question archive 1) A consumer who can only consume two goods has a preference relation over the bundles that are "smooth" and is such that, the marginal rate of substitution of good 2 for good 1 at a bundle (91,92) is: 1 MRS2,1(41,42) 'q? Is the assumption of diminishing marginal rate of substitution satisfied? • What is the marginal rate of substitution of good 1 for good 2 (as a func- tion of (41, 42))? • What is the marginal rate of substitution of good 2 for good 1 at the bundle (4,9)?
1) A consumer who can only consume two goods has a preference relation over the bundles that are "smooth" and is such that, the marginal rate of substitution of good 2 for good 1 at a bundle (91,92) is: 1 MRS2,1(41,42) 'q? Is the assumption of diminishing marginal rate of substitution satisfied? • What is the marginal rate of substitution of good 1 for good 2 (as a func- tion of (41, 42))? • What is the marginal rate of substitution of good 2 for good 1 at the bundle (4,9)?
Subject:EconomicsPrice: Bought3
1) A consumer who can only consume two goods has a preference relation over the bundles that are "smooth" and is such that, the marginal rate of substitution of good 2 for good 1 at a bundle (91,92) is: 1 MRS2,1(41,42) 'q? Is the assumption of diminishing marginal rate of substitution satisfied? • What is the marginal rate of substitution of good 1 for good 2 (as a func- tion of (41, 42))? • What is the marginal rate of substitution of good 2 for good 1 at the bundle (4,9)? . By spending all his money the consumer can consume the bundle (4,9). Given that the consumer is endowed with the bundle (4,9), if he gives up 0.1 units of good 1, approximately, how much good 2 should he receive so that he is indifferent between his initial bundle (4,9) and the final bundle which has 4 -0.1 = 3.9 units of good 1? Now assume that, rather than giving up 0.1 units of good 1, he gives up 0.1 units of good 2. How much good 1 should he receive in order to be indifferent between his initial bun- dle and final bundle? • The price of good 1 is 4 TL/unit and the price of good 2 is 2TL/unit. Given these prices, if the consumer decides to consume 0.1 units less of good 1 how much more good 2 can the consumer buy assuming that be- fore and after the exchange he spends all his income)? What if he decides to consume 0.1 units less of good 2, how much more good I can he buy? • Assume that by buying the bundle (4, 9) the consumer spends all his money. If the price of good 1 is 4 TL/unit and the price of good 2 is 2 TL/units, can the bundle (4,9) be an optimal bundle? 1) A consumer who can only consume two goods has a preference relation over the bundles that are "smooth" and is such that, the marginal rate of substitution of good 2 for good 1 at a bundle (91,92) is: 1 MRS2,1(41,42) 'q? Is the assumption of diminishing marginal rate of substitution satisfied? • What is the marginal rate of substitution of good 1 for good 2 (as a func- tion of (41, 42))? • What is the marginal rate of substitution of good 2 for good 1 at the bundle (4,9)? . By spending all his money the consumer can consume the bundle (4,9). Given that the consumer is endowed with the bundle (4,9), if he gives up 0.1 units of good 1, approximately, how much good 2 should he receive so that he is indifferent between his initial bundle (4,9) and the final bundle which has 4 -0.1 = 3.9 units of good 1? Now assume that, rather than giving up 0.1 units of good 1, he gives up 0.1 units of good 2. How much good 1 should he receive in order to be indifferent between his initial bun- dle and final bundle? • The price of good 1 is 4 TL/unit and the price of good 2 is 2TL/unit. Given these prices, if the consumer decides to consume 0.1 units less of good 1 how much more good 2 can the consumer buy assuming that be- fore and after the exchange he spends all his income)? What if he decides to consume 0.1 units less of good 2, how much more good I can he buy? • Assume that by buying the bundle (4, 9) the consumer spends all his money. If the price of good 1 is 4 TL/unit and the price of good 2 is 2 TL/units, can the bundle (4,9) be an optimal bundle?
