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Problem 2 Expenditure Function: E = x + 2y Utility Constraint: 75 = Vx+ Vy (a)...
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...
Solve Problem 2 1. A consumer maximizes his utility function, 122, subject to the budget constraint,...
Solve Problem 2
1. A consumer maximizes his utility function, 122, subject to the budget constraint, 75x1 +150x2-525· (M-$75, P2-$150, M-$525). Set up the Lagrangian function and use the first-order and second-order conditions to find the values of x1 and x2 that solve the consumer's problem 2. This problem is an extension of Problem 1. Now, the consumer faces an additional constraint. Specifically, good 1 is rationed, and the consumer can buy no more than three units of that good....
S An individual has a utility function as follows subject to the budget constraint; 6r+2y 110 i) Write down the Lagrangian function for this individual. (2 marks) (6 marks) Using Cramer's rule...
S An individual has a utility function as follows subject to the budget constraint; 6r+2y 110 i) Write down the Lagrangian function for this individual. (2 marks) (6 marks) Using Cramer's rule, solve for x, y and 2. ii) Using Hessian matrix, check the second-order sufficient condition to verify that the utility of this individual is at maximum. (3 marks)
S An individual has a utility function as follows subject to the budget constraint; 6r+2y 110 i) Write down the...
2. Consider the following four consumers (C1,C2,C3,C4) with the following utility functions: Consumer Utility Function C1...
2. Consider the following four consumers (C1,C2,C3,C4) with the following utility functions: Consumer Utility Function C1 u(x,y) = 2x+2y C2 u(x,y) = x^3/4y^1/4 C3 u(x,y) = min(x,y) C4 u(x,y) = min(4x,3y) On the appropriate graph, draw each consumer’s indifference curves through the following points: (2,2), (4,4), (6,6) and (8,8), AND label the utility level of each curve. Hint: Each grid should have 4 curves on it representing the same preferences but with different utility levels. 3. In the following parts,...
5. Suppose an individual's utility function is U(x, y) = Vx+2. Vy, and her total budget...
5. Suppose an individual's utility function is U(x, y) = Vx+2. Vy, and her total budget is $90. The price of y is always $1, but the price of x drops from $1 to 50 cents. Calculate the substitution effect on x and the income effect on y. a. SE= +32 X; IE= +10 Y b. SE= +32 X; IE= - 22 Y c. SE= +18 X; IE= - 22 Y d. SE= +18 X; IE= +10 Y
Consider the function fix.) - xy - 3x - 2y + 17x+y+37 and the constraint x....
Consider the function fix.) - xy - 3x - 2y + 17x+y+37 and the constraint x. - - 6x + 3y - 12. Find the optimal point of f(x,y) subject to the constraint oxy). Enter the values of, . fl.), and below. NOTE: Enter correct to 2 decimal places X=8.50 a у f(xy) - 6.50,3 A 3.83
Complete parts a-e. 1. Consider the following (Cobb-Douglas) utility function: U = xayB And budget constraint:...
Complete parts a-e.
1. Consider the following (Cobb-Douglas) utility function: U = xayB And budget constraint: MZ PeX+PY *Treat Px, P, M, a, and B as positive constants. Note, a + B < 1. Using these equations, please answer the following questions: a. Formally state this consumer's utility maximization problem and write down the relevant Lagrangian. (6 pts) b. Using your work from part "a.", derive demand curves for X and Y. Show all work. (6 pts) C. Show that...
2) Assume that utility is given by Utility-U(X,Y)-X03yo7 a) Calculate the ordinary demand functions, indirect utility function, and expenditure function. b) Use the expenditure function calculate...
2) Assume that utility is given by Utility-U(X,Y)-X03yo7 a) Calculate the ordinary demand functions, indirect utility function, and expenditure function. b) Use the expenditure function calculated in part (a) together with Shephard's lemma to compute the compensated demand function for good X. Use the results from part (b) together with the ordinary demand function for good X to show that the Slutsky equation holds for this case. c) d) Prove that the expenditure function calculated in part (a) is homogeneous...
Consider the following constraints and the corresponding graph below Constraint 1: 2x-y21 Constraint 2:x+2y S8 Constraint...
Consider the following constraints and the corresponding graph below Constraint 1: 2x-y21 Constraint 2:x+2y S8 Constraint 3: x-3y 2-2 2x-y-1 4 x +2y 8 4 7 a. (3 points) Shade the feasible region in the graph provided above. b. (3 points) The objective function is Minimize 2x-3y. Mark the optimal solution(s) in the above graph Do not calculate the x and y coordinates at optimal solution(s). Draw the optimal objective function line through the optimal solution(s).
Marge has the utility function U(F,H)=20F2H where F is the quantity of footwear and H...
Marge has the utility function U(F,H)=20F2H where F is the quantity of footwear and H is the quantity of hats she consumes. Suppose the price of footwear is $20 and the price of hats is $5, while Marge has an income of $200/week. Calculate Marge's MRS as a function of the quantities F and H. (2 points) BONUS: Write down the Lagrangian function for Marge's utility maximization problem. (2 points) Solve for Marge's optimal consumption bundle of footwear and...
Solve Problem 2
1. A consumer maximizes his utility function, 122, subject to the budget constraint, 75x1 +150x2-525· (M-$75, P2-$150, M-$525). Set up the Lagrangian function and use the first-order and second-order conditions to find the values of x1 and x2 that solve the consumer's problem 2. This problem is an extension of Problem 1. Now, the consumer faces an additional constraint. Specifically, good 1 is rationed, and the consumer can buy no more than three units of that good....
S An individual has a utility function as follows subject to the budget constraint; 6r+2y 110 i) Write down the Lagrangian function for this individual. (2 marks) (6 marks) Using Cramer's rule, solve for x, y and 2. ii) Using Hessian matrix, check the second-order sufficient condition to verify that the utility of this individual is at maximum. (3 marks)
S An individual has a utility function as follows subject to the budget constraint; 6r+2y 110 i) Write down the...
5. Suppose an individual's utility function is U(x, y) = Vx+2. Vy, and her total budget is $90. The price of y is always $1, but the price of x drops from $1 to 50 cents. Calculate the substitution effect on x and the income effect on y. a. SE= +32 X; IE= +10 Y b. SE= +32 X; IE= - 22 Y c. SE= +18 X; IE= - 22 Y d. SE= +18 X; IE= +10 Y
Consider the function fix.) - xy - 3x - 2y + 17x+y+37 and the constraint x. - - 6x + 3y - 12. Find the optimal point of f(x,y) subject to the constraint oxy). Enter the values of, . fl.), and below. NOTE: Enter correct to 2 decimal places X=8.50 a у f(xy) - 6.50,3 A 3.83
Complete parts a-e.
1. Consider the following (Cobb-Douglas) utility function: U = xayB And budget constraint: MZ PeX+PY *Treat Px, P, M, a, and B as positive constants. Note, a + B < 1. Using these equations, please answer the following questions: a. Formally state this consumer's utility maximization problem and write down the relevant Lagrangian. (6 pts) b. Using your work from part "a.", derive demand curves for X and Y. Show all work. (6 pts) C. Show that...
2) Assume that utility is given by Utility-U(X,Y)-X03yo7 a) Calculate the ordinary demand functions, indirect utility function, and expenditure function. b) Use the expenditure function calculated in part (a) together with Shephard's lemma to compute the compensated demand function for good X. Use the results from part (b) together with the ordinary demand function for good X to show that the Slutsky equation holds for this case. c) d) Prove that the expenditure function calculated in part (a) is homogeneous...
Consider the following constraints and the corresponding graph below Constraint 1: 2x-y21 Constraint 2:x+2y S8 Constraint 3: x-3y 2-2 2x-y-1 4 x +2y 8 4 7 a. (3 points) Shade the feasible region in the graph provided above. b. (3 points) The objective function is Minimize 2x-3y. Mark the optimal solution(s) in the above graph Do not calculate the x and y coordinates at optimal solution(s). Draw the optimal objective function line through the optimal solution(s).
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