Question

(Hajikhameneh & Rietz) Answer the following questions for a consumer with utility function U(x, y) =...

(Hajikhameneh & Rietz) Answer the following questions for a consumer with utility function U(x, y) = x2 y2 and a budget constraint of g(x, y) = 2x + 4y = 40. You must show all of your work for full credit. a. What is the marginal utility of x? of y? b. In one to two sentences, define the economic meaning of the term “marginal utility.” c. What is the marginal rate of substitution for the given utility function? d. In one to two sentences define the economic meaning of the term “marginal rate of substitution.” e. Using the Lagrange multiplier method, find the (Marshallian) demand curves for x and y. Use lambda λ as the Lagrange multiplier. f. In a sentence or two, define the economic meaning of the Lagrange multiplier.

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
We have a utility function U = aln(x) + (1 - a)ln(Y) subject to the budget...
We have a utility function U = aln(x) + (1 - a)ln(Y) subject to the budget constraint: Px'X + Py'Y = I Please use the Lagrange Multiplier method to find the demand function for goods X and Y given the above information about I (income), Px (price of goods X), Py (prices of good Y) Please interpret the meaning of the Multiplier.
Consider the following utility function: U = M in(X; Y ). (I) Find the income and...
Consider the following utility function: U = M in(X; Y ). (I) Find the income and substitution e§ects. (II) Draw the compensated and Marshallian demand curves.
Consider a consumer whose preferences over the goods are represented by the utility function U(x,y) =...
Consider a consumer whose preferences over the goods are represented by the utility function U(x,y) = xy^2. Recall that for this function the marginal utilities are given by MUx(x, y) = y^2 and MUy(x, y) = 2xy. (a) What are the formulas for the indifference curves corresponding to utility levels of u ̄ = 1, u ̄ = 4, and u ̄ = 9? Draw these three indifference curves in one graph. (b) What is the marginal rate of substitution...
Consider a consumer with preferences represented by the utility function u(x,y)=3x+6 sqrt(y) (a) Are these preferences...
Consider a consumer with preferences represented by the utility function u(x,y)=3x+6 sqrt(y) (a) Are these preferences strictly convex? (b) Derive the marginal rate of substitution. (c) Suppose instead, the utility function is: u(x,y)=x+2 sqrt(y) Are these preferences strictly convex? Derive the marginal rate of substitution. (d) Are there any similarities or differences between the two utility functions?
Consider a consumer with preferences represented by the utility function: U(x,y) = 3x + 6 √...
Consider a consumer with preferences represented by the utility function: U(x,y) = 3x + 6 √ y   Are these preferences strictly convex? Derive the marginal rate of substitution Suppose, the utility function is: U(x,y) = -x +2 √ y   Are there any similarities or differences between the two utility functions?
Consider a consumer with the following utility function: U(X, Y ) = X1/2Y 1/2 (a) Derive...
Consider a consumer with the following utility function: U(X, Y ) = X1/2Y 1/2 (a) Derive the consumer’s marginal rate of substitution (b) Calculate the derivative of the MRS with respect to X. (c) Is the utility function homogenous in X? (d) Re-write the regular budget constraint as a function of PX , X, PY , &I. In other words, solve the equation for Y . (e) State the optimality condition that relates the marginal rate of substi- tution to...
Suppose the utility function for a consumer is given by U = 5XY. X is the...
Suppose the utility function for a consumer is given by U = 5XY. X is the amount of Good X and Y is the amount of Good Y. a) Neatly sketch the utility function. [Ensure that you label the graph carefully and state any assumptions that you make in sketching the curve.] b) Does this utility function exhibit diminishing marginal utility? [Ensure that you explain your answer fully.] c) Calculate the marginal rate of substitution. [Ensure that you explain your...
2. Consider a consumer with preferences represented by the utility function: u(x,y)=3x+6sqrt(y) (a) Are these preferences...
2. Consider a consumer with preferences represented by the utility function: u(x,y)=3x+6sqrt(y) (a) Are these preferences strictly convex? (b) Derive the marginal rate of substitution. (c) Suppose instead, the utility function is: u(x,y)=x+2sqrt(y) Are these preferences strictly convex? Derive the marginal rate of sbustitution. (d) Are there any similarities or differences between the two utility functions?
utility function u(x,y) = x3 ·y2 I am going to walk you through the process of...
utility function u(x,y) = x3 ·y2 I am going to walk you through the process of deriving the optimal quantity of apples and bananas that will make you the happiest. To do this, we are going to apply what we learnt about derivatives. a) First, you have a budget. You cannot just buy an infinite amount since you would not be able to afford it. Suppose the price of a single apple is Px = 2 while the price of...
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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT