For m > p2, the demand functions for goods 1 and 2 are given by the equations, x1 = m/p2 - 1 and x2 = p1/p2, where m is income and p1 and p2 are prices.Let the horizontal axis represent the quantity of good 1.Let p1 = 1 and p2 = 2.Then for m > 2, the income offer curve is

A) a vertical line. B) a horizontal line. C) a straight line with slope 2. D) a straight line with a slope of 1/2. E) None of the above. A) a vertical line. B) a horizontal line. C) a straight line with slope 2. D) a straight line with a slope of 1/2. E) None of the above.

Wilma Q.has a utility function U(x1, x2)=x21 +1.5x1x2 + 30x2.The prices are p1 = $1 and p2 = $1.For incomes between $20 and $60, the Engel curve for good 2 is

A) upward sloping. B) downward sloping. C) vertical. D) upward sloping for incomes between $20 and $40 and downward sloping between $40 and $60. E) downward sloping for incomes between $20 and $40 and upward sloping between $40 and $60. A) upward sloping. B) downward sloping. C) vertical. D) upward sloping for incomes between $20 and $40 and downward sloping between $40 and $60. E) downward sloping for incomes between $20 and $40 and upward sloping between $40 and $60.

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?

A) 20 B) 18 C) 10 D) 5 E) There is not enough information to determine how many. A) 20 B) 18 C) 10 D) 5 E) There is not enough information to determine how many.

Exam 5: Demand-Part A

Explore all topics

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?

(Essay)

4.7/5

(76)

Question 41

For m > p₂, the demand functions for goods 1 and 2 are given by the equations, x₁ = m/p₂ - 1 and x₂ = p₁/p₂, where m is income and p₁ and p₂ are prices.Let the horizontal axis represent the quantity of good 1.Let p₁ = 1 and p₂ = 2.Then for m > 2, the income offer curve is

(Multiple Choice)

4.9/5

(81)

Question 42

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

(Multiple Choice)

4.8/5

(71)

Question 43

Harry has $10 to spend on cans of Coke and Pepsi, which he regards as perfect substitutes, one for one.Pepsi costs $.50 a can and Coke costs $.60 a can.Harry has 20 coupons, each of which can be used to buy 1 can of Coke for $.40.Which of the following bundles will Harry buy?

(Multiple Choice)

4.9/5

(69)

Question 44

Carlos consumes only two goods, apples and bananas.His utility function is U(a, b)= a³b².Before he trades, his initial endowment is w_a apples and w_b bananas.After he trades to his optimal consumption point at these prices, the relative prices change.Carlos is allowed to make further trades if he wishes.

(Multiple Choice)

5.0/5

(78)

Question 45

Robert's utility function is U(x, y)= min{4x, 2x + y}.The price of x is $3 and the price of y is $1.Robert's income offer curve is

(Multiple Choice)

4.8/5

(84)

Question 46

In economic theory, the demand for a good must depend only on income and its own price and not on the prices of other goods.

(True/False)

4.7/5

(81)

Question 47

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

(True/False)

4.7/5

(79)

Question 48

Fred has a Cobb-Douglas utility function with exponents that sum to 1.Sally consumes the same two goods, but the two goods are perfect substitutes for her.Despite these differences, Fred and Sally have the same price offer curves.

(True/False)

4.7/5

(89)

Question 49

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

(Multiple Choice)

4.8/5

(70)

Question 50

A rational consumer spends her entire income.If her income doubles and prices do not change, then she will necessarily choose to consume twice as much of every good as she did before.

(True/False)

4.9/5

(70)

Question 51

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

(True/False)

4.8/5

(76)

Question 52

A consumer has a utility function given by U = min{x₁, 2x₂}.If good 2 has a price of zero, the consumer will always prefer more of good 2 to less.

(True/False)

4.8/5

(95)

Question 53

Ambrose's brother Sebastian has a utility function U(x₁, x₂)= 60x^1/2₁ + x₂.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?

(Multiple Choice)

4.9/5

(78)

Question 54

Daisy received a tape recorder as a birthday gift and is not able to return it.Her utility function is U(x, y, z)= x + z^1/2 f(y), where z is the number of tapes she buys, y is the number of tape recorders she has, and x is the amount of money she has left to spend.f(y)= 0 if y < 1 and f(y)= 8 if y is 1 or greater.The price of tapes is $1 and she can easily afford to buy dozens of tapes.How many tapes will she buy?

(Multiple Choice)

4.8/5

(88)

Question 55

Darlene's utility function is U(x, y, z)= x ⁴y ⁸z.If her income doubles and prices remain unchanged, her demand for good y will more than double.

(True/False)

4.7/5

(80)

Question 56

Wilma Q.has a utility function U(x₁, x₂)=x²₁ +1.5x₁x₂ + 30x₂.The prices are p₁ = $1 and p₂ = $1.For incomes between $20 and $60, the Engel curve for good 2 is

(Multiple Choice)

4.8/5

(92)

Question 57

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?

(Multiple Choice)

4.7/5

(102)

Question 58

Is the following statement true or false? "If consumers spend their entire incomes, it is impossible for the income elasticity of demand for every good to be bigger than 1." Write a brief but convincing explanation of your answer.

