = -30 Therefore, here we can see how the marginal utility of a piece of cake declines after the consumption of the previous one. Here, the highest utility is reached at the consumption of the 3rd piece, beyond whichthe total declined. This is a…What is the relation between positional and non-positional goods? Group of answer choices (a) Both are dependent on consumers’ subjective preferences. (b) Both reflect the rational decisions of consumers. (c) Positional goods are purchased for their function and use, while non-positional goods are purchased for their social importance relative to others. (d) Positional goods are purchased for their social importance relative to others, while non-positional goods are purchased for their function and use.F. Veblan good is: (a) Good of status (b) Consumed by very high income group (c) Like diamonds (d) All of the above
- Consider an economy with two goods, consumption c and leisure 1, and a representative consumer. The consumer is endowed with 24 hours of time in a day. A consumer's daily leisure hours are equal to 1 = 24-h where h is the number of hours a day the consumer chooses to work. The price of consumption p is equal to 1 and the consumer's hourly wage is w. The consumer faces an ad valorem tax on their earnings of 7 percent. The con- sumer also receives some exogenous income Y that does not depend on how many hours she works (e.g. an inheritance). The consumer's preferences over consumption and hours of work can be represented by the utility function U(c, h) = c-3h¹+, where 3 > 0 and p > 0 are parameters. 1+pEconomi All partsHow can I apply economics in daily life interms of weekly allowance?
- 7) The law of diminishing marginal utility(a) refers to the decrease in total satisfaction as more units of the good areconsumed.(b) refers to the idea that total utility can be negative.(c) refers to the fall in additional satisfaction created by consumption of more andmore units of a good.(d) All of the above.2. A person considers the following four criteria for buying a car. The pairwise comparison matrix of these criteria is as shown in the table below. With the AHP method, get the weight of the criteria. Safety Comfort accessories Price Safety Comfort accessories 1 1 1 2 2 1 1 1 3 2 3 1 1 2 Price 2 2 2 1Price ($ per gallon) $2.20 $2.00 $1.80 $1.60- $1.40- $1.20- $1.00- D i. 300 400 500 600 700 800 Quantity of Gasoline (millions of gallons) ii. iii. iv. V. vi. vii. viii. ix. ($2.20 per gallon, 420 million gallons) ($2.00 per gallon, 460 million gallons) ($1.80 per gallon, 500 million gallons) ($1.60 per gallon, 550 million gallons) ($1.40 per gallon, 600 million gallons) ($1.20 per gallon, 700 million gallons) X. ($1.00 per gallon, 800 million gallons) 900 Price ($ per gallon) $2.20 $2.00 $1.80 $1.60- $1.40- $1.20- $1.00- ($2.20 per gallon, 720 million gallons) ($2.00 per gallon, 700 million gallons) ($1.80 per gallon, 680 million gallons) ($1.60 per gallon, 640 million gallons) ($1.40 per gallon, 600 million gallons) ($1.20 per gallon, 550 million gallons) ($1.00 per gallon, 500 million gallons) 300 400 500 600 700 800 900 Quantity of Gasoline (millions of gallons) Graph both the demand and supply curve together and identify the equilibrium price and quantity. Define what an…