Microeconomics Answers

9. Given the following marginal utility schedule for good X and good For the individual,and given that the price of X and the price of Y are both $1, and that the individual spends all income of $7 on X and Y, Q 1 2 3 4 5 67 MUX 15 11 9 6 4 3 1 MUY 12 9 6 5 3 2 1 a. indicate how much of X and Y the individual should purchase to maximize utility. b. show that the condition for constrained utility maximization is satisfied when the individual is at his or her optimum. c. determine how much total utility the individual receives when he or she maximizes utility? How much utility would the individual get if he or she spent all income on X or Y?

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VMPxt/Vx=VMPxy/Vx=R

In each of the following situation what is the government's role? Does the government's intervention improve the outcome?
1=public schools for k-12

“it is orthodox to say people’s desire has no boundary from the time past, even in the face realistic limited resources, individual agents never stop to want more of economic output”.

In not less than 180, and not more than 250 words, validate the above statement and discuss with relevant details. (7 points)

Suppose a company makes an investment and opens another factory. In one or two sentences, explain how this investment directly creates jobs.

If (A) -------- interest rates when the output gap and the (B) --------- both fall when a central bank applies a taylor rule in the management of its monetary policy

Supposed investor A has $20,000 in his account and derives 4 utiles of utility from this amount and would derive 5 utiles of utility if he had $40,000. He is faced with a choice to invest the $20000 in a project that has 60% probability of earning a profit of $20000 and 40% probability of loosing. Is the manager likely to invest in the project?
Aproject has expected risky cash flows of $45,000 in perpetuity. Given that the risk adjusted rate of return for the project is 15%, and the risk free rate is 5%, what are the certainty equivalent cash flows in perpetuity?

The basic economic problems faced by a socialist economy are:
a) Different from those faced by a mixed economy.
b) Different from those faced by a market economy, but the same as those faced by a mixed economy.
c) Similar to those faced by both a market and a mixed economy.
d) Different from those faced by a market economy.

Which one of the following statements about the consumption function is incorrect?
a) Consumption spending consists of autonomous consumption and induced consumption.
b) Autonomous consumption consists largely of spending on durable consumer goods.
c) Autonomous consumption is independent of the level of income.
d) As income increases, the level of induced consumption increases.

A depreciation of the rand may have inflationary consequences in South Africa because it:
a) Increases the costs of exports.
b) Discourages savings.
c) Decreases the international competitiveness of South African producers.
d) Increases the costs of imported goods