(Essay)

4.9/5

(83)

Question 59

If Charlie's utility function were X ⁴_AX_B and if apples cost 30 cents each and bananas cost 10 cents each, Charlie's budget line would be tangent to one of his indifference curves whenever

(Multiple Choice)

4.8/5

(80)

Question 60

Showing 41 - 60 of 80

Exam 5: Demand-Part A

For m > p2, the demand functions for goods 1 and 2 are given by the equations, x1 = m/p2 - 1 and x2 = p1/p2, where m is income and p1 and p2 are prices.Let the horizontal axis represent the quantity of good 1.Let p1 = 1 and p2 = 2.Then for m > 2, the income offer curve is

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

Harry has $10 to spend on cans of Coke and Pepsi, which he regards as perfect substitutes, one for one.Pepsi costs $.50 a can and Coke costs $.60 a can.Harry has 20 coupons, each of which can be used to buy 1 can of Coke for $.40.Which of the following bundles will Harry buy?

Robert's utility function is U(x, y)= min{4x, 2x + y}.The price of x is $3 and the price of y is $1.Robert's income offer curve is

In economic theory, the demand for a good must depend only on income and its own price and not on the prices of other goods.

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

Fred has a Cobb-Douglas utility function with exponents that sum to 1.Sally consumes the same two goods, but the two goods are perfect substitutes for her.Despite these differences, Fred and Sally have the same price offer curves.

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

A rational consumer spends her entire income.If her income doubles and prices do not change, then she will necessarily choose to consume twice as much of every good as she did before.

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

A consumer has a utility function given by U = min{x1, 2x2}.If good 2 has a price of zero, the consumer will always prefer more of good 2 to less.

Ambrose's brother Sebastian has a utility function U(x1, x2)= 60x1/21 + x2.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?

Darlene's utility function is U(x, y, z)= x 4y 8z.If her income doubles and prices remain unchanged, her demand for good y will more than double.

Wilma Q.has a utility function U(x1, x2)=x21 +1.5x1x2 + 30x2.The prices are p1 = $1 and p2 = $1.For incomes between $20 and $60, the Engel curve for good 2 is

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?

Is the following statement true or false? "If consumers spend their entire incomes, it is impossible for the income elasticity of demand for every good to be bigger than 1." Write a brief but convincing explanation of your answer.

If Charlie's utility function were X 4A XB and if apples cost 30 cents each and bananas cost 10 cents each, Charlie's budget line would be tangent to one of his indifference curves whenever

Budget Constraint-Part A

Budget Constraint-Part B

Preferences-Part A

Preferences-Part B

Utility-Part A

Utility-Part B

Choice-Part A

Choice-Part B

Demand-Part B

Revealed Preference-Part A

Revealed Preference-Part B

Slutsky Equation-Part A

Slutsky Equation-Part B

Buying and Selling-Part A

Buying and Selling-Part B

Intertemporal Choice-Part A

Intertemporal Choice-Part B

Asset Markets-Part A

Asset Markets-Part B

Uncertainty-Part A

Uncertainty-Part B

Risky Assets-Part A

Risky Assets-Part B

Consumers Surplus-Part A

Consumers Surplus-Part B

Market Demand-Part A

Market Demand-Part B

Equilibrium-Part A

Equilibrium-Part B

Auctions-Part A

Auctions-Part B

Technology-Part A

Technology-Part B

Profit Maximization-Part A

Profit Maximization-Part B

Cost Minimization-Part A

Cost Minimization-Part B

Cost Curves-Part A

Cost Curves-Part B

Firm Supply-Part A

Firm Supply-Part B

Industry Supply-Part A

Industry Supply-Part B

Monopoly-Part A

Monopoly-Part B

Monopoly Behavior-Part A

Monopoly Behavior-Part B

Factor Markets-Part A

Factor Markets-Part B

Oligopoly-Part A

Oligopoly-Part B

Game Theory-Part A

Game Theory-Part B

Game Applications-Part A

Game Applications-Part B

Behavioral Economics

Exchange-Part A

Exchange-Part B

Production-Part A

Production-Part B

Welfare-Part A

Welfare-Part B

For m > p₂, the demand functions for goods 1 and 2 are given by the equations, x₁ = m/p₂ - 1 and x₂ = p₁/p₂, where m is income and p₁ and p₂ are prices.Let the horizontal axis represent the quantity of good 1.Let p₁ = 1 and p₂ = 2.Then for m > 2, the income offer curve is

A consumer has a utility function given by U = min{x₁, 2x₂}.If good 2 has a price of zero, the consumer will always prefer more of good 2 to less.

Ambrose's brother Sebastian has a utility function U(x₁, x₂)= 60x^1/2₁ + x₂.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?

Darlene's utility function is U(x, y, z)= x ⁴y ⁸z.If her income doubles and prices remain unchanged, her demand for good y will more than double.

Wilma Q.has a utility function U(x₁, x₂)=x²₁ +1.5x₁x₂ + 30x₂.The prices are p₁ = $1 and p₂ = $1.For incomes between $20 and $60, the Engel curve for good 2 is

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?

If Charlie's utility function were X ⁴_AX_B and if apples cost 30 cents each and bananas cost 10 cents each, Charlie's budget line would be tangent to one of his indifference curves whenever