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please explain with details thank you. 13. Aji's utility function for Blueberry (b) and Raspberry (r)...
Mustapha’s utility function is as follows: U = 10x0.8 y0.6 Budget constraint: 100 = 6x + 4y a. Solve for the utility-maximizing bundle b. Find the equation of the indifference curve that contains the utility-maximizing bundle. c. Sketch the solution, labeling all relevant items, x on the horizontal axis and y on the vertical axis. d. At the utility-maximizing bundle, what is the increase in Mustapha’s utility from the last dollar spent on good X? What about for good Y?...
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Question 7 Consider a consumer with preferences over two goods 1 and 2. Assume that the horizontal axis pertains to the amount of good 1 and the vertical axis pertains to the amount of good 2. Suppose that, given the consumption bundle r = 10 and y = 10, a consumer's MRS (marginal rate of substitution) is equal (in absolute value) to 4. The price of good 1 is $1, the price...
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...
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4. Two consumers (call them A and B) have utility functions over consumption in period 1 and consumption in period 2 given by U (1,C2)n(c)ln(c2) In period 1, consumer A receives income of y 2, the endowments are reversed, consumer A gets y= 120 and consumer B gets y = 80 80 and consumer B receives y? = 120. In period (so they just a. First assume consumers are not allowed to save...
Question 1: Louis the retired Canadian lives on a fixed budget and consumes only two goods: toques (T) and maple syrup (M). Suppose Louis monthly budget is 100 and the price of the two goods are (PT,PM) (4,2). (a) Make a properly labeled diagram illustrating Louis'budget constraint with T on the hori- zontal axis and M on the vertical axis. Indicate the area corresponding to the set of bundles (M, T) that Louis can afford. (b) What is the maximum...
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3. Consider a person who chooses an amount of consumption c and non-working or leisure time R to maximize the utility function U(R,c) = 100R – R2 + c subject to the constraint c+wR=wL+M, where L is the maximum amount of time available (i.e., the maximum amount of leisure and labor supply possible) and M is the initial income...
1. (15 pts) Suppose Amy enjoys apple juice (A) and grape juice (G) according to U(A,G) = 3A+4G. (a) (4 pts) If apple juice costs 3 cents per ounce and grape juice costs 5 cents per ounce, and Amy has 30 cents to spend on these products, how much apple juice and grape juice should she buy to maximize her utility? (b) (3 pts) Draw the graph of her indifference map and her budget constraint, and show that the utility...
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Exercise 3. Slutsky (Quasilinear) The utility function is u = x + xy, and the budget constraint is m=P,X, + P2XZ. a) Derive the optimal demand curve for good 1, x,(PP2), and good 2, x2(m, PP.). b) Looking at the cross price effects (@x_/ôp, and Ox_/ôp.) are goods x, and X, substitutes or complements? Looking at income effects (@x,lôm and Ox_lām) are goods x, and X, inferior, normal or neither? c) Assume m=100, =0.5...
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Q2) (based on textbook problem 3.19) Consider the utility function 2va +3/ a) Find MU and MUy b) Is the assumption that more is better satisfied for both goods? c) Does the marginal utility of each good diminish, remain constant, or increase as the consumer buys more? d) What is MRS Is it diminishing, constant, or increasing as the consumer sub- e) On a graph with a on the horizontal axis and y on...
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L. The graph below shows a range of consumption bundles comprising Meals and Education. Meals 4 Education Which of the following preference relations are feasible? In case they are NOT feasible, state the assumption violated in each case. (2 points each) 1. DPA 2. CIA 3. DPB,BI E and DIE 4. DP BBP A and DPA II. Draw the indifference...