Please do all the parts and explain it well
Priya has Cobb Douglas preferences for Juice (X1) and Soda (X2). Her MRS at his optimal consumption is 2. If the price of juice is p1= $6. What is the price of Soda, p2?
At the optimal consumption,
MRS = price ratio ( Price of juice / Price of Soda)
Put values, we get
MRS = p1/ p2
2 = 6/ p2
p2 = 6/2 = 3
So price of Soda, P2 = $3.
Please do all the parts and explain it well Priya has Cobb Douglas preferences for Juice...
10. Omar has Cobb Douglas preferences for Juice (X1) and Soda (X2). His MRS at his optimal consumption is 2. If the price of juice is p1= $6. What is the price of Soda, p2?
1. A buyer has Cobb-Douglas preferences such that mrs = − x2/ x1 . He starts with 3 units of good 1 and $50. Use this information to answer the following questions. (a) Find an expression for this consumer’s net demand for good 1 (i.e. how many more units he will buy given price p). (b) Sketch this demand curve. (Make sure you label the axes and put p on the vertical axis.)
Hi.I need your answer for all from A to G for this question 2*. Assume that Bob has a budget constraint p1x1 + p2x2 = m, and that his preferences are represented by the Cobb-Douglas utility function U(x1, x2) = x1 c x2 d , where c>0 and d>0. State Bob’s optimization (utility maximization) problem. a) Set up the Lagrangian function. b) Derive the necessary conditions (the first-order conditions) for an optimal interior solution. c) Show that the MRS (the...
Question: Hi.I need your answer for all from A to G for this question 2*. Assume that Bob has a budget constraint p1x1 + p2x2 = m, and that his preferences are represented by the Cobb-Douglas utility function U(x1, x2) = x1 c x2 d , where c>0 and d>0. State Bob’s optimization (utility maximization) problem. a) Set up the Lagrangian function. b) Derive the necessary conditions (the first-order conditions) for an optimal interior solution. c) Show that the MRS...
2*. Assume that Bob has a budget constraint p1x1 + p2x2 = m, and that his preferences are represented by the Cobb-Douglas utility function U(x1, x2) = x1 c x2 d , where c>0 and d>0. State Bob’s optimization (utility maximization) problem. a) Set up the Lagrangian function. b) Derive the necessary conditions (the first-order conditions) for an optimal interior solution. c) Show that the MRS (the slope of the indifference curve) is equal to the slope of the budget...
2*. Assume that Bob has a budget constraint p1x1 + p2x2 = m, and that his preferences are represented by the Cobb-Douglas utility function U(x1, x2) = x1 c x2 d , where c>0 and d>0. State Bob’s optimization (utility maximization) problem. a) Set up the Lagrangian function. b) Derive the necessary conditions (the first-order conditions) for an optimal interior solution. c) Show that the MRS (the slope of the indifference curve) is equal to the slope of the budget...
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...
Assume that a consumer’s preferences are given by u(x1, x2) = 10x11/2 * x21/2 Currently, m = 200 and p1 = 10 and p2 = 20. Suppose now that p1 increases to p'1 = 20. What is the total effect of this price change in the optimal consumption of the two goods for the consumer, and what are the substitution and income effects? Step 1:Solve the consumer’s problem given her preferences (described by u) and under the assumptions that m =...
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?...
Hi, please solve . Thank you
7. Shawn has quasi linear preferences, linear in x2. His utility function is given by U (x1, x2) = In(xı) + x2 I (a) Compute his MU, and MUZ (b) Compute Shawn's marginal rate of substitution (MRS) for a bundle (x1, x2). (c) Find his demand function for x, and xz in terms of prices and income (P1, P2, y).