, Started on Wednesday, 28 August 2024, 12:44 PM
State Finished
Completed on Wednesday, 28 August 2024, 1:17 PM
Time taken 33 mins 9 secs
Marks 10.00/11.00
Grade 98.91 out of 100.00
Question 1 I confirm
Complete that this assessment will be my own individual work;
Not graded
that I will not communicate with anyone else in any way during the completion of this assessment;
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question that I will not cheat in any way in completing and submitting this assessment.
I confirm.
I do not confirm.
Question 2 Sipho consumes two goods A and B. PA and PB, MUA and MUB and TUA and TUB represent prices, marginal utility and total utility of A and B,
Complete respectively. When will Sipho achieve consumer equilibrium?
Mark 0.00 out of
1.00
TUA/PA = TUB/PB
Flag
question the total utilities of the two goods are equal
MUA/MUB = PA/PB
when the ratio between PA and PB differs from the ratio between MUA and MUB
Sipho will achieve consumer equilibrium when the ratio of the marginal utilities of goods A and B (MUA/MUB) is equal to the ratio of their
prices (PA/PB).
Normally consumer equilibrium is expressed in terms of weighted marginal utilities, that is where
However, if we re-arrange the expression we get
This tells us the consumer’s (subjective) valuation of the relative importance of the two goods is the same as the market’s (objective)valuation
as expressed in the price ratio.
Question 3 Suppose Lerato is purchasing Coke and pretzels in quantities such that she is achieving consumer equilibrium. Then the price of Coke
Complete decreases. Lerato will likely her consumption of Coke and the marginal utility of Coke will while the total utility from Coke will
Mark 1.00 out of .
1.00
Lerato is in equilibrium when the weighted marginal utilities are the same for both goods. For example:
Let’s assume the following values for Coke and pretzels respectively:
Coke Pretzels
Marginal utility of last unit 80 60
consumed
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