If Danny has an income of a hundred dollars to spend on food. (burgers=x, soup=y) the price of burgers is p1=1 per unit and the price of soup is p2=2 per unit. there is a tax on burgers changing the price of burgers to 1+t. Danny's utility function is u=x+y
a)what is Danny's ordinary demand before and after the tax (express after tax in a function of t and the total change in her demand as a function of t)
b)what is the maximum tax that the government can collect
If Danny has an income of a hundred dollars to spend on food. (burgers=x, soup=y) the...
If Danny has an income of a hundred dollars to spend on food. (burgers=x, soup=y) the price of burgers is p1=1 per unit and the price of soup is p2=2 per unit. there is a tax on burgers changing the price of burgers to 1+t. Danny's utility function is u=x+y a)what is Danny's ordinary demand before and after the tax (express after tax in a function of t and the total change in her demand as a function of t)...
2) Chimichanga Fest Your utility function is given by U-X,X, where xi s your consumption of Chimichangas and x, is your consumption of all the other goods in the economy. Yes, you spend 60% of your budget on Chimichangas, which is totally reasonable after the Dumpling House tragedy. a) Solve the utility maximization problem, finding the uncompensated demand for x, & x, and the indirect utility function in terms of p,, p, and Y. b) Solve the expenditure minimization problem,...
- H u y | | | | - 2. Xin is a foodie and loves to spend all his money on food(x) and drinks(Y). As we know, the price of food and drinks are $8 and $3 per unit respectively. Please answer the following questions. A. Assume that Xin has 168 dollars, please write down his budget constraint and make a graph of it. Slope and intercepts have to be marked clearly. B. Xin's utility function is U =...
2) Assume that utility is given by Utility-U(X,Y)-X03yo7 a) Calculate the ordinary demand functions, indirect utility function, and expenditure function. b) Use the expenditure function calculated in part (a) together with Shephard's lemma to compute the compensated demand function for good X. Use the results from part (b) together with the ordinary demand function for good X to show that the Slutsky equation holds for this case. c) d) Prove that the expenditure function calculated in part (a) is homogeneous...
Suppose you have a total income of I to spend on two goods x1 and x2, with unit prices p1 and p2 respectively. Your taste can be represented by the utility function u left parenthesis x subscript 1 comma x subscript 2 right parenthesis equals x subscript 1 cubed x subscript 2 squared (a) What is your optimal choice for x1 and x2 (as functions of p1 and p2 and I) ? Use the Lagrange Method. (b) Given prices p1...
5) When the price of a certain commodity is p dollars per unit, customers demand r hundred units of the commodity, where How fast is the demand r changing with respect to time when the price is $6 per unit and decreasing at the rate of 25 cents per month? 1 6) The output at a certain plant is Q-0.09r20.12ry+0.04y2 units per day, where z is the number of hours of skilled labor used and y is the number of...
Hans has $27 which he decides to spend on x and y. Commodity x costs $16 per unit and commodity y costs $10 per unit. He has the utility function U(x, y) = 5x 2y 2 and he can purchase fractional units of x and y. What is his optimal consumption bundle? Show your result on a graph.
A consumer has an income of $1,000 to spend on food and medicine. The price of one unit of food is $5 and the price of one unit of medicine is $10. For each question, write down the mathematical expression of the budget constraint and draw it carefully. Put food on the x-axis and medicine on the y-axis. Label the incercepts, slopes, and kinks. 1. Suppose the consumer receives coupons for 50 units of food and those can only be...
Suppose the government wishes to tax a utility maximizing consumer to obtain a certain amount of tax revenue. A utility maximizing consumer has utility function u(x,y)= square root(x+y). The price of x is $1, the price of y is $4 and the consumers income is $120. a) Suppose the government imposes sales tax t=1 on good x per unit. What is the optimal consumption for good x and good y for the consumer under the sales tax? What is the...