1. Explain the behavior of consumer from the point of view of Utility Theory. As consumers‚ we are constantly forced into making choices. They face a variety of goods and services which can be purchased‚ but often are limited by the amount of money with which those purchases can be made. The utility theory‚ also sometimes referred to as the consumer behavior theory‚ is often used to explain the behavior of individual consumers and the amount of satisfaction a consumer derives from the consumption
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property of an indifference curve? Question 5 answers | | An indifference curve is convex to the origin / | | | The consumer is indifferent between any two points on an indifference curve / | | | The marginal rate of substitution diminishes as you move down the indifference curve | / | | As you move from one indifference curve to another indifference curve closer to the origin‚ utility increases | An indifference curve is Question 6
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of apples is 1‚ the price of bananas is 2‚ and Charlie’s income is 40. (a) On the graph below‚ use blue ink to draw Charlie’s budget line. (Use a ruler and try to make this line accurate.) Plot a few points on the indifference curve that gives Charlie a utility of 150 and sketch this curve with red ink. Now plot a few points on
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Introduction Over the past decade‚ medical costs have increased more rapidly than other consumer costs. Americans spent 2.5 trillion on health care in 2009 according to Medicare’s Office of the Actuary. That figure translates into approximately $8‚086 per person‚ or 17.6 percent of the nation’s gross domestic product (GDP).1 Health care costs more than tripled from 1990 to 20092 and are projected to rise to 19.6 percent of GDP in 2019.3 “The 4 percent increase from 2008 levels represented
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3. Suppose that in the absence of trade‚ Home consumes nine cars and two televisions and Foreign consumes two cars and nine televisions. Add the indifference curve for each country to the figures in problems 1. Label the production possibilities frontier (PPF)‚ the indifference curve (U1)‚ and the no‐trade equilibrium consumption and production for each country. Label Home and Foreign’s no‐trade consumption points as A and A*‚ respectively. 4.
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Consumer Choice Exercise 1. Function U allows us to know how that agent orders different combinations of goods x e y according to his preferences. For each of the following representations what is the shape of the indifference curves and what is the marginal rate of substitution (MRS)? What does that tell you about the agent’s preferences? a. U x 2 y x y b. U min ‚ 3 4 c. U xy d. U x 2 y Exercise 2. Consider the following utility functions: a. U ( x‚ y) ( x
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X rose to $4 and the price of Y rose to $9‚ how much would Murphy’s income have to rise so that he could still afford his original bundle? a. $700 b. $450 c. $350 d. $1‚050 5. Charlie has the utility function U(xA‚ xB) = xAxB. His indifference curve passing through 15 apples and 16 bananas will also pass through the point where he consumes 3 apples and a. 40 bananas. b. 83 bananas. c. 20 bananas. d. 87 bananas. e. 80 bananas. 1 6. Harmon’s utility function is U(x1‚ x2) =
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中级微观经济学 参考书： Hal R. Varian. Intermediate Microeconomics‚ A Modern Approach. W. W. Norton & Company‚ Inc. 1 BUDGET CONSTRAINT Consumer theory ---- how consumers buy their goods? Economists assume: consumers choose the best bundle of goods they can afford. Two aspects: ----Consumers choose the most preferred goods. ----They are limited by economic condition. The Budget Constraint Consumption bundles: （消费束，商品组合）: a list of numbers of
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households will shift toward purchasing raisins from purchasing relatively more expensive goods. This is the substitution effect. Both effects imply that the quantity of raisins demanded will rise as the price of raisins falls. 4. Using indifference curves and budget constraints‚ explain how a consumer maximizes utility. Show how
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QUESTIONS FOR PRACTICE AND REVIEW TOPIC 2 – THEORY OF CONSUMER BEHAVIOR 1) The price of DVDs (D) is Rs 200 and the price of CDs (C ) is Rs 100. Ajay has a budget of Rs 1000 to spend on the two goods. Suppose that he has already bought one DVD and one CD. In addition‚ there are 3 more DVDs and 5 more CDs that he would really like to buy. a. Given the above prices and income‚ draw his budget line on a graph with CDs on the horizontal axis. b. Considering what he has already purchased and what he
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