Question

Suppose the consumer’s utility function is equal to U=3x+5y. Currently the price of x is $5,...

Suppose the consumer’s utility function is equal to U=3x+5y. Currently the price of x is $5, the price of y is $15 and the income the consumer has to spend on these goods is $100.

A) Determine the MRSyx if we consume the bundle of (X,Y) = (1,2).

B) What if we consume the bundle of (50,2).

C) What is the opportunity cost of X in terms of Y?

D) What quantities of X and Y should this consumer consume to maximize their satisfaction subject to their budget constraint?

E) There is a change in the market and the price of X increases to 10$. What quantities of X and Y should this consumer consume to maximize their satisfaction subject to their budget constraint?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose a consumer’s Utility Function U(x,y) = X1/2Y1/2. The consumer wants to choose the bundle (x*,...
Suppose a consumer’s Utility Function U(x,y) = X1/2Y1/2. The consumer wants to choose the bundle (x*, y*) that would maximize utility. Suppose Px = $5 and Py = $10 and the consumer has $500 to spend. Write the consumer’s budget constraint. Use the budget constraint to write Y in terms of X. Substitute Y from above into the utility function U(x,y) = X1/2Y1/2. To solve for the utility maximizing, taking the derivative of U from (b) with respect to X....
3. Suppose that a consumer has a utility function given by U(X,Y) = X^.5Y^.5 . Consider...
3. Suppose that a consumer has a utility function given by U(X,Y) = X^.5Y^.5 . Consider the following bundles of goods: A = (9, 4), B = (16, 16), C = (1, 36). a. Calculate the consumer’s utility level for each bundle of goods. b. Specify the preference ordering for the bundles using the “strictly preferred to” symbol and the “indifferent to” symbol. c. Now, take the natural log of the utility function. Calculate the new utility level provided by...
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...
Consider a consumer with the utility function U(x, y) = min(3x, 5y). The prices of the...
Consider a consumer with the utility function U(x, y) = min(3x, 5y). The prices of the two goods are Px = $5 and Py = $10, and the consumer’s income is $220. Illustrate the indifference curves then determine and illustrate on the graph the optimum consumption basket. Comment on the types of goods x and y represent and on the optimum solution.
Consider a consumer with the utility function U(x, y) =2 min(3x, 5y), that is, the two...
Consider a consumer with the utility function U(x, y) =2 min(3x, 5y), that is, the two goods are perfect complements in the ratio 3:5. The prices of the two goods are Px = $5 and Py = $10, and the consumer’s income is $330. At the optimal basket, the consumer buys _____ units of y. The utility she gets at the optimal basket is _____ At the basket (20, 15), the MRSx,y = _____.
1. A consumer has the utility function U = min(2X, 5Y ). The budget constraint isPXX+PYY...
1. A consumer has the utility function U = min(2X, 5Y ). The budget constraint isPXX+PYY =I. (a) Given the consumer’s utility function, how does the consumer view these two goods? In other words, are they perfect substitutes, perfect complements, or are somewhat substitutable? (2 points) (b) Solve for the consumer’s demand functions, X∗ and Y ∗. (5 points) (c) Assume PX = 3, PY = 2, and I = 200. What is the consumer’s optimal bundle? (2 points) 2....
8) Suppose a consumer’s utility function is defined by u(x,y)=3x+y for every x≥0 and y≥0 and...
8) Suppose a consumer’s utility function is defined by u(x,y)=3x+y for every x≥0 and y≥0 and the consumer’s initial endowment of wealth is w=100. Graphically depict the income and substitution effects for this consumer if initially Px=1 =Py and then the price of commodity x decreases to Px=1/2.
Consider a consumer with a utility function U = x2/3y1/3, where x and y are 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 the consumer is given by U = x + 5y^3 Suppose...
Suppose the Utility function of the consumer is given by U = x + 5y^3 Suppose the price of x is given by p x and the price of y is given by p y and the budget income of the consumer is given by I. Price of x, Price of y and Income are always strictly positive. Assume interior solution. a) Write the statement of the problem b) Compute the parametric expressions of the equilibrium quantity of x &...
1. Ann’s utility function from consuming x and y is given by U(x, y) = x...
1. Ann’s utility function from consuming x and y is given by U(x, y) = x 1 4 y 1 4 . a) Write down the budget constraint and rationality condition. b) Find Ann’s demand curves of x and y. c) Now suppose Ann’s income is $100. The price of x is $1 and the price of $y is 2. What’s the optimal bundle? d) If the price of x increases to $2, and other things are the same as...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT