Homework SourseQuestions Answers The consumers decision is an example of co
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Answers
The consumer’s decision is an example of constrained optimization. What does this mean?
What do we mean by a consumption bundle?
What are the four standard assumptions about consumer preferences?
Generally speaking, what does a consumer’s level of utility reflect?
What is an example of a “generic” utility function if the two goods are X and Y?
What is the marginal utility of good X? How would we typically abbreviate this variable?
In what units is utility measured?
What does it mean for a consumer to be indifferent between two consumption bundles?
What do all the points on an indifference curve have in common?
For a consumer choosing between two goods X and Y, draw two indifference curves with a typical shape.
At any consumption bundle, how does the consumer’s marginal rate of substitution (MRS) between two goods relate to the slope of the indifference curve at that point?
What do indifference curves look like if the two goods a consumer is consuming are perfect substitutes?
What do indifference curves look like if the two goods a consumer is consuming are perfect complements?
What is a bad in economics?
What’s the mathematical formula for a budget constraint with two goods, X and Y?
What does a typical budget constraint look like when it’s depicted graphically? (describe in words)
What does it mean if a consumer’s utility maximization leads to a corner solution?
What does it mean if a consumer’s utility maximization leads to an interior solution?
| Questions | Answers |
| The consumer’s decision is an example of constrained optimization. What does this mean? | |
| What do we mean by a consumption bundle? | |
| What are the four standard assumptions about consumer preferences? | |
| Generally speaking, what does a consumer’s level of utility reflect? | |
| What is an example of a “generic” utility function if the two goods are X and Y? | |
| What is the marginal utility of good X? How would we typically abbreviate this variable? | |
| In what units is utility measured? | |
| What does it mean for a consumer to be indifferent between two consumption bundles? | |
| What do all the points on an indifference curve have in common? | |
| For a consumer choosing between two goods X and Y, draw two indifference curves with a typical shape. | |
| At any consumption bundle, how does the consumer’s marginal rate of substitution (MRS) between two goods relate to the slope of the indifference curve at that point? | |
| What do indifference curves look like if the two goods a consumer is consuming are perfect substitutes? | |
| What do indifference curves look like if the two goods a consumer is consuming are perfect complements? | |
| What is a bad in economics? | |
| What’s the mathematical formula for a budget constraint with two goods, X and Y? | |
| What does a typical budget constraint look like when it’s depicted graphically? (describe in words) | |
| What does it mean if a consumer’s utility maximization leads to a corner solution? | |
| What does it mean if a consumer’s utility maximization leads to an interior solution? |
Solution
1.Monotonicity-Consumer prefers that bundle which has more of both the goods.
2.continuity-There is no lag between successive consumption.
3.Transitivity-If x is preferred to y and y is preferred to z,then x is preferred to z.
4.Completeness-Bundles are complete.
If a question has multiple sub parts like this one,then an expert answers the first four questions.
| Questions | Answers |
| 1 | It means that the consumer optimizes his behavior with respect to this budget constraint and utility function. |
| 2 | A consumption bundle shows specific set of goods and services to be consumed. |
| 3 | 1.Monotonicity-Consumer prefers that bundle which has more of both the goods. 2.continuity-There is no lag between successive consumption. 3.Transitivity-If x is preferred to y and y is preferred to z,then x is preferred to z. 4.Completeness-Bundles are complete. |
| 4. | Consumer\'s utility function reflects individual\'s preferences for goods and services.It also shows the behavior of goods-whether they are substitute or complements. |
