Question

Consider a perfectly competitive market system with two goods.
Every member of two groups of individuals is trying to maximize
his/her own utility. There are 10 people in group A, and each has
the utility function
*U(x _{A},y_{A})=x_{A}*

Unless otherwise specified, please always keep two digits after the decimal point/round your answer to the closest hundredth if needed.

1)With the current prices, the optimal consumption bundle of an individual in Group A is( ) units of x and ( ) units of y.

2)The MRS of an Individual in Group B is ( ). With the current prices, the optimal consumption bundle of an individual in Group B is ( ) units of x and ( ) units of y.

3)With the current prices, the total (gross) quantity supplied of x in the market is ( ) units, and the total (gross) quantity demanded of x is ( ) units.

4) Which of the following is correct? Select one:

a. The market is currently in equilibrium.

b. The market is not in equilibrium, and *P _{x}*
/

c. The market is not in equilibrium, and *P _{x}*
/

Answer #1

Please solve all the parts.Thank you.
A consumer can spend her income on two products, good X and good
Y . The consumer’s tastes are represented by the utility function
U(x, y) = xy.
a. Suppose that Px = 4 and Py = 1, and I = 16.
Draw the budget line and mark it as BL1. Initial optimum is at A.
Find the optimal amounts, xA and yA and locate A on the graph. Find
the initial level of...

Consider a perfectly competitive market in good x consisting of
250 consumers with a utility function: Denote Px to be the price
for good x and suppose Py = 1. Each consumer has income equal u(x,
y) = xy to 10. There are 100 firms producing good x according to
the cost function c(x) = x^2 + 1.
(a) Derive the demand curve for good x for a consumer in the
market.
(b) Derive the market demand curve for good...

Question 1:
Consider a perfectly competitive market in good x consisting of
250 consumers with utility function:
u(x,y) = xy
Denote Px to be the price for good x and suppose Py=1. Each
consumer has income equal to 10. There are 100 forms producing good
x according to the cost function c(x)=x^2 + 1.
a) Derive the demand curve for good x for a consumer in the
market
b) Derive the market demand curve for good x
C) Derive the...

A consumer has a budget of M = $133 per month to spend on two
goods, X and Y. The consumer’s utility derived from the purchase of
these two goods is determined to be U (X, Y) = 3X2 + Y2 . If PX =
3, and PY = 2
a. What is the optimal bundle of goods that the consumer will
purchase?
b. How much does the consumer spend on each good?
c. If the price of good Y...

Suppose x represents weekly meat consumption and y represents
weekly vegetables consumption. Their prices are px and py. Paul’s
utility function is U1(x,y) = x2y3 and Peter’s utility function is
U2(x,y) = 2x + 3y.
a. Derive the utility level for both at the bundle (4,4)
respectively. Does one enjoy the bundle (4,4) more than the
other?
b. If the meat price px = 5, vegetables price py = 1, and each
of them has a budget of 100. What...

Suppose there are two consumers, A and B, and two goods, X and
Y. The consumers have the following initial endowments and utility
functions:
W X A = 2 W Y A = 9 U A ( X , Y ) = X 1 3 Y 2 3 W X B = 6 W Y B
= 2 U B ( X , Y ) = 3 X + 4 Y
Suppose the price of X is PX=2 and the...

Consider a consumer with a utility function U =
x2/3y1/3, where x and y are the quantities of
each of the two goods consumed. A consumer faces prices for x of $2
and y of $1, and is currently consuming 10 units of good X and 30
units of good Y with all available income. What can we say about
this consumption bundle?
Group of answer choices
a.The consumption bundle is not optimal; the consumer could
increase their utility by...

Suppose the utility function of an individual is
U=X1/4 Y3/4 and income is I=4000. If price of
X is Px=4 and price of Y is Py=1.
The optimal consumption bundle for this individual is:
a) X=50, Y=1000
b) X=150, Y=2000
c) X=250, Y=3000
d) X=350, Y=4000
e) None of above

Suppose there are two goods, good X and good Y . Both goods are
available in arbitrary non-negative quantities; that is, the
consumption set is R2++. A typical consumption bundle is denoted
(x,y), where x is the quantity of good X and y is the quantity of
good Y .
A consumer, Alia, faces two constraints. First, she has a
limited amount of wealth, w > 0, to spend on the goods X and Y ,
and both of these...

Consider the utility function U(x,y) = xy Income is I=400, and
prices are initially
px =10 and py =10.
(a) Find the optimal consumption choices of x and y.
(b) The price of x changes, to px =40, while the price of y remains
the same. What are
the new optimal consumption choices for x and y?
(c) What is the substitution effect?
(d) What is the income effect?

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