AECO 300 Assignment 1

Class #: 5727

Instructor: Mingda Zhang

Due on Feb 18th Tuesday at the beginning of class

1. Draw the graph of the indifference curve maps for each scenarios. Put good X on x-axis

and good Y on Y-axis. Draw 3 indifference curves and labeled 1, 2 , and 3 , from the

highest to the lowest utility level. ( You don’t need specific numbers here, refer to “four

particular preferences” in the slides)

a. Good X is economic bad. For good Y, more is better.

b. Both of goods X and Y are economic bad.

c. Good X is useless good and good Y is economic bad.

2. Draw the graph of an indifference curve map for the utility function ( , ) = 2 .

Put good X on x-axis and good Y on Y-axis. Draw at least 3 indifference curves and label

the utility level for each indifference curve. Explain why or why not do the indifference

curves cross each other on the map.

3. Textbook page 77 Problem 2.3.

4. Textbook Page 77 problem 2.5.

5. ( , ) = 0.7 0.3 ,

= 0.7 −0.3 0.3

= 7 = 6

= 0.3 0.7 −0.7

= 84

(a) Calculate and simplify the expression of the marginal rate of substitution .

Does this rate diminish as x increases and y decreases?

(b) Write the budget constraint.

(c) What is the consumption bundle to maximize the utility level? What is the maximum

utility level?

6. Good X and good Y are complements. U(X, Y) = min (3X, 5Y). Price of X is $6 and

price of Y is $5. The total income is $90.

(a) Write the consumption ratio of good X and good Y.

(b) Write the budget constraint.

(c) What is the consumption bundle to maximize the utility level? What is the maximum

utility level?

7. (a) Assume good X is normal. Plot a graph to illustrate the income and substitution

effects of an increase in PX, holding PY and I constant.

(b) Now suppose X is a Giffen good. Plot a graph to illustrate the income and substitution

effects of an increase in PX, holding PY and I constant.

8. Textbook page 122 Problem 3.8.

9. Consider a linear demand curve, Q = 120 – 4P.

a) What is the price elasticity of demand at P = 20?

b) At what price is demand unit-elastic (i.e. elasticity = –1)?

Purchase answer to see full

attachment

#### Why Choose Us

- 100% non-plagiarized Papers
- 24/7 /365 Service Available
- Affordable Prices
- Any Paper, Urgency, and Subject
- Will complete your papers in 6 hours
- On-time Delivery
- Money-back and Privacy guarantees
- Unlimited Amendments upon request
- Satisfaction guarantee

#### How it Works

- Click on the “Place Order” tab at the top menu or “Order Now” icon at the bottom and a new page will appear with an order form to be filled.
- Fill in your paper’s requirements in the "
**PAPER DETAILS**" section. - Fill in your paper’s academic level, deadline, and the required number of pages from the drop-down menus.
- Click “
**CREATE ACCOUNT & SIGN IN**” to enter your registration details and get an account with us for record-keeping and then, click on “PROCEED TO CHECKOUT” at the bottom of the page. - From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it.