Exam 5: Demand

Ambrose's brother Sebastian has a utility function . His income is $165, the price of good 1 (nuts) is $6, and the price of good 2 (berries) is $1. How many units of nuts will Sebastian demand?

If the price elasticity of demand for a good is -1, then doubling the price of that good will leave total expenditures on that good unchanged.

Regardless of his income and regardless of prices, Smedley always spends 25% of his income on housing, 10% on clothing, 30% on food, 15% on transportation, and 20% on recreation. This behavior is consistent with which of the following?

Clarissa's utility function is U(r, z) = z + 160r - r², where r is the number of rose plants she has in her garden and z is the number of zinnias. She has 250 square feet to allocate to roses and zinnias. Roses each take up 4 square feet and zinnias each take up 1 square foot. She gets the plants for free from a generous friend. If she acquires another 100 square feet of land for her garden and her utility function remains unchanged, she will plant

Donald's utility function is . Currently he is buying some of both goods. If his income rises and prices don't change, he will buy more of both goods.

If Charlie's utility function were X⁶_AX_B and if apples cost 40 cents each and bananas cost 10 cents each, Charlie's budget line would be tangent to one of his indifference curves whenever

Which of the following utility functions represent preferences of a consumer who does not have homothetic preferences?

Mary has homothetic preferences. When her income was $1,000, she bought 40 books and 60 newspapers. When her income increased to $1,500 and prices did not change, she bought

A good is a luxury good if the income elasticity of demand for it is greater than 1.

Miss Muffet insists on consuming 2 units of whey per 1 unit of curds. If the price of curds is $3 and the price of whey is $3, then if Miss Muffett's income is m, her demand for curds will be

Murphy's utility function is U(x, y) = min{ 4x + y, 2x + 2y, x + 4y}. Murphy is consuming 12 units of x and 6 units of y. a. Draw the indifference curve through this point. At what points does this indifference curve have kinks? b. The price of good x is $1. What is the highest possible price for y? What is the lowest possible price for y?

Ambrose's brother Patrick has a utility function U(x₁, x₂) = 16x ₁ + x₂. His income is $82, the price of good 1 (nuts) is $2, and the price of good 2 (berries) is $1. How many units of nuts will Patrick demand?

If two goods are substitutes, then an increase in the price of one of them will increase the demand for the other.

Katie Kwasi's utility function is U(x₁, x₂) = 2(ln x₁) + x₂. Given her current income and the current relative prices, she consumes 10 units of x₁ and 15 units of x₂. If her income doubles, while prices stay constant, how many units of x₁ will she consume after the change in income?

Clarissa's utility function is U(r, z) = z + 120r - r², where r is the number of rose plants she has in her garden and z is the number of zinnias. She has 250 square feet to allocate to roses and zinnias. Roses each take up 4 square feet and zinnias each take up 1 square foot. She gets the plants for free from a generous friend. If she acquires another 100 square feet of land for her garden and her utility function remains unchanged, she will plant

Where x is the quantity of good X demanded, the inverse demand function for X

John Parker Nosey works for the Internal Revenue Service. He is in charge of auditing income of self-employed people. In any year, people divide their total income between consumption and saving. John cannot determine people's consumptions, but he is able to determine how much people have saved over the course of a year. From years of experience, he has learned that people act as if they are maximizing a utility function of the form U(c, s) = 10,000ln(c) + s, where c is the number of dollars worth of consumption in a year and s is the number of dollars saved.

Wanda Lott's utility function is U(x, y) = max{ 2x, y}. Draw some of Wanda's indifference curves. If the price of x is 1, the price of y is p, and her income is m, how much of y does Wanda demand?

Let w be the number of whips and j the number of leather jackets. If Kinko's utility function is U(x, y) = min{ 7w, 4w + 12j}, then if the price of whips is $20 and the price of leather jackets is $40, Kinko will demand

If preferences are homothetic and all prices double while income remains constant, then demand for all goods is halved.