Microeconomics Answers

The opportunity cost of one ATV ▼

depend on how many you purchase because the opportunity cost of one good stays constant

for a​ straight-line boundary.

Using the equation of a line, and P for price and Q for quantity, what is the algebraic formula of this curve?

4. Suppose an individual has a utility function u (x1, x2) = 2*2. Present your mathmatical expressions below in the simplest form you can.

a) Derive an expression for the marginal utility of good 1, and for the marginal utility of good 2.

b) Using these, solve for an expression describing the slope of an indifference curve: MRS (11, 12).

c) Sketch indifference curves for this consumer corresponding to u = 0,10,20. (Hint: z rı = k solves for m} = 11 (21) . Solve this expression and approximate it on a graph for the three values of k.) 

a) Define what is meant by a monotonic transformation of some consumer's utility function: u (21,22). b) Suppose u (01,02) = 3x1 + 2x2. Sketch indifference curves for this consumer corresponding to utility levels 10, 20 and 30. c) Suppose u (C1, 12) = 11 + 12. Sketch indifference curves for this consumers corresponding to utility levels 10, 20 and 30. d) Can these two utility functions be said to describe the same preferences: Is the function in b) a monotonic transformation of the function in c). Explain.

A University graduate recieves his first pay cheque. Discuss how scarcity,choice and opportunity cost arise for the graduate on his first shopping trip to the city

A maximizing consumer with preferences u = min (3x, 2y) and an income of 120 dollars pays p_X= 2 for good x and p_Y= 2 for good y. Next month her income will decline to 60 dollars. After the income change x₁ =

Equilibrium in any market can be described as that point where demand is equal to supply

Imagine that the utility maximizing consumer, endowed with a rational preference, gets swayed by advertisements for the products. Develop a modification of the utility maximization problem.

Consider an infinitely lived agent who has one unit of a commodity and she consumes it over lifetime. The commodity is not perishable and she receives no dividend or interest on saving. Consumption of the commodity in period t is denoted Xt. Let the lifetime utility function be given by: u(x0, x1,...,) = Σ B^t (ln Xt).[Limit 1 to infinity]. Here, 0 < B < 1.

Compute the consumer’s optimal consumption level for each period.