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Assigment Intro

This document outlines a group assignment for first-year economics students at Wachemo University, focusing on utility maximization and consumer behavior. It includes questions on determining optimal consumption bundles, explaining economic concepts, and analyzing budget lines under various scenarios. Students are instructed to show their work and avoid duplication to receive credit.

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17 views1 page

Assigment Intro

This document outlines a group assignment for first-year economics students at Wachemo University, focusing on utility maximization and consumer behavior. It includes questions on determining optimal consumption bundles, explaining economic concepts, and analyzing budget lines under various scenarios. Students are instructed to show their work and avoid duplication to receive credit.

Uploaded by

adinewlidet
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Wachemo University College of Business and Economics Department of

Economics. Introduction to Economics Group Assignment for First year


section H students. (20%)
Instructions:
Show necessary steps and put correct answer for all question.
Duplication of Assignment will make your result zero
1. Utility-maximizing consumer enjoys eating free hot dogs. Use the data from the
following table determine how many hot dogs this consumer should eat.

2. Assume the consumer having a given income of 200 birr consumes only two

commodities X and Y and his utility function is given as;


Assuming further that prices of X and Y are 5 birr and 10 birr respectively.
Determine:
A).The consumer’s optimal bundles
b). His marginal utility of income and its interpretation
3. Explain briefly the following concepts.
A) Utility
B) Indifference curve
C) Law of diminishing marginal utility
D) Budget line
E) Consumer preference
F) Marginal rate of substitution
4. What is the basic difference between cardinal and ordinal approaches of utility?
5. Elaborate the justifications for the negative slope and convexity of indifference curve.

6. Standard indifference curves cannot intersect each other. Why?

7. Does the change in income affect the slope of the budget line? Explain.

8. A person has $ 200 to spend on two goods X and Y whose respective prices are $4
and $5.

A). Draw the budget line.

B).What happens to the original budget line if the budget falls by 25%?

C).What happens to the original budget line if the price of X doubles?

D).What happens to the original budget line if the price of Y falls to $4?

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