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    Isl 805 - Uyg - 2 - 19 Ekưm 2012

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    Bảo Trân Hồ
    The document contains 5 questions related to consumer choice theory and utility maximization. Question 1 asks about an individual's utility function and determining the amount of good Y consumed given consumption of good X. Question 2 asks to draw indifference curves for 5 individuals on an island economy based on their preferences for coconuts and pineapples. Question 3 provides a utility function for an individual and asks to determine their optimal consumption bundle given budget and price constraints. Question 4 repeats a similar analysis for an individual with a different utility function. Question 5 asks how different forms of additional income would shift an individual's budget constraint and impact their optimal choice.

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    Isl 805 - Uyg - 2 - 19 Ekưm 2012

    Uploaded by

    Bảo Trân Hồ
    83 views3 pages
    The document contains 5 questions related to consumer choice theory and utility maximization. Question 1 asks about an individual's utility function and determining the amount of good Y consumed given consumption of good X. Question 2 asks to draw indifference curves for 5 individuals on an island economy based on their preferences for coconuts and pineapples. Question 3 provides a utility function for an individual and asks to determine their optimal consumption bundle given budget and price constraints. Question 4 repeats a similar analysis for an individual with a different utility function. Question 5 asks how different forms of additional income would shift an individual's budget constraint and impact their optimal choice.

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    ISL 805_UYG _2__19 EKƯM 2012

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    The document contains 5 questions related to consumer choice theory and utility maximization. Question 1 asks about an individual's utility function and determining the amount of good Y consumed given consumption of good X. Question 2 asks to draw indifference curves for 5 individuals on an island economy based on their preferences for coconuts and pineapples. Question 3 provides a utility function for an individual and asks to determine their optimal consumption bundle given budget and price constraints. Question 4 repeats a similar analysis for an individual with a different utility function. Question 5 asks how different forms of additional income would shift an individual's budget constraint and impact their optimal choice.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    83 views3 pages

    Isl 805 - Uyg - 2 - 19 Ekưm 2012

    Uploaded by

    Bảo Trân Hồ
    The document contains 5 questions related to consumer choice theory and utility maximization. Question 1 asks about an individual's utility function and determining the amount of good Y consumed given consumption of good X. Question 2 asks to draw indifference curves for 5 individuals on an island economy based on their preferences for coconuts and pineapples. Question 3 provides a utility function for an individual and asks to determine their optimal consumption bundle given budget and price constraints. Question 4 repeats a similar analysis for an individual with a different utility function. Question 5 asks how different forms of additional income would shift an individual's budget constraint and impact their optimal choice.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    1

    ISL 805 UYGULAMALI KTSAT_ UYGULAMA (2) _ 19 Ekim 2012

    SORULAR

    1.

    Consider Garys utility function: U(X,Y) = 5 XY, where X and Y are two goods. If the individual consumed 10 units of X and received 250 units of utility, how many units of Y must the individual consume? Would a market basket of X=15 and Y=3 be preferred to the above combination? Explain. An island economy produces only two goods, coconuts and pineapples. There are five people (A,B, C, D, and E) living on the island with these preferences: A has a strong preference for pineapples. B has a strong preference for coconuts. C doesn't care for pineapples (assigns no value to them). D doesn't care for coconuts (assigns no value to them) E will only consume pineapples and coconuts in the fixed proportion of one pineapple to one coconut. For each of these five individuals, construct a representative indifference curve with pineapples on the vertical axis and coconuts on the horizontal axis. Discuss the shape of the indifference curves and relate them to the MRS.

    2.

    ARA. GR. GLN ELF YCEL

    ISL 805 UYGULAMALI KTSAT_ UYGULAMA (2) _ 19 Ekim 2012

    3.

    Sally consumes two goods, X and Y. Her utility function is given by the expression U = 3 XY 2 . The current market price for X is $10, while the market price for Y is $5.00. Sally's current income is $500. a. Sketch a set of two indifference curves for Sally in her consumption of X and Y. b. Write the expression for Sally's budget constraint. Graph the budget constraint and determine its slope. c. Determine the X,Y combination which maximizes Sally's utility, given her budget constraint. Show her optimum point on a graph. (Partial quantities are possible.) (Note: MUY = 6XY and MUX = 3Y2.) d. Calculate the impact on Sally's optimum market basket of an increase in the price of X to 15. What would happen to her utility as a result of the price increase?

    4.

    Janice Doe consumes two goods, X and Y. Janice has a utility function given by the expression: U = 4X.5Y.5. The current prices of X and Y are 25 and 50, respectively. Janice currently has an income of 750 per time period. a. Write an expression for Janice's budget constraint. b. Calculate the optimal quantities of X and Y that Janice should choose, given her budget constraint. Graph your answer. c. Suppose that the government rations purchases of good X such that Janice is limited to 10 units of X per time period. Assuming that Janice chooses to spend her entire income, how much Y will Janice consume? Construct a diagram that shows the impact of the limited availability of X. Is Janice satisfying the usual conditions of consumer equilibrium while the restriction is in effect? d. Calculate the impact of the ration restriction on Janice's utility.

    ARA. GR. GLN ELF YCEL

    ISL 805 UYGULAMALI KTSAT_ UYGULAMA (2) _ 19 Ekim 2012

    5.

    Lisa's budget line and her satisfaction maximizing market basket, A, are shown in the diagram below.

    a. Suppose that Lisa is given $50 worth of coupons that must be spent on food. How will the coupons alter Lisa's budget line? b. Suppose that Lisa is given $50 in cash instead of $50 in coupons. How will this alter Lisa's budget line? c. Is Lisa indifferent between the food coupon and cash program, or does she prefer one program over the other? Draw an indifference curve to illustrate your answer.

    ARA. GR. GLN ELF YCEL

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