Julia has strictly convex preferences and she allocates all of her income to the purchase of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Julia has strictly convex preferences and she allocates all of her income to the purchase of good X and good Y. At her current income of $3000 per month, with price of X being $20 per unit and price of Y being $35 per unit, Julia chooses to allocate her income equally between the two goods. What quantity of X does she purchase? Show your working. What quantity of Y does she purchase? Show your working. Part (c) Represent her optimal bundle on a diagram by employing all the relevant tools such as her indifference curve and her budget constraint while keeping good X on the horizontal axis. Briefly explain your work. Suppose that price of good Y falls and at the same time Julia's income also changes in a way that she is exactly as well off after these changes as she was in part (b). Do further work on your diagram for part (b) to show an appropriate position of Julia's new budget constraint which is consistent with this observation and also show an appropriate location for her new optimal bundle. Explain your work. Will an income effect be induced due to these changes? Explain your stance. Julia has strictly convex preferences and she allocates all of her income to the purchase of good X and good Y. At her current income of $3000 per month, with price of X being $20 per unit and price of Y being $35 per unit, Julia chooses to allocate her income equally between the two goods. What quantity of X does she purchase? Show your working. What quantity of Y does she purchase? Show your working. Part (c) Represent her optimal bundle on a diagram by employing all the relevant tools such as her indifference curve and her budget constraint while keeping good X on the horizontal axis. Briefly explain your work. Suppose that price of good Y falls and at the same time Julia's income also changes in a way that she is exactly as well off after these changes as she was in part (b). Do further work on your diagram for part (b) to show an appropriate position of Julia's new budget constraint which is consistent with this observation and also show an appropriate location for her new optimal bundle. Explain your work. Will an income effect be induced due to these changes? Explain your stance.
Expert Answer:
Answer rating: 100% (QA)
answer Equilibrium Point The point where the budget line intersects the indifference curve is Julias optimal consumption bundle This is the point where she gets the most satisfaction from her spending ... View the full answer
Related Book For
Posted Date:
Students also viewed these finance questions
-
CANMNMM January of this year. (a) Each item will be held in a record. Describe all the data structures that must refer to these records to implement the required functionality. Describe all the...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Suppose you observe the following exchange rates: 1 = $1.50; 120 = $1.00. Calculate the euro-yuan exchange rate. Group of answer choices a. 80 = 1.00 b. 1 = 2.50 c. 133.33 = 1.00 d. 1.00 = 180
-
Your discussion with a client has turned to the measurement of investment performance, particularly with respect to international portfolios. a. Assume that the data in this table for Manager A and...
-
On June 30, Year 3, Walton Company's total current assets were $500,500 and its total current liabilities were $279,500. On July 1, Year 3, Walton issued a short-term note to a bank for $41,800 cash....
-
Sample height averages (in centimeters) for 10 males and 10 females are listed. Find the coefficient of variation for each of the two data sets. Then compare the results. Males 167 165 160 181 190...
-
Alternative denominator-level capacity concepts effect on operating income. Lucky Lager has just purchased the Austin Brewery. The brewery is two years old and uses absorption costing. It will sell...
-
A $980m hedge fund charges fees of 1.5-20 and has 0.22% in other annual expenses. LPs provide $945m of the initial capital with the GP providing the rest. The GP takes the management fees out of the...
-
A local canoe manufacturer analyses their business over the past year. They determine that if they manufacture and sell x canoes, their manufacturing costs can be modeled by the equation: C'(x) =...
-
Two metallic spheres A and B are placed on nonconducting stands. Sphere A carries a positive charge, and sphere B is electrically neutral. The two spheres are connected to each other via a wire, and...
-
In the first quarter of the year 2015/2016, City Steels total revenues decreased by 35 per cent compared with the previous year. Adverse economic conditions caused the Groups products to decrease...
-
Apple Inc. is well known for developing innovative products like the iPhone, iPad and iPod. Such devices are manufactured with complex electronic components and incur substantial design and...
-
Most developed economies have well-developed road and highway networks. From time to time new highways are built to relieve congested cities, but by and large most developed countries are not...
-
Allan Stratton is a cost management consultant with over 35 years of experience who shares the benefit of his experience providing tools and resources via the internet. In one of his articles he...
-
1. How do the practices described above relate to operations and supply chain strategy and process design and analysis? 2. Describe the main challenges of running a food manufacturing plant. How are...
-
We all experience emotions, but some people disguise their true feelings better than others. Do you think this is a helpful or harmful thing to do? Under what conditions do you think it would be most...
-
A football is thrown on a long pass. Compared to the balls initial vertical velocity, the vertical component of its velocity at the highest point is (a) greater, (b) less, (c) the same.
-
Which one of the following cannot be a true statement about an object: (a) It has zero velocity and a nonzero acceleration; (b) it has velocity in the x-direction and acceleration in the y-direction;...
-
Two linear vectors of magnitudes 3 and 4 are added. The magnitude of the resultant vector is (a) 1, (b) 7, (c) between 1 and
Study smarter with the SolutionInn App