Mr Raheem Temitope
Practice work 6
Class work:
1. Given:
Consumer’s income 100 Lt, price of good A is 2 Lt, price of good B is 4 Lt.
Find:
a) Calculate consumer optimal choice, find equilibrium point and show in a graph, if it is known that consumer uses 25 units of good A.
b) Suppose, that consumer's incomes has been increased to 160 Lt. Calculate new consumer budget line, find new equilibrium point and show in a graph, if consumer evaluates good A as a inferior product. c) Draw income – consumption curve.
d) Draw Engel curve for good A.
2. Total utility function – TU = QA*QB
a) Calculate consumer optimal choice, find equilibrium point and show in a graph, if it is known that PA = 20 EUR, PB = 10 EUR, M = 200 EUR
b) Suppose, that price of good A has been increased to 30 EUR. Calculate new consumer optimal choice, find new equilibrium point and show in a graph. Good A is a good quality product.
c) Draw demand curve for good A.
3. It is known that, consumer will buy set of good A and other goods. Expenditures of other goods is given as Mi. Price of good A – PA = 20 USD, Consumers income – M = 200 USD. Total utility function – TU = QA x Mi.
a) Calculate consumer optimal choice, find equilibrium point and show in a graph.
b) Suppose, that price of good A has been decreased to 10 USD. Calculate new consumer optimal choice, find new equilibrium point and show in a graph, if consumer evaluates good A as a good quality product.
c) Draw demand curve for good A.
Home work:
1. Consumer’s income 200 Lt, price of good A 10 Lt, price of good B 10 Lt.
Total utility function – TU=QA*QB
Find:
a) Calculate consumer optimal choice, find equilibrium point and show in a graph, if it is known that consumer buys 10 units of good A.
b) Suppose, that consumer's income has been increased to 400 Lt. Calculate new consumer optimal choice, find new equilibrium point and show in a graph.
c) Draw income – consumption curve, define goods (inferior, normal goods).
d) Draw Engel
Class work:
1. Given:
Consumer’s income 100 Lt, price of good A is 2 Lt, price of good B is 4 Lt.
Find:
a) Calculate consumer optimal choice, find equilibrium point and show in a graph, if it is known that consumer uses 25 units of good A.
b) Suppose, that consumer's incomes has been increased to 160 Lt. Calculate new consumer budget line, find new equilibrium point and show in a graph, if consumer evaluates good A as a inferior product. c) Draw income – consumption curve.
d) Draw Engel curve for good A.
2. Total utility function – TU = QA*QB
a) Calculate consumer optimal choice, find equilibrium point and show in a graph, if it is known that PA = 20 EUR, PB = 10 EUR, M = 200 EUR
b) Suppose, that price of good A has been increased to 30 EUR. Calculate new consumer optimal choice, find new equilibrium point and show in a graph. Good A is a good quality product.
c) Draw demand curve for good A.
3. It is known that, consumer will buy set of good A and other goods. Expenditures of other goods is given as Mi. Price of good A – PA = 20 USD, Consumers income – M = 200 USD. Total utility function – TU = QA x Mi.
a) Calculate consumer optimal choice, find equilibrium point and show in a graph.
b) Suppose, that price of good A has been decreased to 10 USD. Calculate new consumer optimal choice, find new equilibrium point and show in a graph, if consumer evaluates good A as a good quality product.
c) Draw demand curve for good A.
Home work:
1. Consumer’s income 200 Lt, price of good A 10 Lt, price of good B 10 Lt.
Total utility function – TU=QA*QB
Find:
a) Calculate consumer optimal choice, find equilibrium point and show in a graph, if it is known that consumer buys 10 units of good A.
b) Suppose, that consumer's income has been increased to 400 Lt. Calculate new consumer optimal choice, find new equilibrium point and show in a graph.
c) Draw income – consumption curve, define goods (inferior, normal goods).
d) Draw Engel