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
Answer 1- (-2)
Answer 2- will consume less of both goods
1. answer it only numerical values. 2. A person has a Cobb Douglas utility function for...
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 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. 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...
Sara has $40 in her budget. Given the following graph, what is the MRS of her optimal consumption bundle? Burritos Pizza 4
Sara has $40 in her budget. Given the following graph, what is the MRS of her optimal consumption bundle? Burritos 8 Pizza 2
2. Consider the Cobb-Douglas utility function u(x,y) = x2y2. Let the budget 1, where pr, py are the prices and I denotes the constraint be prx + pyy income. (a) Write the Lagrangian for this utility maximization problem. (b) Solve the first-order conditions to find the demand functions for both good a and good y. [Hint: Your results should only depend on the pa- rameters pa, Py, I.] (c) In the optimal consumption bundle, how much money is spend on...
Q3: a. Consider a Cobb-Douglas Utility Function Find marginal utility of Y. Does marginal utility of depend on the level of consumption of X? how do you know? Explain b. Find slope of the indifference curve. c. Find MRS and draw the indifference curve for above function.
Assume John has Cobb-Douglas utility function for bread (B) and whiskey (W): U= 2 BSWS Marginal utilities are as followed: MUB=B-05W. and MUw = 30.5W-0.5 a. Write down the expression for MRSow (i.e., you need to simplify the ratio and come up with a neat result) b. What is MRSBw at bundle A(4,4)? At bundle B(1,16)? C. Regarding MRSBw, we consider a movement along an indifference curve from the left to the righ (getting more of bread, the good on...
Problem 1 (10 marks) Answer the following questions regarding a Cobb-Douglas utility function U(X,Y)= X0.3 0.7 (a) Does this utility function exhibit diminishing marginal utility in X? Show why or why not. (b) Does this utility function exhibit diminishing marginal rate of substitution? Mathematically show and verbally explain why it has (or doesn't have) such property. Problem 2 (10 marks) Consider the following utility function U(X,Y)= X14734 Suppose that prices and income are given as following Px= 1 Py =...
Assume John has Cobb-Douglas utility function for bread (B) and whiskey (W): U- 2*B0.5w0.5 Marginal utilities are as followed: MUs B0sW05 and MUw Bo5w°s 0.5 1. Write down the expression for MRSBw 2. What is MRSBw at the bundle A(9,9)? 3. Does this utility function have diminishing MRS?