Question

**Suppose the marginal utilities from consuming good X and
Y are MUX=20 and MUY=30, respectively. And prices of good X and
good Y are PX=$3 and PY=$4. Which of the following statements is
true?**

A. The consumer is maximizing utility

B. The consumer could increase utility by consuming less Y and more X

C. The consumer could increase utility by consuming less X and more Y

D. The consumer is receiving less marginal utility per dollar from good X than from good Y

Answer #1

The utility maximizing condition

Mux/Px =MUy/Py

It means that in consumer equilibrium, when the marginal utility from the consumption of the last dollar’s value of each good is the equal.

Mux/Px =MUy/Py

20/3<30/4

6.66< 7.5

Therefore for maximizing total utility, consumer can decrease the consumption of good X and increase the consumption of good Y. Hence in this way MU of X will increase and MU of Y will decrease.

Hence statement C is true.

Hence option C is the correct answer.

12.
Suppose that Jennifer's marginal utility for good X and Y are
MUX = 10, MUY = 15 with
prices for good X and Y as PX = $5, and
PY = $3. Which of the following statements is
TRUE?
A.
she is receiving more marginal utility per dollar from good
Y than from good X.
B.
she could increase utility by consuming more of good X
and less of good Y.
C.
she is maximizing utility.
D.
she could...

Suppose the marginal utilities from consuming good X and good Y
are MUx M U x = 20 and MUy M U y = 30, respectively. And prices of
good X and good Y are Px P x = $3 and Py P y = $4. Which of the
following statements is true?
Question 28 options:
The consumer could increase utility by giving up 1 unit of good
Y for 3/4 units of good X.
The consumer is receiving more...

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...

Ginger's utility function is U(x,y)=x2y with associated marginal
utility functions MUx=2xy and MUy=x2. She has income I=240 and
faces prices Px= $8 and Py =$2.
a. Determine Gingers optimal basket given these prices and her
in.
b. If the price of y increase to $8 and Ginger's income is
unchanged what must the price of x fall to in order for her to be
exactly as well as before the change in Py?

If MUx MUy > Px Py for a consumer, then she must purchases
more x
True or false?

Answer the following questions based on the equations: U =
x2y, MUx = 2xy and MUy =
x2
Determine the demand curves for x and y given px,
py and I.
Based on (a), are x and y normal or inferior goods?
When px, py and I double then Utility
also doubles. Explain if this is this is a true or false
statement.
Now suppose that U = 17x6y3 – 203,
MUx = 102x5y3 and MUy =
51x6y2. Do the...

Suppose a consumer's preferences are given by U(X,Y) = X*Y.
Therefore the MUX = Y and MUY = X. Suppose
the price of good Y is $1 and the consumer has $80 to spend (M =
80). Sketch the price-consumption curve for the
values
PX = $1
PX = $2
PX = $4
To do this, carefully draw the budget constraints associated with
each of the prices for good X, and indicate the bundle that the
consumer chooses in each...

Suppose that Ali has consumed two goods X and Y. Details of MUx
and MUy are given in the following table. Ali’s income is Rs.1000
and the price of Px is Rs.200 and the price of Py is Rs.100. Units
1 2 3 4 5 6 7 8 9 10 MUx 3000 2900 2600 2300 1900 1600 1200 800 600
200 MUy 2400 2200 2000 1600 1250 1100 800 400 0 -50 i) Explain how
Ali should spend his income...

Suppose there are two goods, X and
Y. The price of good X is $2 per unit and the price of
good Y is $3 per unit. A given consumer with an income
of $300 has the following utility function:
U(X,Y) = X0.8Y0.2
which yields
marginal utilities of:
MUX= 0.8X-0.2Y0.2
MUY= 0.2X0.8Y-0.8
a. What
is the equation for this consumer’s budget constraint in terms of X
and Y?
b. What
is the equation for this consumer’s marginal rate of substitution
(MRSXY)? Simplifyso you only have...

Given:
X
TUx MUx
MUx/Px
Y
TUy MUy
MUy/Py
MUy/Py’
0
0
0
0
0
0
0
0
0
1
250
1
350
2
450
2 550
3
600
3 700
4
700
4 800
5
775
5 875
6
800
6 900
Suppose income I = $160, Px = $20, & Py = $20.
Find the combination of X and Y that maximizes utility.
Calculate Consumers’ surplus of X, CSx = TUx – TEx, total
utility minus total expenditures...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 58 seconds ago

asked 6 minutes ago

asked 30 minutes ago

asked 42 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago