Reference no: EM132078424

Economics

1.  Suppose a consumer views two goods, X and Y, as perfect complements.  Her utility function is given by U = MIN [2X, Y].  Sketch the graph of the consumers indifference curve that goes through the bundle X = 7 and Y = 8.  Put the amount of Y on the vertical axis, and the amount of X on the horizontal axis.  Which of the three assumptions that we made about consumer preferences is violated in this case?

2.  Suppose a consumer has $250 to spend on two goods, Good X and Good Y.  The price of Good X is given by P_X = $10.  The price of Good Y is given by P_Y = $25.  Graph the consumer's budget constraint.  Please put the quantity of Good X on the horizontal axis, and the quantity of Good Y on the vertical axis.  Be sure to label your graph carefully and accurately. What is the slope of the budget constraint?

3.  Suppose a consumer's preferences can be represented by the utility function U(X,Y) = XY².  In the table below, identify 4 points on the consumer's indifference curve where U = 100.

4.  Suppose a consumer's preferences can be represented by the utility function U(X,Y) = Min (2X,Y).  Also, suppose the consumer has $300 to spend and the price of Good X is PX = $2 and the price of Good Y is PY = $5.  If the consumer maximizes their utility subject to their budget constraint, how much of Good X and how much of Good Y will the consumer purchase?

X* =

Y* =

5.  Suppose a consumer's preferences can be represented by the utility function U(X,Y) = X*Y.  Also, suppose the consumer has $320 to spend and the price of Good X is P_X = $2 and the price of Good Y is P_Y = $4.  If the consumer maximizes their utility subject to their budget constraint, how much of Good X and how much of Good Y will the consumer purchase?

X* =

Y* =