2) (18 points) For each of the following situations, draw the consumer's budget constraint and indicate...
2) (18 points) For each of the following situations, draw the consumer's budget constraint and indicate the consumer's optimal bundle on the budget constraint. Make sure your graph is accurate and clearly labeled. a) U(X,Y)-X1"Y34. The consumer has S24 to spend and the prices of the goods are Px - S2 and Py S3. Note that the MUx-(1/4)X-3*Y34 and the MUy (3/4)X14Y-14. b) U(X,Y) MIN(5X,Y). The consumer has S2 4 to spend and the prices of the goods are Px...
Draw the consumer’s budget constraint and indicate the consumer’s optimal bundle on the budget constraint. Make sure your graph is accurate and clearly labeled. c) U(X,Y) 2X +3Y. The consumer has $20 to spend and the prices of the goods are Px $2 and Py $4.
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...
A) Suppose U = min[X, 3Y] and I=12, Px=1 and Py=5. Find X* and Y*. B) Draw an indifference curve and a normal linear budget constraint such that there is a tangency point (where MRS= price ratio) that is not the optimal bundle. C) Suppose U=X∙Y5. Find X* and Y*. D) Suppose U = 5∙X + 2∙Y and I=12, Px=2 and Py=1. Find X* and Y*.
Assume that you have exactly 100 hours of labor to allocate between producing goods X and Y. Your output of X and Y depends solely on the hours of labor you spend so the production functions, qi=fLifor i=X and Y, are: X=LX.5 and Y=LY.5 If you can sell your output of X and Y at the fixed prices PX = 10 and PY = 5, how much of goods X and Y would you produce to maximize your income? (Hint:...
1) Suppose a consumer's choice set consists of 2 goods. Can they both be superior goods at the same level of income? Why or why not? 2) Suppose a consumer's utility function is U=(x^.5)(y^.5) and the consumer has $100 to spend. Let Px=10 and Py=5. How much of x and y will be purchased?
Question 2 (20 points) A consumer purchases two goods x ano y. The consumer's income is I. His utility 18 * and y. Px is the price of x. Py is the price of Is 1. His utility is given by U(x,y) = xy a) Calculate consumer's optim uncompensated demand) s optimal choice of x and y under his budget. hinc b) Derive the indirect utility function. c) Are these two goods normal goods? Why! d) Derive the expenditure function....
1 [75 points; Chapter 5] You are to solve the consumer choice problem for three different consumers. Each consumer has $150 to spend (income) and faces prices Px = $2 and Py = $3 for goods X and Y. Consumers I, II, and III have utility functions U'(X, Y) = X? + Y, U"(X, Y) = X12 + Yl2, and UTM(X, Y) = X´Y, respectively. For each consumer, do the following steps. a [15 points] Carefully express the consumer's choice...
Question 2 (20 points) A consumer purchases two goods x ano y. The consumer's income is 1. Hi S income is 1. His utility is given by is * and y. Px is the price of x. Py is the price of a) Calculate consumer's optim U(x,y) = xy s optimal choice of x and y under his budget.hu uncompensated demand) b) Derive the indirect utility function. c) Are these two goods normal goods? Why d) Derive the expenditure function....
7. Lori has the following utility function U = X0.5Y0.5 MUx = 0.5 X-0.5Y0.5 MUy = 0.5 X0.5Y-0.5 A.) Calculate Lori’s optimal consumption bundle when Px = Py = 10 given a budget of 200 B.)Calculate Lori’s optimal consumption bundle if Px = 5, other things equal C.) Derive Lori’s demand for good X assuming it is linear.