# Week 4 Tutorial Questions - Tutorial Questions for Week 4...

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Tutorial Questions for Week 4 beginning 21stMarch1.Each week Bill, Mary and Jane select the quantity of two goods X and Y that they willconsume in order to maximise their respective utilities. They each spend their entireweekly income on these two goods.a.Suppose you are given the following information about the choices that Billmakes over a three-week period:XYPxPyWeek 110202Week 27193Week 38313Did Bill’s Utility increase or decrease between weeks 1 and 2 and between weeks 1and 3?Explain using a graph. Identify the income and substitution effects that resultfrom a change in the price of good X (Hint: which weeks should you be using?)Draw the demand curve(s) for X using the above data. Draw the PCC and the ICC.b.Now consider the following information about the choices that Mary makes overI140140155
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Term
Spring
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English language films, Harshad number, ICC, substitution effects

Unformatted text preview: a three-week period: X Y P x P y I Week 1 10 20 2 1 40 Week 2 6 14 2 2 40 Week 3 20 10 2 2 60 Did Mary’s Utility increase or decrease between weeks 1 and 3? Identify the income and substitution effects that result from a change in the price of good Y. Draw the demand curve(s) for X using the above data. Draw the PCC and the ICC. Explain using a graph. Draw the PCC and the ICC. c. Finally, examine the following information about Jane’s choices: X Y P x P y I Week 1 12 24 2 1 48 Week 2 16 32 1 1 48 Week 3 12 24 1 1 36 Draw a budget line-indifference curve graph that illustrates Jane’s three chosen bundles. What can you say about Jane’s preferences in this case? Identify the income and substitution effects that result from a change in the price of good X. Draw the PCC and the ICC....
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