Microecon HW 2 - Custom Scholars
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# Microecon HW 2

question

Suppose that an agent has utility function U(x, y)=x+2y. What information is necessary to calculate the agent’s optimal consumption of Good X?

price of good X, price of good Y, and income

question

An individual demand curve can be derived from the ________ curve.

price consumption curve
question

Which of the following is true regarding utility along a price-consumption curve?

-It changes only for normal goods

-It changes only if income changes.

-It changes from point to point.

-It is constant.

it changes from point to point

question

Jane has utility function U(x,y)=x^4y^5. The marginal utility of Good X is MUX(x,y)= 4x^3y^ 5 and the marginal utility of Good Y is MUY=5x^4y^4. The price of X is PX, the price of Y is PY, and Jane’s income is I. What is the expression of her consumption of Y as a function of prices and income (her optimal consumption is determined by the tangency rule)?

Qy(Px, Py, I)= (4I)/(5Py).

Qy(Px, Py, I)= (5I)/(9Py).

Qy(Px, Py, I)= (4I)/(3Py).

Qy(Px, Py, I)= (5I)/(4Py).

Qy(Px, Py, I)= (9I)/(5Py)

Qy(Px, Py, I)= (5I)/(9Py).
question

Jane has utility function U(x,y)=x4y5. The marginal utility of Good X is MUX(x,y)= 4x3y5 and the marginal utility of Good Y is MUY=5x4y4. The price of X is PX, the price of Y is PY, and Jane’s income is I. What is the function of her demand curve of Good X when I=100 and PY=5?

QX(PX)= 400/(9PY)

QX(PX)= I/9

QX(PX)= 500/(9PY)

QX(PX)=100-5PX

QX(PX)= 400/(9PX)

QX(PX)= 400/(9PX)
question

Jane has utility function U(x,y)=x4y5. The marginal utility of Good X is MUX(x,y)= 4x3y5 and the marginal utility of Good Y is MUY=5x4y4. The price of Good X is PX, the price of Y is PY, and Jane’s income is I. What is the function of her Engel curve of Good X if PX=4 and PY=5?

QX(I)= I/4

QX(I)= 500/(9PX)

QX(I)= 400/(9Px)

QX(I)= I/5

QX(I)= I/9

QX(I)= I/9
question

Jane’s Engel curve for the consumption of food shows:

Jane’s consumption of food as a function of prices, all the other constant.

Jane’s consumption of food as a function of income, all the other constant

Jane’s consumption of food as a function her consumption of the other goods.

Jane’s consumption of food as a function of income and prices.

Jane’s consumption of food as a function of the price of food, all the other constant.

Jane’s consumption of food as a function of income, all the other constant

question

The Engel curve bends backward implies that the good is a normal good at low income level and is an inferior good at a high income level.

True or False?

true
question

Suppose the demand function of Good X is QX=0.5I/PX and that of Good Y is QY=0.5I/PY. The two goods, X and Y, are:

A) independent

B) substitutes

C) complements

independent

question

Suppose the demand function of Good X is QX=I/(PX+PY) and that of Good Y is QY=I/(PX+PY). The two goods, X and Y, are:

complements

undetermined

independent

substitutes

complements
question
When the assumption "more is better" is imposed on consumer behaviors, the income effect can never be negative.
True or False?
false
question

The price elasticity of demand for gasoline is estimated by some researchers to be -0.02. Approximately, what percentage change in the price of gasoline induces an increase of 1% in its consumption?

50% decrease
question
price elasticity formula
Percentage change in quantity demanded divided by the total percentage change in price
question

Jose works for the economic research department of the local utility company in his city. He is interested in the effect of a price increase in the demand for their services. He calculates that the price elasticity for the demand is -2.3. This means:

A)Cable services are Giffen goods.

B)A unit increase in price will induce a 2.3 unit of services decrease in consumption.

C)Demand will not change if price is increased.

D)Demand will increase by 2.3% if price increases by 1%.

E)Demand will fall approximately by 2.3% if price increases by 1%

Demand will fall approximately by 2.3% if price increases by 1%.
question
consumer surplus formula

1/2 times the max price consumers are willing to pay minus the actual price times quantity demanded at said price

question
The difference between what a consumer is willing to pay for a unit of a good and what must be paid when actually buying it is called:
consumer surplus
question
A local retailer has decided to carry a well-known brand of shampoo. The marketing department tells them that the quarterly demand by an average man is: Qm = 3 - 0.25P and the quarterly demand by an average woman is: Qw = 4 - 0.5P. The market consists of 10,000 men and 10,000 women. How many bottles of shampoo can they expect to sell if they charge \$6 per bottle?
25,000
question
Suppose Good X and Good Y are perfect complements and the kinks of indifference curves fall of the line y=3x. The prices of Good X is PX =20. We also know that PY=10. The income level is denoted by I. Then the Engel curve of Good X is given by ___?
Qx(I)=I/50
question

Both Sally and Sam receive a 5% raise in a single year. Sally increases her demand for ground beef, whereas Sam decreases his demand for ground beef.

A)This is possible if ground beef is a normal good for Sally, and is an inferior good for Sam.

B)This is only possible if Sally has lower income than Sam.

C)This is impossible.

D)This is possible if ground beef is a normal good for Sally, and is an inferior good for Sam.

This is possible if ground beef is a normal good for Sally, and is an inferior good for Sam.
question
Assume that beer is a normal good. If the price of beer rises, then the substitution effect results in the person buying ________ of the good and the income effect results in the person buying ________ of the good.
less, less
question

A change in consumption of a good resulting from an increase in purchasing power, with relative prices held constant, is referred to as:

the income effect.

the substitution effect.

the total effect of a price change.

the wealth effect.

the income effect
question

Which of the following is true concerning the substitution effect of a decrease in price?

A)It will lead to an increase in consumption only for a Giffen good.

B)It will lead to an increase in consumption only for an inferior good.

C)It will lead to an increase in consumption only for a normal good.

D)It always will lead to an increase in consumption.

It always will lead to an increase in consumption.
question
Assume that rice is a Giffen good. If the price of rice falls, then the substitution effect results in the person buying _ of the good and the income effect results in the person buying __ of the good. Overall, the person will buy __ of the good.
less, less, less
question

Suppose the price elasticity of demand of movie tickets is equal to -1 throughout the curve. How do total expenditures on movie tickets vary along the demand curve?

A)Total expenditures remain the same between points along the demand curve.

B)Since the quantity is sold at lower and lower prices, total expenditures decrease as quantity demanded increases.

C)Total expenditures increase through the upper portion of the curve and then decrease at low price levels.

D)Since quantity demanded increases as price decreases, total expenditures increase.

Total expenditures remain the same between points along the demand curve.
question

Suppose price elasticity of demand of artichoke is equal to -0.5. When the price of artichokes is increases slightly, the total expenditure by consumers on artichokes will ________ and the number of artichokes sold will ________.

A)fall; fall

B)rise; fall

C)fall; rise

D)rise; rise

rise, fall
question

Denote the consumption of food by x and the consumption of all other goods by y. The demand for food as a function of prices and income is given by:

Qx(Px,Py,I)=(3I)/(4Px). What is the price elasticity for the consumption of food when income I=100, PX=3, and PY=5?

-1
question

Suppose Good X and Good Y are perfect complements and the kinks of indifference curves fall of the line y=3x. The price of Good X is denoted by PX . We also know that PY=10 and income level is I=200. Then the demand function of Good X is given by ___?

Qx(Px)=(200-10y)/Px

Qx(Px)=200/(Px+30)

Qx(Px)=200-10Px

Qx(Px)=200/(Px+10)

Qx(Px)=200/(Px+30)
question

for a normal good, when the price of the good rises, the substitution effect results in the person buying ____________ of that good.

the substitution effect results in the person buying less of that good
question
for a normal good, when the price of the good rises, real purchasing power decreases. thus, the person will buy __________ of that good
less
question
For the substitution effect, a decrease in price will ALWAYS lead to an _______________ in consumption. (for an inferior, giffen, or normal good)
for the substitution effect, a decrease in price will always lead to an increase in consumption
question

For a giffen good:

When the price of a giffin good falls, the substitution effect results in an ____________ in the consumption of that good. However, as the price of rice falls, there is an increase in real purchasing power, and because a giffin good is such an inferior good, the income effect will result in a consumer _______________ the consumption of rice.

