(g) A representative consumer has a utility function U (x, y) = xy. A representative firm makes
good x and has a production function x = f(k, l) = (kl)0.25and an unavoidable fixed cost
equal to A. There are 100 consumers and, initially, 100 firms. Prices are w = v = Py = 1 and Px is determined in a competitive market. Representative consumer income is I = 2.
Assume M stays at 100 & capital isn’t fixed.
(g) Suppose A=2. Based on economic profit, will M increase or decrease in the long run?
(g) A representative consumer has a utility function U (x, y) = xy. A representative firm...
(f) A representative consumer has a utility function U (x, y) = xy. A representative firm makes good x and has a production function x = f(k, l) = (kl)0.25and an unavoidable fixed cost equal to A. There are 100 consumers and, initially, 100 firms. Prices are w = v = Py = 1 and Px is determined in a competitive market. Representative consumer income is I = 2. In the long run,the number of firms is M (determined endogenously),...
(d) A representative consumer has a utility function U (x, y) = xy. A representative firm makes good x and has a production function x = f(k, l) = (kl)0.25and an unavoidable fixed cost equal to A. There are 100 consumers and, initially, 100 firms. Prices are w = v = Py = 1 and Px is determined in a competitive market. Representative consumer income is I = 2. (d) Solve for the equilibrium price and quantity of good x?
(a) A representative consumer has a utility function U (x, y) = xy. A representative firm makes good x and has a production function x = f(k, l) = (kl)0.25and an unavoidable fixed cost equal to A. There are 100 consumers and, initially, 100 firms. Prices are w = v = Py = 1 and Px is determined in a competitive market. Representative consumer income is I = 2. (a) Find the representative individual’s Marshallian demand for good x?
(b) A representative consumer has a utility function U (x, y) = xy. A representative firm makes good x and has a production function x = f(k, l) = (kl)0.25and an unavoidable fixed cost equal to A. There are 100 consumers and, initially, 100 firms. Prices are w = v = Py = 1 and Px is determined in a competitive market. Representative consumer income is I = 2. (b) Find the representative firm’s supply of good x?
(h)(iii) A representative consumer has a utility function U (x, y) = xy. A representative firm makes good x and has a production function x = f(k, l) = (kl)0.25and an unavoidable fixed cost equal to A. There are 100 consumers and, initially, 100 firms. Prices are w = v = Py = 1 and Px is determined in a competitive market. Representative consumer income is I = 2. In the long run,the number of firms is M (determined endogenously),...
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...
7. A consumer has the following utility function for goods X and Y: U(X,Y) 5XY3 +10 The consumer faces prices of goods X and Y given by px and py and has an income given by I. (5 marks) Solve for the Demand Equations, X (px,py,I) and Y*(px,py,I) a. b. (5 marks) Calculate the income, own-price and cross-price elasticities of demand for X and Y
Suppose that a consumer had a utility function given by: U-XY This consumer has a budget of $48. Fill in the value of this consumer's demand function. X (For instance, if X = 4/Px, then X = 4 * (1/Px) and enter 4) IS
4. Andy's utility is represented by the function U(X,Y) - XY. His marginal utility of X is MUx = Y. His marginal utility of Y is MUY = . He has income $12. When the prices are Px - 1 and Py -1, Andy's optimal consumption bundle is X* -6 and Y' = 6. When the prices are Px = 1 and P, = 4, Andy's optimal consumption bundle is X** = 6 and Y* 1.5. Suppose the price of...
1. Suppose a consumer has the utility function over goods x and y u(x, y) = 3x}}} (a) Setup the utility maximization problem for this consumer using the general budget con- straint. (2 points) (b) Will the constraint be active/binding? Is the sufficient condition for interior solution satisfied? Prove your answers. (4 points) (c) Solve the utility maximization problem for the Marshallian demand equations x (Px, py,m) and y* (Px, Py,m). Show all of your work and circle your final...