There are two consumers on the market: Jim and Donna. Jim’s utility function is U(x, y)...

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There are two consumers on the market: Jim and Donna. Jim’s utility function is U(x, y)...

There are two consumers on the market: Jim and Donna. Jim’s utility function is U(x, y) = xy. Donna’s utility function is U(x, y) = x 2 y. Income of Jim is mJ = 100 and income of Donna is mD = 150.

a) Find optimal baskets of Jim and Donna when price of y is Py = 1 and price of x is P. (PREVIOUSLY POSTED)

b) On separate graphs plot Jim’s and Donna’s demand schedule for x for all values of P.

business economics

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Answer 1

Answer #1

B.Jim

X=50/P

Graph caption 8.4 2 3.6 2 X axis variable

Donna

X=100/P

Graph caption 8.4 2 3.6 2 X axis variable

Y axis represents price.

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Answer 2

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There are two consumers on the market: Jim and Donna. Jim’s utility function is U(x, y)...

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