Homework Answers
Figure 1
e)
The income effect is movement from B to C. Therefore,
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Clear writing please
2. Utility is given by U21, 22) = 2102. Marginal utilities are MU...
clear writing please 2. Utility is given by U21, 22) = 2102. Marginal utilities are MU...
clear writing please
2. Utility is given by U21, 22) = 2102. Marginal utilities are MU = 22, and MU, = 21. The price of xy is $1, the price of C, is $2, and income is $40. The price of falls to $1. (a) Calculate the optimal consumption choice before the price change. Illustrate that choice on a graph. Lable that choice A. (b) If, after the price change, income had changed so that the consumer could exactly afford...
Sophie's preferences over two goods are given by u21, 12) = 40x12 +22. Good 1 costs...
Sophie's preferences over two goods are given by u21, 12) = 40x12 +22. Good 1 costs $2 per unit and good 2 costs $1 per-unit. a) Sketch Sophie's income offer curve in a clearly labelled diagram. (1 point) b) Find the optimal consumption bundle when Sophie is spending m = $250 on the two goods. Illustrate your answer in the above diagrams. (1 point) c) Suppose that the price of good 1 increases to $4 per-unit. Under the assumption that...
4. Andy's utility is represented by the function U(X,Y) - XY. His marginal utility of X...
4. Andy's utility is represented by the function U(X,Y) - XY. His marginal utility of X is MUx = Y. His marginal utility of Y is MUY = . He has income $12. When the prices are Px - 1 and Py -1, Andy's optimal consumption bundle is X* -6 and Y' = 6. When the prices are Px = 1 and P, = 4, Andy's optimal consumption bundle is X** = 6 and Y* 1.5. Suppose the price of...
please in part b graph it with identifying everything. 2. Consumer Theory. Ahn's utility function for...
please in part b graph it with identifying everything.
2. Consumer Theory. Ahn's utility function for goods X (pizzas) and Y (cola) is represented as U(X, Y) = 2ln(X)+ln(Y). The prices of X and Y are $1 and $1, respectively. Ahn's income is $12. 1) Calculate Ahn's optimal consumption bundle (X*, Y*). (X*, Y*)= 2) Suppose there is an increase in the price of X. Illustrate the net effect, income effect, and substitution effect on Ahn's optimal consumption choice.
economics Problem 2 Jon is spending his money on potatoes (R) and all other goods (C)....
economics
Problem 2 Jon is spending his money on potatoes (R) and all other goods (C). Suppose that the price of rice potatoes falls. Determine Jon's optimal consumption bundle using the tangency between his original budget line and one of his indifference curves as well as the consumption bundle after the price change, i.e., using the tangency between his new budget line and one of his indifference curves when 1. Potatoes is a normal good 2. Potatoes is an inferior...
Can someone please break this solution down into plain English for me? 8.6 (0) Douglas Cornfield's...
Can someone please break this solution down into plain English
for me?
8.6 (0) Douglas Cornfield's demand function for good z is z(Pa, Py, m) 2m/5pe. His income is $1,000, the price of a is 85, and the price of y is $20. If the price of a falls to $4, then his demand for z will change from to O. (a) If his income were to change at the same time so that he could exactly afford his old...
Problem 1 - Consumer Choice Consider the case of a consumer who decides how many cups...
Problem 1 - Consumer Choice Consider the case of a consumer who decides how many cups of coffee (denote by c) and cups of tea (denote by t) to consume every month. Assume the income endowment for caffeine needs is $300; the price of a cup of tea is $2 and the price of a cup of coffee is $3. a) Write down a Cobb-Douglas utility function with exponents a=0.5 and 1-a=0.5. b) Write down the budget constraint for this...
clear writing please 1. Utility is given by U(x,y) = y + 10y, with marginal utilities...
clear writing please
1. Utility is given by U(x,y) = y + 10y, with marginal utilities MU, = y and MU, = x + 10. The price of x is P, and the price of y is Py. The consumer has income m. (a) Assume first that we have an interior solution. Solve for the demand for u. (b) Suppose now that m = 100. Since I must never be negative, what is the maximum price for good x for...
please solve exercise 8.21 es the consumer buy at the higher price of beer and her...
please solve exercise 8.21
es the consumer buy at the higher price of beer and her new different consumption bundle from O? llicks compensation? Explain h. Using red ink, draw the draw the new budget line and label the new optimal point, Point C. books and CDs does the consumer purchase at the new prices and her original which income? old new budget line in blue ink and label the new optimal consumption bundle, Point j. Draw this new budget...
Consider the typical example of shopping at Walmart for pants (x1) and shirts (x2). Your income...
Consider the typical example of shopping at Walmart for pants (x1) and shirts (x2). Your income endowment is $300; the price of shirts is $20, and the price of pants is $30 a) Write down a Cobb-Douglas utility function with exponents a=0.5 and 1-a=0.5. b) Write down the budget constraint for this problem. c) Set up the Lagrange and find the optimal consumption bundle for Xi and x2 (call this bundle A) d) Now assume that the price of pants...
clear writing please
2. Utility is given by U21, 22) = 2102. Marginal utilities are MU = 22, and MU, = 21. The price of xy is $1, the price of C, is $2, and income is $40. The price of falls to $1. (a) Calculate the optimal consumption choice before the price change. Illustrate that choice on a graph. Lable that choice A. (b) If, after the price change, income had changed so that the consumer could exactly afford...
Sophie's preferences over two goods are given by u21, 12) = 40x12 +22. Good 1 costs $2 per unit and good 2 costs $1 per-unit. a) Sketch Sophie's income offer curve in a clearly labelled diagram. (1 point) b) Find the optimal consumption bundle when Sophie is spending m = $250 on the two goods. Illustrate your answer in the above diagrams. (1 point) c) Suppose that the price of good 1 increases to $4 per-unit. Under the assumption that...
4. Andy's utility is represented by the function U(X,Y) - XY. His marginal utility of X is MUx = Y. His marginal utility of Y is MUY = . He has income $12. When the prices are Px - 1 and Py -1, Andy's optimal consumption bundle is X* -6 and Y' = 6. When the prices are Px = 1 and P, = 4, Andy's optimal consumption bundle is X** = 6 and Y* 1.5. Suppose the price of...
please in part b graph it with identifying everything.
2. Consumer Theory. Ahn's utility function for goods X (pizzas) and Y (cola) is represented as U(X, Y) = 2ln(X)+ln(Y). The prices of X and Y are $1 and $1, respectively. Ahn's income is $12. 1) Calculate Ahn's optimal consumption bundle (X*, Y*). (X*, Y*)= 2) Suppose there is an increase in the price of X. Illustrate the net effect, income effect, and substitution effect on Ahn's optimal consumption choice.
economics
Problem 2 Jon is spending his money on potatoes (R) and all other goods (C). Suppose that the price of rice potatoes falls. Determine Jon's optimal consumption bundle using the tangency between his original budget line and one of his indifference curves as well as the consumption bundle after the price change, i.e., using the tangency between his new budget line and one of his indifference curves when 1. Potatoes is a normal good 2. Potatoes is an inferior...
Can someone please break this solution down into plain English
for me?
8.6 (0) Douglas Cornfield's demand function for good z is z(Pa, Py, m) 2m/5pe. His income is $1,000, the price of a is 85, and the price of y is $20. If the price of a falls to $4, then his demand for z will change from to O. (a) If his income were to change at the same time so that he could exactly afford his old...
Problem 1 - Consumer Choice Consider the case of a consumer who decides how many cups of coffee (denote by c) and cups of tea (denote by t) to consume every month. Assume the income endowment for caffeine needs is $300; the price of a cup of tea is $2 and the price of a cup of coffee is $3. a) Write down a Cobb-Douglas utility function with exponents a=0.5 and 1-a=0.5. b) Write down the budget constraint for this...
clear writing please
1. Utility is given by U(x,y) = y + 10y, with marginal utilities MU, = y and MU, = x + 10. The price of x is P, and the price of y is Py. The consumer has income m. (a) Assume first that we have an interior solution. Solve for the demand for u. (b) Suppose now that m = 100. Since I must never be negative, what is the maximum price for good x for...
please solve exercise 8.21
es the consumer buy at the higher price of beer and her new different consumption bundle from O? llicks compensation? Explain h. Using red ink, draw the draw the new budget line and label the new optimal point, Point C. books and CDs does the consumer purchase at the new prices and her original which income? old new budget line in blue ink and label the new optimal consumption bundle, Point j. Draw this new budget...
Consider the typical example of shopping at Walmart for pants (x1) and shirts (x2). Your income endowment is $300; the price of shirts is $20, and the price of pants is $30 a) Write down a Cobb-Douglas utility function with exponents a=0.5 and 1-a=0.5. b) Write down the budget constraint for this problem. c) Set up the Lagrange and find the optimal consumption bundle for Xi and x2 (call this bundle A) d) Now assume that the price of pants...
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