Suppose there are 100 units of good x and 50 units of good y in an exchange economy with 2 people.
Suppose consumer 1 has a utility function u1(x1,y1)=x1y1 and consumer 2 has a utility function of u2(x2,y2)=(x2y2)^(1/2)
a. What is the MRS of person 1 at 25 units of good x and 12.5 units of good y? Express the MRS as a numerical value (one decimal) in terms of units of good y that we can take away if we give the person one more unit of good x and leave the person as well off as before.
b.What is the MRS of person 2 at the consumption bundle where person 2 receives 75 units of good x and 37.5 units of good y? Please provide a numerical value with one decimal only.
Suppose person 1 owns all of good x and person 2 owns all of good y. The price of good x is $1 and the price of good y is $2.
c.Given the initial endowment of person 1 and the current prices, how many units of good x does person 1 demand? Just put down the numerical value.
d.What is the optimal amount of good y for person 1 at the current prices and initial endowment? Just put down the numerical value.
e.What is the optimal amount of good x for person 2 at the current prices and initial endowment? Put down the numerical value.
f.What is the optimal amount of good y for person 2 at current prices and the initial endowment? Just put down the numerical value.
Suppose there are 100 units of good x and 50 units of good y in an...
Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A is given an initial endowment of 3 units of good X and 5 units of good Y. Consumer B is given an initial endowment of 5 units of good X and 3 units of good Y. Consumer A’s utility function is given by: UA(X,Y) = X + 4Y, and consumer B’s utility function is given by UB(X,Y) = MIN (X, 2Y). If the prices...
2. Suppose there are two consumers, A and B, and two goods, X and Y. Consumer A is given an initial endowment of 2 units of good X and 3 units of good Y. Consumer B is given an initial endowment of 6 units of good X and 5 units of good Y. Consumer A’s utility function is given by: UA(X,Y) = X1/2*Y1/2, And consumer B’s utility function is given by UB(X,Y) = X1/4*Y3/4. Therefore, consumer A’s marginal utilities for...
Suppose there are two consumers, A and B, and two goods, X, and Y. Consumer A's utility function is given by: Ua(X,Y) = X*Y^3 Consumer B's utility function is given by: Ub (X,Y) = X*Y Marginal Utilities for A: MUx =Y^3 , MUy = 3X*Y^2 Marginal Utilities for B: MUx = Y, MUy = X Initial endowments: Person A has 40 units of good X and 20 units of good Y Person B has 30 units of good x and...
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Suppose that Jim uses his budget to purchase 100 units of Good X and 100 units of Good Y. When the price of Good X rises, he purchases 55 units of Good X and 95 units of Good Y. An economist calculates his compensated budget and finds that in that scenario, Jim would buy 60 units of Good X and 105 units of Good Y Calculate the substitution effect Remember to include a negative sign (-) if the effect reduces...
I know that the answer is shown so please show the work 24 total points) Suppose there are two consumers, A and B, and two gods, X and given an initial endowment of 9 units of good X and 14 units of good en a ina ds, X and Y. Consumer A is Y. Consumer B is given an imitia endowment of 7 units of good X and 2 units of good Y. Consumer A's utility function is given by:...
Description of the economy: For each of the following problems, consider a 2x2 Exchange Economy with two consumers A and B, and two goods X and Y . The preferences of consumer A can be represented by the utility function uA(xA, yA) = xAyA , where xA is the amount of good A consumed by consumer A, and yA is the amount of good Y consumed by consumer A. The preferences of consumer B can be represented by the utility...
) A consumer's utility function is given by: U(x,y) = 10xy Currently, the prices of goods x and y are $3 and $5, respectively, and the consumer's income is $150 . a. Find the MRS for this consumer for any given bundle (x,y) . b. Find the optimal consumption bundle for this consumer. c. Suppose the price of good x doubles. How much income is required so that the Econ 201 Beomsoo Kim Spring 2018 consumer is able to purchase...
Description of the economy: For each of the following problems, consider a 2x2 Exchange Economy with two consumers A and B, and two goods X and Y . The preferences of consumer A can be represented by the utility function uA(xA, yA) = xAyA , where xA is the amount of good A consumed by consumer A, and yA is the amount of good Y consumed by consumer A. The preferences of consumer B can be represented by the utility...
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...