Question

1) For a linear preference function u (x, y) = x + 2y, calculate the utility...

1) For a linear preference function u (x, y) = x + 2y, calculate the utility maximizing consumption bundle, for income m = 90, if

a) px = 4 and py = 2

b) px = 3 and py = 6

c) px = 4 and py = 9

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose a consumer has the utility function U (x, y) = xy + x + y....
Suppose a consumer has the utility function U (x, y) = xy + x + y. Recall that for this function the marginal utilities are given by MUx(x,y) = y+1 and MUy(x,y) = x+1. (a) What is the marginal rate of substitution MRSxy? (b)If the prices for the goods are px =$2 and py =$4,and if the income of the consumer is M = $18, then what is the consumer’s optimal affordable bundle? (c) What if instead the prices are...
Consider the utility function U ( x,y ) = min { x , 2y }. (a)...
Consider the utility function U ( x,y ) = min { x , 2y }. (a) Find the optimal consumption choices of x and y when I=50, px=10, and py=5. (b) The formula for own-price elasticity of x is εx,px = (−2px/2px + py) For these specific values of income, prices, x and y, what is the own-price elasticity? What does this value tell us about x? (c) The formula for cross-price elasticity of x is εx,py = (py/2px +...
A consumer's preferences are given by the utility function u=(107)^2+2(x-5)y and the restrictions x>5 and y>0...
A consumer's preferences are given by the utility function u=(107)^2+2(x-5)y and the restrictions x>5 and y>0 are imposed. 1. Write out the Lagrangian function to solve the consumer's choice problem. Use the Lagrangian to derive the first order conditions for the consumer's utility maximizing choice problem. Consider only interior solutions. Show your work. 2. Derive the Optimal consumption bundles x*(px,py,w) and y*(px,py,w) 3. Use the first order condition from 1 to calculate the consumer's marginal utility of income when w=200,...
1. Suppose utility for a consumer over food(x) and clothing(y) is represented by u(x,y) = 915xy....
1. Suppose utility for a consumer over food(x) and clothing(y) is represented by u(x,y) = 915xy. Find the optimal values of x and y as a function of the prices px and py with an income level m. px and py are the prices of good x and y respectively. 2. Consider a utility function that represents preferences: u(x,y) = min{80x,40y} Find the optimal values of x and y as a function of the prices px and py with an...
Using the utility function U(x,y)=3x+y/2, px=7, py=1, and M=46 , what is the utility-maximizing demand for...
Using the utility function U(x,y)=3x+y/2, px=7, py=1, and M=46 , what is the utility-maximizing demand for y, y*?
. Suppose utility is given by the following function: u(x, y) = min(2x, 3y) Suppose Px...
. Suppose utility is given by the following function: u(x, y) = min(2x, 3y) Suppose Px = 4, Py = 6, and m = 24. Use this information to answer the following questions: (a) What is the no-waste condition for this individual? (b) Draw a map of indifference curves for these preferences. Be sure to label your axes, include the no-waste line, and draw at least three indifference curves. (c) Given prices and income, what is the utility-maximizing bundle of...
Sam's is interested in two goods, X and Y. His indirect utility function is U* =...
Sam's is interested in two goods, X and Y. His indirect utility function is U* = M px-.6 py-4.    ( same as U* = M /(px.6 py0.4 ) ) where M is Sam's income, and px   and py denote respectively the price of good X and the price of good Y.   Sam's market demand functions are X*=0.6M/px and Y* = 0.4M/py . Find the absolute value of the change in Sam's consumers surplus if the price of good X...
Tamer derives utility from goods X and Y, according to the following utility function: U(X,Y)= 3...
Tamer derives utility from goods X and Y, according to the following utility function: U(X,Y)= 3 X radical y . His budget is $90 per period, the price of X is PX=$2, and the price of Y is PY=$6. 1. Graph the indifference curve when U= 36 2. What is the Tamer’s MRS between goods X and Y at the bundle (X=8 and Y=2 )? What does the value of MRS means? (أحسب القيمة واكتب بالكلمات ماذا تعني القيمة) 3....
Suppose a consumer’s utility function is given by U(X,Y) = X*Y. Also, the consumer has $360...
Suppose a consumer’s utility function is given by U(X,Y) = X*Y. Also, the consumer has $360 to spend, and the price of X, PX = 9, and the price of Y, PY = 1. a) (4 points) How much X and Y should the consumer purchase in order to maximize her utility? b) (2 points) How much total utility does the consumer receive? c) (4 points) Now suppose PX decreases to 4. What is the new bundle of X and...
9. AJ has a utility function: u(x,y) = x2y3. The price of x is px =...
9. AJ has a utility function: u(x,y) = x2y3. The price of x is px = 1 and the price of y is py = 2, and AJ has income m = 15 to spend on the goods. To maximize his utility, how many units of y will AJ consume?