5. Suppose an individual's utility function is U(x, y) = Vx+2. Vy, and her total budget...
5. Douglas consumes two goods, x and y. His utility function is u(x) = Vx+y Let the price of good x be $2 and the price of good y be $2. Furthermore, assume that Douglas has $420.00 to spend on these two goods. Find the demand for good x and y. Now suppose that the price of good x decreases to $1.00. What is the income effect and substitution effect of this price change on the demand for x?
Suppose James derives utility from two goods {x,y},
characterised by the following utility function: $u(x, y) =
2sqrt{x} + y$: his wealth is w = 10 let py = 1:
(a) What is his optimal basket if px = 0.50? What is her
utility?
(b) What is his optimal basket and utility if px = 0.20?
(c) Find the substitution effect and the income
effect associated with the price change.
(d) What is the change in consumer
surplus?
Suppose Linda...
A consumer has the utility function U(X, Y) = (X + 2)(Y + 4). Her income is $100, the price of X is $4, and the price of Y is $5. In order to maximize utility subject to her budget constraint, how many units of X and Y will our consumer choose to purchase? Sketch a budget line – indifference curve diagram illustrating this optimum. Label this optimum A. Suppose the price of X increases to $8, while income and the price...
1.Suppose a consumer had a utility function given by: U= 9X + 2Y. If the price of Good X (Px) is $8 and the price of Good Y is $4then what is the utility maximizing quantity of Good X the consumer will purchase with a budget of $32? 2. Suppose an individual had a utility function given by: U=X^4Y^0.6 Calculate this individual's Marginal Rate of Substitution (MRSxy) when they have a bundle with 3 units of Good X and 1.8...
Suppose an individual had a utility function given by: U=X^4*Y^1. Calculate this individual's Marginal Rate of Substitution (MRSxy) when they have a bundle with 5 units of Good X and 0.25 units of Good Y. (Round to the nearest decimal place if necessary.)
3. A consumer's preferences over a and y are given by the utility function u(x,y) - 2vr 2/y. The individual's income is I $100. The price of a unit of good c is $2, while the price of a unit of good y is S1. a) Graphically describe: i. the consumer's preferences for r and y ii. the budget constraint (b) Find the optimal x that the consumer would choose. You may assume (c) What is the consumer's MRS at...
Suppose a consumer’s utility function is given by U(X,Y) = X*Y. Also, the consumer has $180 to spend, and the price of X, PX = 4.50, and the price of Y, PY = 2 a. How much X and Y should the consumer purchase in order to maximize her utility? b. How much total utility does the consumer receive? c. Now suppose PX decreases to 2. What is the new bundle of X and Y that the consumer will demand?...
Suppose an individual had a utility function given by: U -X0,6y0.8 Calculate this individual's Marginal Rate of Substitution (MRSxy) when they have a bundle with 3 units of Good X and 4 units of Good Y (Round to the nearest decimal place if necessary.)
Suppose an individual had a utility function given by: U -X0,6y0.8 Calculate this individual's Marginal Rate of Substitution (MRSxy) when they have a bundle with 3 units of Good X and 4 units of Good Y (Round to the nearest decimal place if necessary.)
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...