1 Which of the following claims is true at each point along

1) Which of the following claims is true at each point along a price-consumption curve? A. Utility is maximized but income is not all spent. B. All income is spent, but utility is not maximized. C. Utility is maximized, and all income is spent. D. The level of utility is constant

2) Suppose that Swapna has $100 to spend on contact lenses. For some reason, left lenses cost $1 but right lenses cost $4 and her utility function is U(L,R)=min(L,R). To maximize utility, she will buy___ left lenses and____ right lenses

3)

Alfred derives utility from consuming iced tea and lemonade. For the bundle he currently consumes, the marginal utility he receives from iced tea is 16 utils, and the marginal utility he receives from lemonade is 8 utils. Instead of consuming this bundle, Alfred should:

buy more iced tea and less lemonade.

buy more lemonade and less iced tea.

buy more iced tea and lemonade.

buy less iced tea and lemonade.

none of the above is necessarily correct

Solution

1. c. Utility is maximized, and all income is spent as point along the price consumption curve provides the optimal level of utility asit connects tangents of indifference curves and budget lines (optimal bundles).

please ask other 2 questions in the new posts as we can answer one question per post.