The ______ bundle of goods and services occurs where the indifference curve is tangent to the budget line.Multiple choice question.utility-maximizingprofit maximizingmost affordablecost minimizing

Which of the following scenarios is consistent with a consumer's optimal choice?The budget line intersects the indifference curve at multiple pointsThe budget line is tangent to the indifference curveThe budget line intersects the indifference curve at one pointThe budget line is above the indifference curve

Below is the utility preferences for an individual: Movies Marginal Utility of Movies Marginal Utility of Movies per Dollar (PM=$10)PM=$10Books Marginal Utility of Books Marginal Utility of Books per Dollar (PB=$5)PB=$51 100 10 1 45 92 70 7 2 40 83 40 4 3 30 64 10 1 4 15 3 What is the utility-maximizing consumption bundle if the individual has $25 to spend?Multiple choice question.1 movie and 3 books5 books2 movies and 3 books2 movies and 1 book

A consumer with a limited income will maximize utility when each good is purchased in amounts such that theMultiple Choicetotal utility is the same for each good in a bundle.marginal utility of each good in a bundle is maximized.marginal utility per dollar spent on each of the final choices in a bundle is equal.marginal utility per dollar spent on each of the final choices in a bundle is maximized for each good.

An indifference curve shows,Group of answer choicesexpenditure bundles that the consumer can afford given the prices.consumption bundles that give the consumer the same level of satisfactionconsumption bundles that give the consumer different level of satisfaction.expenditure bundles that the consumer is least willing to make.

Question 1Joe’s preferences are described by the following utility functionU (x, y) = xαyβwith α > 0 and β > 0.(a) Let I denote Joe’s income, and px and py denote the prices of good x and y, respectively.Find Joe’s optimal consumption bundle.(b) Now, suppose α = 6, β = 2, px = 2, py = 3 and I = 24. Evaluate Joe’s optimal choice.(c) Suppose px increases by 50%. What is Joe’s new optimal consumption bundle? Calculateboth the Income Effect and the Substitution Effect.Question 2Collin likes milkshakes (m) and sushi (s). His preferenes over these two goods are representedby the following utility functionU (m, s) = 2√m + s.Collin’s income is $100 and the price of sushi is $10.(a) Suppose the price of milkshakes is initially $2. Find Collin’s optimal consumption bundle.(b) Draw a graph (with m on the horizontal axis and s on the vertical axis) to show Collin’sbudget line, his indifference curve, and his optimal bundle.(c) Suppose the price of milkshakes increases to $5. How many units of milkshake and sushiare in Collin’s new optimal consumption bundle?(d) Draw a new graph for the new optimal bundle (or add it to the graph you have drawnabove in part (b)).(e) What are the substitution and income effects that result from the increase in the price ofmilkshake? Calculate these effects algebraically and illustrate them on a new graph.(f) What is the amount of additional income needed for Collin to achieve the initial level ofutility? What is the amount of additional income needed for Collin to purchase the initialbundle? What is the ideal cost of living index?