A person has a Cobb Douglas utility function for two goods X and Y. If the price of a X increases and the budget stays the same, the utility maximizing person __________.
Cannot be determined from the information
will consume less of Y
will only consume Y
will consume less of both goods
will have lower utility
A person has a Cobb Douglas utility function for two goods X and Y. If the...
A person has a Cobb Douglas utility function for two goods X and Y. If the price of a X decreases and the budget stays the same, then a utility maximizing person O will only consume X* O will consume more of Y Cannot be determined from the information will consume more of both goods will have higher utility
1. answer it only numerical values. 2. A person has a Cobb Douglas utility function for two goods X and Y. If the price of a X increases and the budget stays the same, the utility maximizing person __________. Cannot be determined from the information will consume less of Y will only consume Y will consume less of both goods will have lower utility Sara has $40 in her budget. Given the following graph, what is the MRS of her...
1. Megan has $50 in their budget. Given the following graph what's the MRS at her optimal consumption bundle? 2. The demand curve for airplanes is: Qc=15,000 - .2Pc - 800Pg where Qc is the quantity of airplanes, Pc is the price of airplanes and Pg is the price of gasoline. By what quantity does the demand for airplanes change if the price of gasoline goes down by $.50? a) 400 b) 800 c) -400 d) -800 e) Can’t be...
Consumer A has a Cobb -Douglas utility function with exponents that sum to 1. Consumer B consumes the same two goods, but the goods are perfect substitutes for her. Can Consumer A and Consumer B have the same price offer curves?
Suppose Bill has preferences over chocolate,x, and ice cream,y, that are represented by the Cobb-Douglas utility function u(x, y) =x^2 y. 1. Write down two other Cobb-Douglas utility functions, besides the one above, that represent Bill’s preferences. 2. Write down two more Cobb-Douglas utility functions that do NOT represent Bill’s prefer- ences. 3. Draw 3 indifference curves that represents Bill’s preferences at 3 different levels of satsifaction. 4. What is Bill’s marginal rate of substitution between chocolate and ice cream?...
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?
here's the utility function Let us introduce a second person, who has standard Cobb-Douglas utility UB = (x+B)•(x²B). Their endowments are wa= (6, 3) and WB = (3,6). You may assume p2 = 3p1. Find the amount person A consumes of good 1 in competitive equilibrium. Simplify decimals (no extra zeros). et ua = x+A+ 3x A.
Ex. 1: Imagine there are two goods, X and Y. The utility function is: U = XY. The price of X is $2 and the price of Y is $4. The budget is $20. What is the optimal quantity of X and Y to consume? Ex. 2: Imagine there are two goods: books and coffees. Your utility function is U = BC, where B is the number of books you consume and C is the number of coffees you consume....
For a general Cobb-Douglas utility function U(x,y)=Axayb, please show that the price elasticities of demand for both of good x and y are -1, and that the income elasticities of demand for both of good x and y are 1.
1. When a consumer has a Cobb-Douglas utility function given by u(x, y) = xa yb , their demand for good x is given by x∗ = m/Px (a/a+b) where m is income and Px is the price of good x. Using this demand function, find the formula for this consumer’s price elasticity of demand. Interpret it in words.