Oct 02, 2017 term paper 2

# (18 POINTS) FOR EACH OF THE FOLLOWING SITUATIONS, USE A GRAPH TO INDICATE THE GIVEN BUNDLE AND

This paper concentrates on the primary theme of (18 POINTS) FOR EACH OF THE FOLLOWING SITUATIONS, USE A GRAPH TO INDICATE THE GIVEN BUNDLE AND in which you have to explain and evaluate its intricate aspects in detail. In addition to this, this paper has been reviewed and purchased by most of the students hence; it has been rated 4.8 points on the scale of 5 points. Besides, the price of this paper starts from £ 40. For more details and full access to the paper, please refer to the site.

1. (18 points) For each of the following situations, use a graph to indicate the given bundle and accurately draw the indifference curve that goes through that bundle. Be sure to label you graph carefully and accurately. In all cases put the amount of good X on the horizontal axis, and the amount of good Y on the vertical axis.

a) The consumers utility function is given by U(X,Y) = X2*Y, and the given bundle is X = 2 and Y = 4.

b) The consumers utility function is given by U(X,Y) = MIN(X, 4Y), and the given bundle is X = 2 and Y = 1.

c) The consumers utility function is given by U(X,Y) = 4X + 2Y and the given bundle is X = 2 and Y = 6.

2) (18 points) For each of the following situations, draw the consumer’s budget constraint, indicate the optimal bundle on the graph, and accurately draw the indifference curve that runs through the consumer’s optimal bundle. Be sure to carefully label your graph.

a) U(X,Y) = XY2. The consumer has \$24 to spend and the prices of the goods are PX = \$2 and PY = \$4. Note that the MUX = Y2and the MUY = 2XY.

b) U(X,Y) = MIN(4X,Y). The consumer has \$24 to spend and the prices of the goods are PX = \$2 and PY = \$1.

c) U(X,Y) = 3X + Y. The consumer has \$20 to spend and the prices of the goods are PX = \$4 and PY = \$2.

3. (14 points) Suppose that Lynn enjoys coconut oil in her coffee. She has very particular preferences, and she must have exactly two spoonfuls of coconut oil for each cup of coffee. Let C be the number of cups of coffee, and O be the number of spoonfuls of coconut oil. Also, let PC be the price of a cup of coffee. Suppose Lynn has \$12 to spend on coffee and coconut oil. Also, the price of coconut oil is \$.50 per spoonful.

a) Graph Lynn’s Price Consumption Curve for prices, PC = \$1, PC = \$2, and PC = \$3. Please put the number of cups of coffee on the horizontal axis, and the number of spoonfuls of coconut oil on the vertical axis. Be sure to label your graph carefully and accurately.

b) Graph Lynn’s demand curve for coffee. You may assume that both coconut oil and coffee are continuous variables so she can consume any amount of coffee and coconut oil that she could afford. Be sure to label your graph carefully and accurately.

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