Homework Answers
Answer
Option A
OBserving the equation the demand for Good X is dependent on factors "l" and "n"; whereas the demand for good y is independent of any factors besides the number of Y purchased.
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Ewa's preferences are presented by the utility function: U(2,y) = 2lnz + y. With a current...
5. Assume an individual has preferences represented by the utility function U(x, y) = x1/2y1/3 Which...
5. Assume an individual has preferences represented by the utility function U(x, y) = x1/2y1/3 Which of the following statements is necessarily TRUE? Assume prices and income are positive. a. The price consumption curve as the price of x changes) slopes downward. b. The income consumption curve slopes downward. c. Cross-price elasticity of demand for good x with respect to the price of y is negative. d. Price elasticity of demand for good y is negative. (See Besanko 5.6 and...
Cat only buys tomatoes (x) and cucumbers (y) and her preferences can be identified with U(6x2y e. If Cat's income is 24...
Cat only buys tomatoes (x) and cucumbers (y) and her preferences can be identified with U(6x2y e. If Cat's income is 240, the price of tomatoes is 2 and the price of cucumbers is 4, what is the bundle that Cat consumes? What is the utility that she gets from this bundle? f. If the price of cucumbers falls to 2, what is the new bundle that Cat consumes? Is her utility higher or lower than when the price was...
Sally the Sleek’s preferences can be described by the utility function U(x, y) = x^2y^3/1000. Prices...
Sally the Sleek’s preferences can be described by the utility function U(x, y) = x^2y^3/1000. Prices are px = 4 and py = 3; she has an income of $80 to spend. (a) If Sally initially consumed 5 units of x and 20 units of y, how much additional utility does she get from spending one (small fraction of a) dollar more on good x? How much additional utility does she get from spending one (small fraction of a) dollar...
A consumer has preferences represented by the utility function u(x, y) -xlyi. (This means that a....
A consumer has preferences represented by the utility function u(x, y) -xlyi. (This means that a. What is the marginal rate of substitution? b. Suppose that the price of good x is 2, and the price of good y is 1. The consumer's income is 20. What is the optimal quantity of x and y the consumer will choose? c. Suppose the price of good x decreases to 1. The price of good y and the consumer's income are unchanged....
3. Suppose an individual has perfect-complements preferences that can be represented by the utility function U(x,y)=...
3. Suppose an individual has perfect-complements preferences that can be represented by the utility function U(x,y)= min[3x,2y]. Furthermore, suppose that she faces a standard linear budget constraint, with income denoted by m and prices denoted by px and p,, respectively. a) Derive the demand functions for x and y. b) How does demand for the two goods depend on the prices, p, and p, ? Explain.
A consumer's preferences are given by the following utility function: u(x,y) = xy Assume Pold =...
A consumer's preferences are given by the following utility function: u(x,y) = xy Assume Pold = 1, Py = 1, and I = 8. a. Solve for the Marshallian demand functions of x and y (your answer should have numbers, not variables. You should round your answers to three decimal places): * old 4 y = 4 b. What is the utility associated with these demands, prices, and income? u = 16 c. Suppose the price of x rises to...
Question 2 Question 2 (15 pts) A consumer has preferences represented by the utility function u(x,y)...
Question 2
Question 2 (15 pts) A consumer has preferences represented by the utility function u(x,y) -xlyi. (This means that a. What is the marginal rate of substitution? b. Suppose that the price of good x is 2, and the price of good y is 1. The consumer's income wWhat is the optimal quantity is 20. What is the optimal quantity of x and y the consumer will choose? c. Suppose the price of good x decreases to 1. The...
* * 5. A consumer's preferences are given by the utility function U = x;'°*". The...
* * 5. A consumer's preferences are given by the utility function U = x;'°*". The price of good 1 is 3 and the price of 2 is 6, while her income is 36. The utility maximising bundle for the consumer is a. X* = 4, x* = 4 b. x1 = 4, x = 3 C. x1 = 2, x = 6 d. x1 = 8, x* = 2 e. None of the above * * N * *...
3. A consumer's preferences over a and y are given by the utility function u(x,y) -...
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...
Clara consumes two goods x and y. Suppose her utility function is given as U(x,y)=min{3x,4y} The...
Clara consumes two goods x and y. Suppose her utility function is given as U(x,y)=min{3x,4y} The prices of the two goods are Px for good x and Py for good y. If her monthly income is $M, Derive her uncompensated demand function for good x Derive her uncompensated demand function for good y Derive the cross-price effects and show that the two goods are complementary goods.
5. Assume an individual has preferences represented by the utility function U(x, y) = x1/2y1/3 Which of the following statements is necessarily TRUE? Assume prices and income are positive. a. The price consumption curve as the price of x changes) slopes downward. b. The income consumption curve slopes downward. c. Cross-price elasticity of demand for good x with respect to the price of y is negative. d. Price elasticity of demand for good y is negative. (See Besanko 5.6 and...
Cat only buys tomatoes (x) and cucumbers (y) and her preferences can be identified with U(6x2y e. If Cat's income is 240, the price of tomatoes is 2 and the price of cucumbers is 4, what is the bundle that Cat consumes? What is the utility that she gets from this bundle? f. If the price of cucumbers falls to 2, what is the new bundle that Cat consumes? Is her utility higher or lower than when the price was...
A consumer has preferences represented by the utility function u(x, y) -xlyi. (This means that a. What is the marginal rate of substitution? b. Suppose that the price of good x is 2, and the price of good y is 1. The consumer's income is 20. What is the optimal quantity of x and y the consumer will choose? c. Suppose the price of good x decreases to 1. The price of good y and the consumer's income are unchanged....
3. Suppose an individual has perfect-complements preferences that can be represented by the utility function U(x,y)= min[3x,2y]. Furthermore, suppose that she faces a standard linear budget constraint, with income denoted by m and prices denoted by px and p,, respectively. a) Derive the demand functions for x and y. b) How does demand for the two goods depend on the prices, p, and p, ? Explain.
A consumer's preferences are given by the following utility function: u(x,y) = xy Assume Pold = 1, Py = 1, and I = 8. a. Solve for the Marshallian demand functions of x and y (your answer should have numbers, not variables. You should round your answers to three decimal places): * old 4 y = 4 b. What is the utility associated with these demands, prices, and income? u = 16 c. Suppose the price of x rises to...
Question 2
Question 2 (15 pts) A consumer has preferences represented by the utility function u(x,y) -xlyi. (This means that a. What is the marginal rate of substitution? b. Suppose that the price of good x is 2, and the price of good y is 1. The consumer's income wWhat is the optimal quantity is 20. What is the optimal quantity of x and y the consumer will choose? c. Suppose the price of good x decreases to 1. The...
* * 5. A consumer's preferences are given by the utility function U = x;'°*". The price of good 1 is 3 and the price of 2 is 6, while her income is 36. The utility maximising bundle for the consumer is a. X* = 4, x* = 4 b. x1 = 4, x = 3 C. x1 = 2, x = 6 d. x1 = 8, x* = 2 e. None of the above * * N * *...
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...
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