Question

6. Assume that you have two agents with the following utility functions: u1(x,y)-21n(x)+In(y) and uz(x,y)-In(x)+3 1n(y). The
0 0
Add a comment Improve this question Transcribed image text
Answer #1

U L ........ ... . u,lx, y) = Рxx + 2lnxtlny 9 9 = m, ou - more = 2 Ox 002 - moy - MRSxy = mux = 2 y moy 312 = 24 At optimalх = 2 х1 = от ) Agent 2 Ч2 (x, 92 = OU2 = lnx+ 31я7 M Ox = 2 О Х о, - мая MRS²x, y = mox моя = + ось - P4х + P Q = м 2 At optm2 4 px 1. x2 = M2 ups Y = 6 3 1 m y2 = 302 upy mi= - ex Px + eypy 5 x + upy = m2 = ese Pret e²y Py = 2P2t opg alhatatodermat= 7 px - 4110 Px + 8 Py) + 3 (2 Px + 6Py) 12 yopx + 32Py + 6Px + 18 Py = 84 px 46 Px + 50Py = 84 Px 50PY = su px - 46 px 50PY

Add a comment
Know the answer?
Add Answer to:
6. Assume that you have two agents with the following utility functions: u1(x,y)-21n(x)+In(y) and uz(x,y)-In(x)+3 1n(y)....
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

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 Carol has the following utility function: Uc = (xc)0.6 (4c)0.4 where xc and yc...

    Question 2 Carol has the following utility function: Uc = (xc)0.6 (4c)0.4 where xc and yc are the quantities of x and y consumed by Carol. Carol's endowments are Tc = 100 and Yc = 100. Assuming the prices of x and y are denoted Px and Py respectively, Carol's budget constraint is given by: 100 (Px + Py) = Px&c + PyYc. (a) State the Lagrangian for Carol's consumer choice problem. (i.e. the Lagrangian used to derive his demand...

  • 4. Assume that the utility function of a given agent is given by: U(X,Y) = log...

    4. Assume that the utility function of a given agent is given by: U(X,Y) = log X + Blog Y. And that this agent faces the following vector of prices: (10, 8) and that his income is 100. What should be the optimal consumption of X and Y for this specific agent? (assume perfect divisibility of goods)

  • Suppose you have the following utility function U(X.,Y)-min{2X,Y} Let's assume you have $80 to spend between...

    Suppose you have the following utility function U(X.,Y)-min{2X,Y} Let's assume you have $80 to spend between goods X and Y and the prices are Px 2 and Py -4 Find the utility maximizing consumption level of X and Y. Please show all your work and provide explanations.

  • Suppose James derives utility from two goods {x,y}, characterised by the following utility function: $u(x, y)...

    Suppose James derives utility from two goods {x,y}, characterised by the following utility function: $u(x, y) = 2sqrt{x} + y$: his wealth is w = 10 let py = 1: (a) What is his optimal basket if px = 0.50? What is her utility? (b) What is his optimal basket and utility if px = 0.20? (c) Find the substitution effect and the income effect associated with the price change. (d) What is the change in consumer surplus? Suppose Linda...

  • Question 6 6 In Problems 5 - 7, you are given the utility function u(x, y),...

    Question 6 6 In Problems 5 - 7, you are given the utility function u(x, y), income I and two sets of prices: initial prices px,py and final prices p,%-For each problem, you are to find: (a) the optimal choice at the initial prices (b) the optimal choice at the final prices (c) the change- optimal choice at final prices - optimal choice at initial prices (d) the income effect and the substitution effect 5) u(x, y)-min(x, 3y), 1-14, p.-1,...

  • A household's utility function is given by U(x, y, z) = 6 In x + 9...

    A household's utility function is given by U(x, y, z) = 6 In x + 9 ln y + 15 In z, where x,y and z are the quantities of products X, Y and Z respectively, consumed by the household each month. The prices per unit for these three goods are px = $6, Py = $15 and pz = $24, respectively. The household's monthly budget for these goods is B = $4800. Question 11 2 pts This continues the...

  • Utility maximization with more than two goods Suppose that there four goods Q, R, X and Y , avail...

    Utility maximization with more than two goods Suppose that there four goods Q, R, X and Y , available in arbitrary non-negative quantities (so the the consumption set is R 4 +). A typical consumption bundle is therefore a vector (q, r, x, y), where q ≥ 0 is the quantity of good Q, r ≥ 0 is the quantity of good R, x ≥ 0 is the quantity of good X, and y ≥ 0 is the quantity of...

  • Suppose that a consumer’s utility function is U(x,y)=xy+10y. the marginal utilities for this utility function are...

    Suppose that a consumer’s utility function is U(x,y)=xy+10y. the marginal utilities for this utility function are MUx=y and MUy=x+10. The price of x is Px and the price of y is Py, with both prices positive. The consumer has income I. (this problem shows that an optimal consumption choice need not be interior, and may be at a corner point.) Assume first that we are at an interior optimum. Show that the demand schedule for x can be written as...

  • Suppose an individual’s utility function for two goods X and Y is givenby U(X,Y) = X^(3/4)Y^(1/4)...

    Suppose an individual’s utility function for two goods X and Y is givenby U(X,Y) = X^(3/4)Y^(1/4) Denote the price of good X by Px, price of good Y by Py and the income of the consumer by I. a) (2 points) Write down the budget constraint for the individual. b) (4 points) Derive the marginal utilities of X and Y. c) (3 points) Derive the expression for the marginal rate of substitution of X for Y. Write down the tangency...

  • Assume that Sam has following utility function: U(x,y) = 2√x+y. Assume px = 1/5, py = 1 and her i...

    Assume that Sam has following utility function: U(x,y) = 2√x+y. Assume px = 1/5, py = 1 and her income I = 10. (e) Draw an optimal bundle which is the result of utility maximization under given budget set. (Hint: Assume interior solution). Define corresponding expenditure minimization problem (note the elements for expenditure minimization problem are (i) objective function, (ii) constraint, (iii) what to choose). (f)Describeaboutwhatthedualityproblemis. Definemarshalliandemandfuction andhicksiandemandfunction. (Hint: identifytheinputfactorsofthesefunctions.)        (g) Consider a price increase for the good x from...

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