Suppose a consumer's preferences over commodities 1 and 2 can be represented by the utility function( 1 , 2 ) min 1 , 2 , where 1 , 2 0 The prices of the two commodities are 1 and 2 respectively and the consumer's income is 150 Which of the following is true Max score 4 Neg score 0 At the optimum, the consumer should consume 50 units of commodity 1 and 50 units ofcommodity 2 At the optimum, the consumer should consume 150 units of commodity 1 and none ofcommodity 2 At the optimum, the consumer should consume 75 units of commodity 2 and none ofcommodity 1 At the optimum, the consumer should spend equal amounts on the two commodities

The Answer is in the image, click to view ...

Question: Suppose a consumer's preferences over commodities 1 and 2 can be represented by the utility function( 1 , 2 ) = min{ 1 , 2

Suppose a consumer's preferences over commodities 1 and 2 can be represented by the utility function(₁,₂) = min{₁,₂}, where₁,₂ 0. The prices of the two commodities are 1 and 2 respectively and the consumer's income is 150.

Which of the following is true?

Max. score: 4; Neg. score: 0

At the optimum, the consumer should consume 50 units of commodity 1 and 50 units ofcommodity 2.
At the optimum, the consumer should consume 150 units of commodity 1 and none ofcommodity 2.
At the optimum, the consumer should consume 75 units of commodity 2 and none ofcommodity 1.
At the optimum, the consumer should spend equal amounts on the two commodities.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Suppose a consumer's preferences over commodities 1 and 2 can be represented by the utility function( 1 , 2 ) = min{ 1 , 2 }, where 1 , 2 0. The prices of the two commodities are 1 and 2 respectively...

Pooh's preferences over goods 1 and 2 can be represented by the utility function u(x1,x2) = x1 + x2. and Pooh has an income of $120 to spend each month. 1). Pooh originally faced prices p1 = 2 and p2...

Pooh's preferences over goods 1 and 2 can be represented by the utility function u(x1,x2) = x1 x2. and Pooh has an income of $120 to spend each month. 1). Pooh originally faced prices p1 = 2 and p2 =...

Compensating Variation and Equivalent Variation are not necessarily the same amount. The reason for the difference is that money before a price change and money aer a price change mean different...

Hi, I'm seeking the answer to Q4, assignment question, full answer needed urgently... would be appreciated! thanks Tutorial Question 3 Consider a two-person (A and B], two-commodity (1 and 2) pure...

Question 4 (60 points total) Matt's preferences over commodities x1 and x2 can be represented by the utility function, (1, 2) = x1 + 42. Matt has $12 in income, p1 is $2 and p2 is $4. A. (10 points)...

Hi, I'm struggling with this question. Full answer urgently needed for a task! Tutorial Question 3 Consider a two-person (A and B], two-commodity (1 and 2) pure exchange economy. Suppose that...

What is ( the interface between the different phases) in reservoir

Give some examples of public relations campaigns run by state or local governments?

What is the definition of analytical procedures?a . Describe three major types of comparisons the auditor might make in performing analyticalprocedures.b . At what stages of the audit are analytical...

The Council of the Indies was charge of colonial administration in Spanish America. True False

Assume that you have just been hired as the store manager for a high-volume discount store in Winnipeg. Other stores in Alberta are owned by the same person. The previous manager recently hired 10...

Since pay for performance is an important factor governing compensation increases, managers must be able to defend the compensation recommendations they make for their employees. Merit raises granted...

How do you think the other employees learned about Bobs salary? What could have been done to prevent this? Ravi Singh sat at his desk and wondered what his next steps should be. As the manager of the...