Question

Brad's preferences are represented by the following utility ?(?,?)=?^(1/4)?^(3/4) pz=5, pw=15 and Brad's income I=20. The...

Brad's preferences are represented by the following utility ?(?,?)=?^(1/4)?^(3/4) pz=5, pw=15 and Brad's income I=20. The government subsidies consumption of good w, the price of w with subsidy is pw′=0.8pw. Compute the change in Brad's income that will keep Brad as well-off as without the subsidy (i.e. we want to keep Brad's utility fixed). Remember that the change in income is ?new−?old:

a.

3.0821

b.

-3.0821

c.

4.0214

d.

-4.0214

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
A consumer has preferences represented by the utility function u(x, y) = x^(1/2)*y^(1/2). (This means that...
A consumer has preferences represented by the utility function u(x, y) = x^(1/2)*y^(1/2). (This means that MUx=(1/2)x^(−1/2)*y^(1/2) and MUy =1/2x^(1/2)*y^(−1/2) a. What is the marginal rate of substitution? b. Suppose that the price of good x is 2, and the price of good y is 1. The consumer’s income is 20. What is the optimal quantity of x and y the consumer will choose? c. Suppose the price of good x decreases to 1. The price of good y and...
1. Suppose utility for a consumer over food(x) and clothing(y) is represented by u(x,y) = 915xy....
1. Suppose utility for a consumer over food(x) and clothing(y) is represented by u(x,y) = 915xy. Find the optimal values of x and y as a function of the prices px and py with an income level m. px and py are the prices of good x and y respectively. 2. Consider a utility function that represents preferences: u(x,y) = min{80x,40y} Find the optimal values of x and y as a function of the prices px and py with an...
2. Yan has preferences over chocolate(x)and vanilla(y)ice cream that are represented by the following utility function:...
2. Yan has preferences over chocolate(x)and vanilla(y)ice cream that are represented by the following utility function: u(x,y) = xy4 3 Notice the power (4/3) just affects good y. (a) Yan is an ice cream connoisseur, meaning, when deciding how much ice cream to buy, there is a minimum level of utility he must reach with ice cream consumption. But he doesn’t want to spend too much money because he is a graduate student. Setup Yan’s constrained expenditure minimization problem. (1...
5. Suppose that an individual’s utility is given by ?(?, ?) = ?^(1/4)? ^(3/4). Let I...
5. Suppose that an individual’s utility is given by ?(?, ?) = ?^(1/4)? ^(3/4). Let I denote income, ?? the price of x, and ?? the price of y. e. Suppose the price of good x is $0.25 and the price of good y is $0.75. How much money would this individual need to spend to reach a utility level of 10? (Show your work and provide a numerical answer.) (6 points) f. Suppose that the price of good x...
Consider a one-period closed economy, i.e. agents (consumers, firms and government) live for one period, consumers...
Consider a one-period closed economy, i.e. agents (consumers, firms and government) live for one period, consumers supply labor and demand consumption good, whereas their utility function is in the form of log(C−χN1+ν/1+ν ) (GHH preference). Firms supply consumption good and demand labor and their production function is y = zN^1−α. The government finances an exogenous spending via lump-sum taxes. Suppose there is a positive shock on χ which means the consumers favor leisure (or dislike labor) by much more than...
ECO 101-S70: Final Quiz 2 CHAPTER 3: Demand, Supply and Equilibrium 1. Which of the following...
ECO 101-S70: Final Quiz 2 CHAPTER 3: Demand, Supply and Equilibrium 1. Which of the following could cause a decrease in consumer demand for product X? a.   a decrease in consumer income b.   an increase in the prices of goods which are good substitutes for product X c. an increase in the price which consumers expect will prevail for product X in the future d. a decrease in the supply of product X 2. If two goods are substitutes for...
Please answer the following Case analysis questions 1-How is New Balance performing compared to its primary...
Please answer the following Case analysis questions 1-How is New Balance performing compared to its primary rivals? How will the acquisition of Reebok by Adidas impact the structure of the athletic shoe industry? Is this likely to be favorable or unfavorable for New Balance? 2- What issues does New Balance management need to address? 3-What recommendations would you make to New Balance Management? What does New Balance need to do to continue to be successful? Should management continue to invest...
What role could the governance of ethics have played if it had been in existence in...
What role could the governance of ethics have played if it had been in existence in the organization? Assess the leadership of Enron from an ethical perspective. THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among the top Fortune 500 companies, collapsed in 2001 under a mountain of debt...
Discuss ethical issues that can be identified in this case and the mode of managing ethics...
Discuss ethical issues that can be identified in this case and the mode of managing ethics Enron finds itself in this case. How would you describe the ethical culture and levels of trust at Enron? Provide reasons for your assessment. THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among...
In February 2012, the Pepsi Next product was launched into the US market. This case study...
In February 2012, the Pepsi Next product was launched into the US market. This case study provides students with an interesting insight into PepsiCo’s new product process and some of the challenging decisions that they faced along the way. Pepsi Next Case Study Introduction Pepsi Next was launched by PepsiCo into the US market in February 2012, and has since been rolled out to various international markets (for instance, it was launched in Australia in September 2012). The new product...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT