? (?, ?) = (5 ? ^0.6 )(14 ?^ 0.5 ) ?? = $25 ?? =...
? (?, ?) = (5 ? ^0.6 )(14 ?^ 0.5 )
?? = $25
?? = $50
?????? = $500
Prompts:
1. Sketch a graph with the budget constraint
2. Solve for the optimal X and Y (and utility) and add this to the graph
Homework Answers
4. Assume a utility function described by u(x,y)=2/xy. a. Given the utility function, u(x,y)=2xy, sketch the...
4. Assume a utility function described by u(x,y)=2/xy. a. Given the utility function, u(x,y)=2xy, sketch the indifference curves for u = 50, 72 and 98. e indifference Carved forbise banta un b. Sketch budget constraint of 5x +10y = 30. Label intercepts (where it crosses the axes). 00:0 VE c. Solve for calculate) the optimal bundle (x, y) and sketch the optimal solution.
Given an income equation, $150 = ($10 x wine) + ($5 x crackers) and utility function:...
Given an income equation, $150 = ($10 x wine) + ($5 x crackers) and utility function: U = (W.75C.25) 1. Calculate the indifference curve at the optimal levels of consumption of W and C and graph. 2. Economically speaking, what is going on at that point? 3. Using the numbers from above, find the consumer equilibrium condition or rule and explain. 4. Put wine on the x axis and crackers on the y axis and find both intercept points and...
If pA = $10, PB = $5,Y = $75, where p is the price of a...
If pA = $10, PB = $5,Y = $75, where p is the price of a good, A and B are goods, and Y is income. Given that the utility function is U = 25A2B, determine the optimal bundle of x and yfor this consumer. Be sure to show your work and box your answers. a) Solve for the marginal utility of A and the marginal utility of B b) Solve for the relationship (trade-off) between A and B c)...
Utility Function: U = ln (x) + ln (z) Budget Constraint: 120 = 2x + 3z...
Utility Function: U = ln (x) + ln (z) Budget Constraint: 120 = 2x + 3z (a) Find the optimal values of x and z (b) Explain in words the idea of a compensating variation for the case where the budget constraint changed to 120 = 2x + 5z Problem 4 (a) Derive the demand functions for the utility function (b) Let a = 2, b = 5, px = 1, pz = 3, and Y = 75. Find the...
Question 1: Colin's utility function for goods X and Y is represented by U(XY) = X0.5Y0.5...
Question 1: Colin's utility function for goods X and Y is represented by U(XY) = X0.5Y0.5 . Assume his income is $1000 and the prices of X and Y are $50 and S100, respectively. a. Write an expression for Colin's budget constraint. b. Calculate the optimal quantities of X and Y that Colin should choose, given his budget constraint. Graph your answer. Suppose that government subsidy program lowers the price of Y from $100 per unit to $ 50 per...
1. (24 total points) Suppose a consumer’s utility function is given by U(X,Y) = X1/2*Y1/2. Also,...
1. (24 total points) Suppose a consumer’s utility function is given by U(X,Y) = X1/2*Y1/2. Also, the consumer has $72 to spend, and the price of Good X, PX = $4. Let Good Y be a composite good whose price is PY = $1. So on the Y-axis, we are graphing the amount of money that the consumer has available to spend on all other goods for any given value of X. a) (2 points) How much X and Y...
Homework 3 Chapter 5: Demand 1. What happens to the amount of x and y consumed...
Homework 3 Chapter 5: Demand 1. What happens to the amount of x and y consumed when income falls if x and y are normal goods? Draw a budget constraint (before the income decrease) and a convex utility curve that corresponds to the optimal consumption bundle. Draw a new budget constraint (after income falls) and a new convex utility curve that corresponds to the optimal consumption bundle. Has the amount of x and y consumed increased or decreased due to...
Sally consumes two goods, X and Y. Her preferences over consumption bundles are repre- sented by the utility function r...
Sally consumes two goods, X and Y. Her preferences over consumption bundles are repre- sented by the utility function r, y)- .5,2 where denotes the quantity of good X and y denotes the quantity of good Y. The current market price for X is px 10 while the market price for Y is Pr = $5. Sally's current income is $500. (a) Write the expression for Sally's budget constraint. (1 point) (b) Find the optimal consumption bundle that Sally will...
3) Sally consumes two goods, X and Y. Her utility function is given by the expression...
3) Sally consumes two goods, X and Y. Her utility function is given by the expression U = 3 · XY2. The current market price for X is $10, while the market price for Y is $5. Sally's current income is $500. a. Sketch a set of two indifference curves for Sally in her consumption of X and Y. b. Write the expression for Sally's budget constraint. Graph the budget constraint and determine its slope. c. Determine the X, Y...
On the "calculations" sheet, I have plotted an indifference curve, derived from the utility function (x*0.5)*(y*0.5)....
On the "calculations" sheet, I have plotted an indifference
curve, derived from the utility function (x*0.5)*(y*0.5).
Follow the instructions, also listed in the "Questions" sheet in
the excel file, and answer the following 7 questions.
Instructions: Given the current income and prices, the
allocation of x and y is not optimal. You may change any of the
boxes that are highlighted (e.g. income, Px, Py, or X). You cannot
change the consumption of y. This is found by spending all...
4. Assume a utility function described by u(x,y)=2/xy. a. Given the utility function, u(x,y)=2xy, sketch the indifference curves for u = 50, 72 and 98. e indifference Carved forbise banta un b. Sketch budget constraint of 5x +10y = 30. Label intercepts (where it crosses the axes). 00:0 VE c. Solve for calculate) the optimal bundle (x, y) and sketch the optimal solution.
If pA = $10, PB = $5,Y = $75, where p is the price of a good, A and B are goods, and Y is income. Given that the utility function is U = 25A2B, determine the optimal bundle of x and yfor this consumer. Be sure to show your work and box your answers. a) Solve for the marginal utility of A and the marginal utility of B b) Solve for the relationship (trade-off) between A and B c)...
Question 1: Colin's utility function for goods X and Y is represented by U(XY) = X0.5Y0.5 . Assume his income is $1000 and the prices of X and Y are $50 and S100, respectively. a. Write an expression for Colin's budget constraint. b. Calculate the optimal quantities of X and Y that Colin should choose, given his budget constraint. Graph your answer. Suppose that government subsidy program lowers the price of Y from $100 per unit to $ 50 per...
Homework 3 Chapter 5: Demand 1. What happens to the amount of x and y consumed when income falls if x and y are normal goods? Draw a budget constraint (before the income decrease) and a convex utility curve that corresponds to the optimal consumption bundle. Draw a new budget constraint (after income falls) and a new convex utility curve that corresponds to the optimal consumption bundle. Has the amount of x and y consumed increased or decreased due to...
Sally consumes two goods, X and Y. Her preferences over consumption bundles are repre- sented by the utility function r, y)- .5,2 where denotes the quantity of good X and y denotes the quantity of good Y. The current market price for X is px 10 while the market price for Y is Pr = $5. Sally's current income is $500. (a) Write the expression for Sally's budget constraint. (1 point) (b) Find the optimal consumption bundle that Sally will...
3) Sally consumes two goods, X and Y. Her utility function is given by the expression U = 3 · XY2. The current market price for X is $10, while the market price for Y is $5. Sally's current income is $500. a. Sketch a set of two indifference curves for Sally in her consumption of X and Y. b. Write the expression for Sally's budget constraint. Graph the budget constraint and determine its slope. c. Determine the X, Y...
On the "calculations" sheet, I have plotted an indifference
curve, derived from the utility function (x*0.5)*(y*0.5).
Follow the instructions, also listed in the "Questions" sheet in
the excel file, and answer the following 7 questions.
Instructions: Given the current income and prices, the
allocation of x and y is not optimal. You may change any of the
boxes that are highlighted (e.g. income, Px, Py, or X). You cannot
change the consumption of y. This is found by spending all...
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