ZuoTi.Pro
Question

A consumer has preferences represented by the utility function u(x, y) -xlyi. (This means that a. What is the marginal rate of substitution? b. Suppose that the price of good x is 2, and the price of good y is 1. The consumers income is 20. What is the optimal quantity of x and y the consumer will choose? c. Suppose the price of good x decreases to 1. The price of good y and the consumers income are unchanged. How much will the consumer increase his consumption of x after the price change? d. Based on your calculations in part b and c, what is the own price elasticity of demand for good x?

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

2 2 2 2Px 202) 20 2 0)(I-25 5

0 0
Add a comment
Know the answer?
Add Answer to:
A consumer has preferences represented by the utility function u(x, y) -xlyi. (This means that a....
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Question 2 Question 2 (15 pts) A consumer has preferences represented by the utility function u(x,y)...

    Question 2 Question 2 (15 pts) A consumer has preferences represented by the utility function u(x,y) -xlyi. (This means that a. What is the marginal rate of substitution? b. Suppose that the price of good x is 2, and the price of good y is 1. The consumer's income wWhat is the optimal quantity is 20. What is the optimal quantity of x and y the consumer will choose? c. Suppose the price of good x decreases to 1. The...

  • Question 2 (15 pts) A consumer has preferences represented by the utility function ufa,y)ty. (This means...

    Question 2 (15 pts) A consumer has preferences represented by the utility function ufa,y)ty. (This means that Muy and Muy ly 1) a. What is the marginal rate of substitution? b. Suppose that the price of good x is 2, and the price of good y is 1. The consumer's income is 20. What is the optimal quantity of x and y the consumer will choose? c. Suppose the price of good x decreases to 1. The price of good...

  • Question 1 (10 pts) Consider the following market. Demand is given by Qp 5-P where Qp...

    Question 1 (10 pts) Consider the following market. Demand is given by Qp 5-P where Qp is the quantity demand and p is the price. Supply is given by Qs - F where Qs is the quantity supplied. a. What is the market equilibrium quantity and price? b. Calculate consumer, producer, and total surplus. Depict your answer in a graph. c. Suppose the government imposes a price floor of P- 4. Calculate the consumer surplus, producer surplus, and deadweight loss....

  • 3. A consumer's preferences over a and y are given by the utility function u(x,y) -...

    3. A consumer's preferences over a and y are given by the utility function u(x,y) - 2vr 2/y. The individual's income is I $100. The price of a unit of good c is $2, while the price of a unit of good y is S1. a) Graphically describe: i. the consumer's preferences for r and y ii. the budget constraint (b) Find the optimal x that the consumer would choose. You may assume (c) What is the consumer's MRS at...

  • 5. Assume an individual has preferences represented by the utility function U(x, y) = x1/2y1/3 Which...

    5. Assume an individual has preferences represented by the utility function U(x, y) = x1/2y1/3 Which of the following statements is necessarily TRUE? Assume prices and income are positive. a. The price consumption curve as the price of x changes) slopes downward. b. The income consumption curve slopes downward. c. Cross-price elasticity of demand for good x with respect to the price of y is negative. d. Price elasticity of demand for good y is negative. (See Besanko 5.6 and...

  • Consumer's Surplus A consumer has the utility function U(, y)v) where is the good in concern...

    Consumer's Surplus A consumer has the utility function U(, y)v) where is the good in concern ail y is the money that can be spent on all other goods (so the price of y is normalized to be 1). The income of - this consumer is 100. Bi Pr X10 (In(x)y) (10%) Derive the demand function of z for this consumer. (10%) Calculate the price elasticity of the demand function in (b) Is it true that the absolute value of...

  • Suppose that a consumer’s utility function is U=xy with MUx=y and MUy=x. Suppose the consumer‘s income...

    Suppose that a consumer’s utility function is U=xy with MUx=y and MUy=x. Suppose the consumer‘s income is $480. For this question you may need to use the following approximations: sqrt(2) is approximately 1.4, sqrt(3) is approx. 1.7 and sqrt(5) is approx 2.2. a) Initially, the price of y is $4 and the price of x is $6. What is the consumer’s optimal bundle? b) What is the consumer's initial utility? Now suppose that price of x increases to $8 and...

  • Consumer's surplus: A consumer has the utility function U(x,y) =e^((ln(X)+Y)^1/3) where X is the good in...

    Consumer's surplus: A consumer has the utility function U(x,y) =e^((ln(X)+Y)^1/3) where X is the good in concern and Y is the money that can be spent on all other goods. (So the price of Y is normalized to be 1). The income of this consumer is 100. (a) (10pts) Derive the demand function of x for this consumer. Make sure that at every price of x, the consumer always has enough income to buy the amount of x as indicated...

  • A consumer has preferences represented by the utility function: u(21,12)=x2? Market prices are p1 = 2...

    A consumer has preferences represented by the utility function: u(21,12)=x2? Market prices are p1 = 2 and P2 = 5. The consumer has an income m = 13. Find an expression for the consumer's demand for good 1,21 (P1). 39p1

  • 3. Suppose that Bob’s preferences can be represented by the utility function u(x, y) = 32x^0.5...

    3. Suppose that Bob’s preferences can be represented by the utility function u(x, y) = 32x^0.5 + y. The MUx = 16x^-0.5 and MUy = 1. (a) Determine Bob’s demand functions for x and y. (b)If the price of x is $8, and Bob’s income is $1000, how many x would Bob consume? How much income would be devoted to spending on y? (c) Suppose that the price of x doubles to $16. Calculate the income and substitution effects. (d)Is...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT