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Microeconomic- Assignment

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Added on  2020-02-24

Microeconomic- Assignment

   Added on 2020-02-24

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Running head: MICROECONOMIC ASSIGNMENT Microeconomic AssignmentName of the StudentName of the UniversityAuthor Note
Microeconomic- Assignment_1
1MICROECONOMIC ASSIGNMENTTable of ContentsAnswer 1:.........................................................................................................................................2Answer 2:.........................................................................................................................................2Answer 3:.........................................................................................................................................3Answer 4:.........................................................................................................................................3Answer 5:.........................................................................................................................................4Answer 6:.........................................................................................................................................4Answer 7:.........................................................................................................................................7References:......................................................................................................................................8
Microeconomic- Assignment_2
2MICROECONOMIC ASSIGNMENTAnswer 1: According to the problem, Sally’s income is I = $200 and the price of one cup of coffee is$4 and that of one liter of milk is $1. Therefore, if Sally buys a commodity basket consisting of 25 cups of coffee and 50 litresof milk, then the amount of money spent on the commodity basket by Sally is: M = 25*($4) + 50*($1) = $100 + $50 = $150 Therefore, the amount of money spent on this basket is $150, which is less than $200.This implies that Sally is not spending the entire income on this commodity basket. Acommodity basket is considered to be optimal if it fully utilizes the income of the concernedindividual (Baumol and Blinder 2015). This shows that the commodity basket is not optimal. Answer 2: The marginal rate of substitution of X for Y can be express as the amount of Y for whichone unit of X can be exchanged (Varian 2014): MRSXY = MUX/MUY = 20/√xTherefore, MRSXY = 20/√x.
Microeconomic- Assignment_3

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