Assume John has Cobb-Douglas utility function for bread (B) and whiskey (W): U= 2 BSWS Marginal...
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?
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.
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...
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 =...
Aaron consumes only 2 goods: avocados (a) and bread (b). His utility function is U(a,b)=ab, with MUa=b and MUb=a. The price of avocados is $4 and Aaron’s income is $24. He spends his entire income on his current consumption bundle of two avocados and eight loaves of bread. a) What is the price of a loaf of bread?
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.
1. Dorothy's utility function is U(B, O) = (B + 2) (0 + 1) where B is her consumption of bananas and O is her consumption of oatmeal. MUB = 0 + 1, MUo = B + 2. (Place Oatmeal on the y axis.) a. Write down the expression and draw Dorothy's indifference curve through (2,8). b. Suppose po = Pb = $1 and M = $11, draw the budget constraint on the same graph as her indifference curve. c....
2. Abagail has an estimated Cobb-Douglas utility function of U = 982592.75 for food, 91, and housing, 92. The price for food is arbitrarily set at $1 per unit Pi = $1 and the average monthly rent near UCF, P2, is $1.50 per sq ft. Jackie, like the average UCF student spends $800 on food and housing per month. (a) (20 points) Using calculus, solve for Abagail's optimal quantities of housing and food. For 10 bonus points provide the marginal...
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?
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...