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Q. 1. Lee has the utility function U(x1, x2) = (x1+1)(x2+4) The price of x2 is $1. Lee spends all his income to buy 6 units of x2 also no x1. Illustrate what is the minimum level of the price of x1 compatible with these facts? Explicate your answer.
2. Sheila budgets $9 per week for her morning coffee with milk. She likes it only if it is prepared with 4 parts of coffee and 1 part milk. Coffee costs $1 per ounce and milk costs $0.5 per ounce. How much coffee and how much milk will Sheila buy per week? How would your answer change if the price of coffee rises to $2 per week? Illustrate your answers graphically.
3. Max has the utility function U(x1,x2) = x1(x2+2)
(a) If the price of x1 is 2, the price of x2 is 1, and Max's income is 10, how much x1 will Max consume? How much x2?
(b) Suppose that Max's income level is 10. Derive Max's demand function for x1. Is x2 a substitute of x1 or a complement of it? (Be sure to show your calculations.)
Distinguish between the resources market and the product market in the circular flow model.
When the bookstore announces a 20% price increase in new texts and a 10% increase in used texts for next year, Guojun's father offers him $80 extra.
The impossible trinity refers to the idea that a country can simultaneously pursue only two of the three following policies: free international-capital flows, monetary policy for domestic stabilization, and a fixed exchange rate.
Assuming that your opportunity cost funds interest rate is 5% which refrigerator would you buy and why.
Trade restrictions will stop foreign imports which will increase American employment and protect American jobs
What are the annual accounting costs for the firm described above? What are the annual explicit costs for the firm described above?
The payoff matrix of economic profits above displays the possible outcomes for Bob and Jane who are involved in game of whether or not to advertise.
Which of these same curve would shift as a result of the per-burger tax. Curves average fixed cost,marginal cost would shift as a result.
They could each decide to work a few extra hours on Saturday and earn more income. But they choose to play tennis or to relax around the house.
School tries to discourage Twinkie consumption by raising the price to $.40, by how much will Matt's mother have to increase his lunch allowance to provide him.
Clarify why you chose this agency as well as what the impacts to you have been. Do you consider the impact to be positive or negative.
What is a one invention that had good impact on the international economy and why. What were the impacts of this invention were impact good or bad.
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