Question

A consumer has 250 dirhams to spend on goods X and Y. The market prices of...

A consumer has 250 dirhams to spend on goods X and Y. The market prices of these two goods are Px = 10 and Py = 25

  1. Determine the equation for the consumer’s budget line.
  1. Illustrate the consumer’s opportunity set in a carefully labeled diagram.
  1. What is the MRS between goods X and Y?
  2. Show how the consumer’s opportunity set changes if income increases by 250.
  1. How does this increase affect the MRS?
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 250 dirhams to spend on goods X and Y. The market prices of...
A consumer has 250 dirhams to spend on goods X and Y. The market prices of these two goods are Px a) b) c) d) = 10 and Py = 25 Determine the equation for the consumer’s budget line. Illustrate the consumer’s opportunity set in a carefully labeled diagram. What is the MRS between goods X and Y? Show how the consumer’s opportunity set changes if income increases by 250. e) How does this increase affect the MRS? justify your...
A consumer has a budget of M = $133 per month to spend on two goods,...
A consumer has a budget of M = $133 per month to spend on two goods, X and Y. The consumer’s utility derived from the purchase of these two goods is determined to be U (X, Y) = 3X2 + Y2 . If PX = 3, and PY = 2 a. What is the optimal bundle of goods that the consumer will purchase? b. How much does the consumer spend on each good? c. If the price of good Y...
Suppose a consumer has the utility function u(x, y) = x + y. a) In a...
Suppose a consumer has the utility function u(x, y) = x + y. a) In a well-labeled diagram, illustrate the indifference curve which yields a utility level of 1. (b) If the consumer has income M and faces the prices px and py for x and y, respectively, derive the demand functions for the two goods. (c) What types of preferences are associated with such a utility function?
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.
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...
Suppose a consumer has the utility function u(x,y)=x+y - (a) In a well labelled diagram illustrate...
Suppose a consumer has the utility function u(x,y)=x+y - (a) In a well labelled diagram illustrate the indifference curve which yields a utility level of 1 (b) If the consumer has income And faces the prices Px and Py for x and y, respectively, derive the demand function for the two goods (c) What types of preferences are associated with such a utility function?
Suppose there are two goods, good X and good Y . Both goods are available in...
Suppose there are two goods, good X and good Y . Both goods are available in arbitrary non-negative quantities; that is, the consumption set is R2++. A typical consumption bundle is denoted (x,y), where x is the quantity of good X and y is the quantity of good Y . A consumer, Alia, faces two constraints. First, she has a limited amount of wealth, w > 0, to spend on the goods X and Y , and both of these...
In a research paper an economist assumes that the typical consumer has a utility U(X, Y)...
In a research paper an economist assumes that the typical consumer has a utility U(X, Y) = X^0.25Y^0.75 and a budget of $1,000. a) Consider the utility function. What is the consumer’s attitude towards mixing X and Y? What is the shape of the consumer’s indifference curves? Do you expect this consumer to choose a bundle in the interior of the budget line or a bundle at one of the corners? Discuss. b) Now, turn your attention to the budget...
A consumer has utility function U(x, y) = x + 4y1/2 . What is the consumer’s...
A consumer has utility function U(x, y) = x + 4y1/2 . What is the consumer’s demand function for good x as a function of prices px and py, and of income m, assuming a corner solution? Group of answer choices a.x = (m – 3px)/px b.x = m/px – 4px/py c.x = m/px d.x = 0
Suppose a consumer’s Utility Function U(x,y) = X1/2Y1/2. The consumer wants to choose the bundle (x*,...
Suppose a consumer’s Utility Function U(x,y) = X1/2Y1/2. The consumer wants to choose the bundle (x*, y*) that would maximize utility. Suppose Px = $5 and Py = $10 and the consumer has $500 to spend. Write the consumer’s budget constraint. Use the budget constraint to write Y in terms of X. Substitute Y from above into the utility function U(x,y) = X1/2Y1/2. To solve for the utility maximizing, taking the derivative of U from (b) with respect to X....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT