Question

using the given information what will be the optimal production bundle? income=$10utility function; xy Px=Py=1

Answer #1

Given the following utility function and budget
contraints:
U(X,Y) = XY
I = Px (X) + Py(Y)
and given that: Py = 10 , Px=12 and I = 360
Fill in the blanks in the following table (round to two
decimal places):
Part 1: What is the Value of
Qx?
Part 2: What is the Value of
Qy?
Part 3: What is the Optimal
level of utility?

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...

(x,y)=ln (x^2+16)+y. Px=$4 Py= 8 m=$64
a.find the optimal bundle
b. find good y income elasticity when income rises to
$96

(x,y)=ln (x^2+16)+y. Px=$4 Py= 8 m=$64
a.find the optimal bundle
b. find good y income elasticity when income rises to
$96

Let income be I = $90, Px = $2, Py = $1, and utility U = 4X½Y.
a.[12] Write down and simplify the two conditions required for
utility maximization. b.[6] Compute the optimal consumption bundle
for the consumer. What is the level of utility at the optimum?

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?

Homework Assignment 5
1. U = XY where MRS = Y/X; I = 1500, Px = Py = 15,
A. Derive optimal consumption bundle.
B. If Px increases to be $30, derive the new optimal consumption
bundle
C. Using the results from A and B, derive the individual demand
for good X assuming the demand is linear.
2. Assuming the market has two consumers for a very special GPU
and their individual demands are given below
Consumer A: P =...

Assume that Sam has following utility function: U(x,y) =
2√x+y
MRS=(x)^-1/2, px = 1/5, py = 1 and her income I = 10. price
increase for the good x from px = 1/5 to p0x = 1/2.
(a) Consider a price increase for the good x from px = 1/5 to
p0x = 1/2. Find new optimal bundle under new price using a graph
that shows the change in budget set and the change in optimal
bundle when the price...

Utility cobb douglas function = 2X.5Y2
MUx =Y2/X.5 MUy
=4X.5Y Px=1 PY=2 and M=100
1.Graph the consumer optimization problem in(X,Y) space. Clealy
label the precise location of the optimal bundle, the budget
constraintm, and the shape of the furthest obtainable indifference
curve.
2.Assume Px increase to 2. What is the total effect of the price
change in terms of X and Y.
3. What is the precise location of the bundle used to decompose
the substitution and income effect?
4.What...

Suppose that your utility function is 7x+3y. The market prices
are px=20 and
py=14. Assuming that your wealth is
$10,000, calculate the utility-maximizing commodity bundle.

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