Overall, the income effect dominates for the good to be a Giffin good, thus overall, a consumer will buy _________ of the good.

when the price of a giffin good falls, the substitution effect results in an increase in the consumption of that good. the income effect will result in a consumer decreasing the consumption of rice. overall, a consumer will buy less of the good.

question

when demand is less than 1 in value, the demand is considered _____________ and consumer's total expenditure on the product/ a firm's revenue ______________ when the price increases.

when demand is less than 1 in value, the demand is considered inelastic and consumer's total expenditure on a product/a firms revenue increases when the price increases

question

mathematically, price elasticity of demand is defined as

percentage change in quantity demanded divided by percentage change in price

question
when the demand is greater than 1 in value, demand is considered ______________ and consumers expenditure on a product/a firm's revenue _____________ when the price increases

when the demand is greater than 1 in value, demand is considered elastic and consumers expenditure on a product/ a firm's total revenue decreases when the price increases

question
when demand (Ep) is equal to -1, demand is unit elastic and consumers total expenditure on the product/ a firms total revenue does _________ change when the price increases

when demand is equal to negative 1 and is unitary elastic, consumers total expenditure on the product/ a firms total revenue does not change when the price increases

question

what is the derivative needed to compute price elasticity analytically?

derivative of the equation given, Q'(P) multiplied by P/Q

question
when demand is less than 1, it is
inelastic
question
when demand is inelastic, when price falls, the quantity demanded _____________.
increases
question
Suppose price elasticity of demand of artichoke is equal to -0.5. When the price of artichokes is increases slightly, the total expenditure by consumers on artichokes will ________ and the number of artichokes sold will ________.
rise, fall
question
Suppose the price elasticity of demand of movie tickets is equal to -1 throughout the curve. How do total expenditures on movie tickets vary along the demand curve?
total expenditures remain the same between points along the demand curve
question
the income effect
the change in consumption that results when a price increase causes real income to decline
question
change in demand resulting from a change in real purchasing power
income effect
question
negative income effect means
the consumers increased income has a negative impact on the goods consumed
question

upward sloping engel curves means that more income leads to ________ consumption.

upward sloping engel curves means that more income leads to more consumption
question
downward sloping engel curves means that more income leads to _________ consumption.
downward sloping engel curves means that more income leads to less consumption
question
Suppose an Engel curve is upward-sloping at low income level and downward-sloping at high income level. Then one can conclude that at low income level (upward-sloping portion of the Engel curve), the good is ___.
a normal good
question
the larger MRS will have a ___________ indifference curve
the larger MRS will have a steeper indifference curve
question

if indifference curves are upward sloping, this violates which assumption?

violates more is better
question
if indifferences curves intersect, this violates what 2 assumptions?
violates transitivity and more is better
question
if indifference curves are thick, this violates
more is better
question
if preferences satisfy the 3 basic assumptions of more is better, transitivity, and completeness, then the indifference curves should always be

downward sloping thin lines that never intersect each other

question
completeness
consumers can compare and rank all possible baskets
question

if good X and good Y are perfect complements and the kinks of your indifference curves follow the 45 degree line, as long as your income and the prices are positive, you will choose a market basket at a kink.

True or False?

true. if good X and good Y are perfect complements and the kinks of your indifference curves follow the 45 degree line, as long as your income and the prices are positive, you will choose a market basket at a kink.

question

True or False?

If good X and good Y are perfect substitutes, it may be optimal to consume a market basket where the MRS is not equal to the price ratio.

true. if a good X and good Y are perfect substitutes, it may be optimal to consume a market basket where the MRS is not equal to the price ratio.

question

if Good X and Good Y are perfect substitutes, and the slope of the indifference curves is always -1, then you will only consume some quantity of both goods if the prices of them are equal.

True or False?

if Good X and Good Y are perfect substitutes and the slope of the indifference curves is always -1, then you will only consume some quantity of both goods if the prices of them are equal.

question

if Good X and Good Y are perfect substitutes and the slope of the indifference curves is always -1, then you will only consume the good with the lowest price. True or false?

true. if good X and good Y are perfect substitutes and the slope of the indifference curves is always -1, then you will only consume the good with the lowest price.

question
the rule that MRS equals price ratio only works when the indifference curves are smooth and the solution is interior. this means that this rule does not work for perfect substitutes and complements. true or false?

true. The rule that MRS equals price ratio only works when the indifference curves are smooth and the solution is interior. this means that this rule does not work for perfect substitutes and complements.

question

when the numbers are of Px, Py, and I are given, set MRS equal to the slope of the price ratio.

Ex: MRS of 2x/3y= 2

true. when the numbers of Px, Py, and I are given, set MRS equal to the slope of the price ratio
1 of 58
question

Suppose that an agent has utility function U(x, y)=x+2y. What information is necessary to calculate the agent’s optimal consumption of Good X?

price of good X, price of good Y, and income

question

An individual demand curve can be derived from the ________ curve.

price consumption curve
question

Which of the following is true regarding utility along a price-consumption curve?

-It changes only for normal goods

-It changes only if income changes.

-It changes from point to point.

-It is constant.

it changes from point to point

question

Jane has utility function U(x,y)=x^4y^5. The marginal utility of Good X is MUX(x,y)= 4x^3y^ 5 and the marginal utility of Good Y is MUY=5x^4y^4. The price of X is PX, the price of Y is PY, and Jane’s income is I. What is the expression of her consumption of Y as a function of prices and income (her optimal consumption is determined by the tangency rule)?

Qy(Px, Py, I)= (4I)/(5Py).

Qy(Px, Py, I)= (5I)/(9Py).

Qy(Px, Py, I)= (4I)/(3Py).

Qy(Px, Py, I)= (5I)/(4Py).

Qy(Px, Py, I)= (9I)/(5Py)

Qy(Px, Py, I)= (5I)/(9Py).
question

Jane has utility function U(x,y)=x4y5. The marginal utility of Good X is MUX(x,y)= 4x3y5 and the marginal utility of Good Y is MUY=5x4y4. The price of X is PX, the price of Y is PY, and Jane’s income is I. What is the function of her demand curve of Good X when I=100 and PY=5?

QX(PX)= 400/(9PY)

QX(PX)= I/9

QX(PX)= 500/(9PY)

QX(PX)=100-5PX

QX(PX)= 400/(9PX)

QX(PX)= 400/(9PX)
question

Jane has utility function U(x,y)=x4y5. The marginal utility of Good X is MUX(x,y)= 4x3y5 and the marginal utility of Good Y is MUY=5x4y4. The price of Good X is PX, the price of Y is PY, and Jane’s income is I. What is the function of her Engel curve of Good X if PX=4 and PY=5?

QX(I)= I/4

QX(I)= 500/(9PX)

QX(I)= 400/(9Px)

QX(I)= I/5

QX(I)= I/9

QX(I)= I/9
question

Jane’s Engel curve for the consumption of food shows:

Jane’s consumption of food as a function of prices, all the other constant.

Jane’s consumption of food as a function of income, all the other constant

Jane’s consumption of food as a function her consumption of the other goods.

Jane’s consumption of food as a function of income and prices.

Jane’s consumption of food as a function of the price of food, all the other constant.

Jane’s consumption of food as a function of income, all the other constant

question

The Engel curve bends backward implies that the good is a normal good at low income level and is an inferior good at a high income level.

True or False?

true
question

Suppose the demand function of Good X is QX=0.5I/PX and that of Good Y is QY=0.5I/PY. The two goods, X and Y, are:

A) independent

B) substitutes

C) complements

independent

question

Suppose the demand function of Good X is QX=I/(PX+PY) and that of Good Y is QY=I/(PX+PY). The two goods, X and Y, are:

complements

undetermined

independent

substitutes

complements
question
When the assumption "more is better" is imposed on consumer behaviors, the income effect can never be negative.
True or False?
false
question

The price elasticity of demand for gasoline is estimated by some researchers to be -0.02. Approximately, what percentage change in the price of gasoline induces an increase of 1% in its consumption?

50% decrease
question
price elasticity formula
Percentage change in quantity demanded divided by the total percentage change in price
question

Jose works for the economic research department of the local utility company in his city. He is interested in the effect of a price increase in the demand for their services. He calculates that the price elasticity for the demand is -2.3. This means:

A)Cable services are Giffen goods.

B)A unit increase in price will induce a 2.3 unit of services decrease in consumption.

C)Demand will not change if price is increased.

D)Demand will increase by 2.3% if price increases by 1%.

E)Demand will fall approximately by 2.3% if price increases by 1%

Demand will fall approximately by 2.3% if price increases by 1%.
question
consumer surplus formula

1/2 times the max price consumers are willing to pay minus the actual price times quantity demanded at said price

question
The difference between what a consumer is willing to pay for a unit of a good and what must be paid when actually buying it is called:
consumer surplus
question
A local retailer has decided to carry a well-known brand of shampoo. The marketing department tells them that the quarterly demand by an average man is: Qm = 3 - 0.25P and the quarterly demand by an average woman is: Qw = 4 - 0.5P. The market consists of 10,000 men and 10,000 women. How many bottles of shampoo can they expect to sell if they charge \$6 per bottle?
25,000
question
Suppose Good X and Good Y are perfect complements and the kinks of indifference curves fall of the line y=3x. The prices of Good X is PX =20. We also know that PY=10. The income level is denoted by I. Then the Engel curve of Good X is given by ___?
Qx(I)=I/50
question

Both Sally and Sam receive a 5% raise in a single year. Sally increases her demand for ground beef, whereas Sam decreases his demand for ground beef.

A)This is possible if ground beef is a normal good for Sally, and is an inferior good for Sam.

B)This is only possible if Sally has lower income than Sam.

C)This is impossible.

D)This is possible if ground beef is a normal good for Sally, and is an inferior good for Sam.

This is possible if ground beef is a normal good for Sally, and is an inferior good for Sam.
question
Assume that beer is a normal good. If the price of beer rises, then the substitution effect results in the person buying ________ of the good and the income effect results in the person buying ________ of the good.
less, less
question

A change in consumption of a good resulting from an increase in purchasing power, with relative prices held constant, is referred to as:

the income effect.

the substitution effect.

the total effect of a price change.

the wealth effect.

the income effect
question

Which of the following is true concerning the substitution effect of a decrease in price?

A)It will lead to an increase in consumption only for a Giffen good.

B)It will lead to an increase in consumption only for an inferior good.

C)It will lead to an increase in consumption only for a normal good.

D)It always will lead to an increase in consumption.

It always will lead to an increase in consumption.
question
Assume that rice is a Giffen good. If the price of rice falls, then the substitution effect results in the person buying _ of the good and the income effect results in the person buying __ of the good. Overall, the person will buy __ of the good.
less, less, less
question

Suppose the price elasticity of demand of movie tickets is equal to -1 throughout the curve. How do total expenditures on movie tickets vary along the demand curve?

A)Total expenditures remain the same between points along the demand curve.

B)Since the quantity is sold at lower and lower prices, total expenditures decrease as quantity demanded increases.

C)Total expenditures increase through the upper portion of the curve and then decrease at low price levels.

D)Since quantity demanded increases as price decreases, total expenditures increase.

Total expenditures remain the same between points along the demand curve.
question

Suppose price elasticity of demand of artichoke is equal to -0.5. When the price of artichokes is increases slightly, the total expenditure by consumers on artichokes will ________ and the number of artichokes sold will ________.

A)fall; fall

B)rise; fall

C)fall; rise

D)rise; rise

rise, fall
question

Denote the consumption of food by x and the consumption of all other goods by y. The demand for food as a function of prices and income is given by:

Qx(Px,Py,I)=(3I)/(4Px). What is the price elasticity for the consumption of food when income I=100, PX=3, and PY=5?

-1
question

Suppose Good X and Good Y are perfect complements and the kinks of indifference curves fall of the line y=3x. The price of Good X is denoted by PX . We also know that PY=10 and income level is I=200. Then the demand function of Good X is given by ___?

Qx(Px)=(200-10y)/Px

Qx(Px)=200/(Px+30)

Qx(Px)=200-10Px

Qx(Px)=200/(Px+10)

Qx(Px)=200/(Px+30)
question

for a normal good, when the price of the good rises, the substitution effect results in the person buying ____________ of that good.

the substitution effect results in the person buying less of that good
question
for a normal good, when the price of the good rises, real purchasing power decreases. thus, the person will buy __________ of that good
less
question
For the substitution effect, a decrease in price will ALWAYS lead to an _______________ in consumption. (for an inferior, giffen, or normal good)
for the substitution effect, a decrease in price will always lead to an increase in consumption
question

For a giffen good:

When the price of a giffin good falls, the substitution effect results in an ____________ in the consumption of that good. However, as the price of rice falls, there is an increase in real purchasing power, and because a giffin good is such an inferior good, the income effect will result in a consumer _______________ the consumption of rice.

Overall, the income effect dominates for the good to be a Giffin good, thus overall, a consumer will buy _________ of the good.

when the price of a giffin good falls, the substitution effect results in an increase in the consumption of that good. the income effect will result in a consumer decreasing the consumption of rice. overall, a consumer will buy less of the good.

question

when demand is less than 1 in value, the demand is considered _____________ and consumer's total expenditure on the product/ a firm's revenue ______________ when the price increases.

when demand is less than 1 in value, the demand is considered inelastic and consumer's total expenditure on a product/a firms revenue increases when the price increases

question

mathematically, price elasticity of demand is defined as

percentage change in quantity demanded divided by percentage change in price

question
when the demand is greater than 1 in value, demand is considered ______________ and consumers expenditure on a product/a firm's revenue _____________ when the price increases

when the demand is greater than 1 in value, demand is considered elastic and consumers expenditure on a product/ a firm's total revenue decreases when the price increases

question
when demand (Ep) is equal to -1, demand is unit elastic and consumers total expenditure on the product/ a firms total revenue does _________ change when the price increases

when demand is equal to negative 1 and is unitary elastic, consumers total expenditure on the product/ a firms total revenue does not change when the price increases

question

what is the derivative needed to compute price elasticity analytically?

derivative of the equation given, Q'(P) multiplied by P/Q

question
when demand is less than 1, it is
inelastic
question
when demand is inelastic, when price falls, the quantity demanded _____________.
increases
question
Suppose price elasticity of demand of artichoke is equal to -0.5. When the price of artichokes is increases slightly, the total expenditure by consumers on artichokes will ________ and the number of artichokes sold will ________.
rise, fall
question
Suppose the price elasticity of demand of movie tickets is equal to -1 throughout the curve. How do total expenditures on movie tickets vary along the demand curve?
total expenditures remain the same between points along the demand curve
question
the income effect
the change in consumption that results when a price increase causes real income to decline
question
change in demand resulting from a change in real purchasing power
income effect
question
negative income effect means
the consumers increased income has a negative impact on the goods consumed
question

upward sloping engel curves means that more income leads to ________ consumption.

upward sloping engel curves means that more income leads to more consumption
question
downward sloping engel curves means that more income leads to _________ consumption.
downward sloping engel curves means that more income leads to less consumption
question
Suppose an Engel curve is upward-sloping at low income level and downward-sloping at high income level. Then one can conclude that at low income level (upward-sloping portion of the Engel curve), the good is ___.
a normal good
question
the larger MRS will have a ___________ indifference curve
the larger MRS will have a steeper indifference curve
question

if indifference curves are upward sloping, this violates which assumption?

violates more is better
question
if indifferences curves intersect, this violates what 2 assumptions?
violates transitivity and more is better
question
if indifference curves are thick, this violates
more is better
question
if preferences satisfy the 3 basic assumptions of more is better, transitivity, and completeness, then the indifference curves should always be

downward sloping thin lines that never intersect each other

question
completeness
consumers can compare and rank all possible baskets
question

if good X and good Y are perfect complements and the kinks of your indifference curves follow the 45 degree line, as long as your income and the prices are positive, you will choose a market basket at a kink.

True or False?

true. if good X and good Y are perfect complements and the kinks of your indifference curves follow the 45 degree line, as long as your income and the prices are positive, you will choose a market basket at a kink.

question

True or False?

If good X and good Y are perfect substitutes, it may be optimal to consume a market basket where the MRS is not equal to the price ratio.

true. if a good X and good Y are perfect substitutes, it may be optimal to consume a market basket where the MRS is not equal to the price ratio.

question

if Good X and Good Y are perfect substitutes, and the slope of the indifference curves is always -1, then you will only consume some quantity of both goods if the prices of them are equal.

True or False?

if Good X and Good Y are perfect substitutes and the slope of the indifference curves is always -1, then you will only consume some quantity of both goods if the prices of them are equal.

question

if Good X and Good Y are perfect substitutes and the slope of the indifference curves is always -1, then you will only consume the good with the lowest price. True or false?

true. if good X and good Y are perfect substitutes and the slope of the indifference curves is always -1, then you will only consume the good with the lowest price.

question
the rule that MRS equals price ratio only works when the indifference curves are smooth and the solution is interior. this means that this rule does not work for perfect substitutes and complements. true or false?

true. The rule that MRS equals price ratio only works when the indifference curves are smooth and the solution is interior. this means that this rule does not work for perfect substitutes and complements.

question

when the numbers are of Px, Py, and I are given, set MRS equal to the slope of the price ratio.

Ex: MRS of 2x/3y= 2

true. when the numbers of Px, Py, and I are given, set MRS equal to the slope of the price ratio

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

## Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.