Question

A consumer’s total utility function is as follows: U(X,Y)=XY+2X, while a budget line equation is 4X+2Y=60....

A consumer’s total utility function is as follows: U(X,Y)=XY+2X, while a budget line equation is 4X+2Y=60.
a. Calculate optimal consumption of both goods.
b. What is total utility from consumption of these goods?
c. What is MRS in the point of optimum?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Given is the Total Utility Function along with Budget Constraint:                               &nbs
Given is the Total Utility Function along with Budget Constraint:                                                  Utility Function:                                 U (X, Y) = X0.2Y0.3 Budget Constraint:                             I = XPx + Y Py What is the consumer’s marginal utility for X and for Y? Suppose the price of X is equal to 4 and the price of Y equal to 6. What is the utility maximizing proportion of X and Y in his consumption? {construct the budget constraint) If the total amount of money he is...
Suppose that there are two goods, X and Y. The utility function is U = XY...
Suppose that there are two goods, X and Y. The utility function is U = XY + 2Y. The price of one unit of X is P, and the price of one unit of Y is £5. Income is £60. Derive the demand for X as a function of P.
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...
(15) A representative consumer’s utility is given by: U=min⁡(2X, Y). Income is 2400. The prices are:...
(15) A representative consumer’s utility is given by: U=min⁡(2X, Y). Income is 2400. The prices are: PX=2, PY=1. X is the consumption of gasoline and Y is the consumption of composite good. (3) Write the budget constraint. Compute the optimal consumption bundle. (4) Now the government imposes 100% tax on the consumption of gasoline. Write the new budget constraint. Compute the optimal consumption bundle. (4) Now, in addition to the tax in part (B), suppose that the government gives the...
(15) A representative consumer’s utility is given by: U=min⁡(2X, Y). Income is 2400. The prices are:...
(15) A representative consumer’s utility is given by: U=min⁡(2X, Y). Income is 2400. The prices are: PX=2, PY=1. X is the consumption of gasoline and Y is the consumption of composite good. (3) Write the budget constraint. Compute the optimal consumption bundle. (4) Now the government imposes 100% tax on the consumption of gasoline. Write the new budget constraint. Compute the optimal consumption bundle. (4) Now, in addition to the tax in part (B), suppose that the government gives the...
(15) A representative consumer’s utility is given by: U=min (2X,Y). Income is 2400. The prices are:...
(15) A representative consumer’s utility is given by: U=min (2X,Y). Income is 2400. The prices are: P_X=2,P_Y=1. X is the consumption of gasoline and Y is the consumption of composite good. (3) Write the budget constraint. Compute the optimal consumption bundle. (4) Now the government imposes 100% tax on the consumption of gasoline. Write the new budget constraint. Compute the optimal consumption bundle. (4) Now, in addition to the tax in part (B), suppose that the government gives the income...
. The consumer’s utility function for goods X and Y is U = 2X^5/2 + 15Y....
. The consumer’s utility function for goods X and Y is U = 2X^5/2 + 15Y. Good X is placed on the x-axis and good Y is placed on the y-axis. Which of the following statements is TRUE? I. The marginal utility of good Y is 15 II. The MRSXY = 5X 15 III. The consumer is always willing to trade away 15 units of good Y for 1 unit of good X. a) I and II b) I only...
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...
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.
Jen’s utility function is U (X, Y ) = (X + 2)(Y + 1), where X...
Jen’s utility function is U (X, Y ) = (X + 2)(Y + 1), where X is her consumption of good X and Y is her consumption of good Y . a. Write an equation for Jen’s indifference curve that goes through the point (X, Y ) = (2, 8). On the axes below, sketch Jen’s indifference curve for U = 36 b. Suppose that the price of each good is 1 and that Jen has an income of 11....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT