Question

Sam's is interested in two goods, X and Y. His indirect utility function is U* =...

Sam's is interested in two goods, X and Y. His indirect utility function is

U* = M px-.6 py-4.    ( same as U* = M /(px.6 py0.4 ) )

where

M is Sam's income, and px   and py denote respectively the price of good X and the price of good Y.  

Sam's market demand functions are X*=0.6M/px and Y* = 0.4M/py .

Find the absolute value of the change in Sam's consumers surplus if the price of good X rises from 1 to 4.3 dollars assuming his income is M=152.3 and price of good Y is equal to 1.

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
An agent has preferences for goods X and Y represented by the utility function U(X,Y) =...
An agent has preferences for goods X and Y represented by the utility function U(X,Y) = X +3Y the price of good X is Px= 20, the price of good Y is Py= 40, and her income isI = 400 Choose the quantities of X and Y which, for the given prices and income, maximize her utility.
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...
Tamer derives utility from goods X and Y, according to the following utility function: U(X,Y)= 3...
Tamer derives utility from goods X and Y, according to the following utility function: U(X,Y)= 3 X radical y . His budget is $90 per period, the price of X is PX=$2, and the price of Y is PY=$6. 1. Graph the indifference curve when U= 36 2. What is the Tamer’s MRS between goods X and Y at the bundle (X=8 and Y=2 )? What does the value of MRS means? (أحسب القيمة واكتب بالكلمات ماذا تعني القيمة) 3....
Larry’s utility is a function of nuts (X) and berries (Y), given by U = 20ln...
Larry’s utility is a function of nuts (X) and berries (Y), given by U = 20ln X + 4Y . a. Derive equations for Larry’s demand functions for X and Y, assuming an interior optimum. b. If the price of berries (PY) gets too high, Larry will stop consuming them altogether. That price is his reservation price for berries. Derive a formula for Larry’s reservation price for berries as a function of the price of nuts and his income (PX...
9. AJ has a utility function: u(x,y) = x2y3. The price of x is px =...
9. AJ has a utility function: u(x,y) = x2y3. The price of x is px = 1 and the price of y is py = 2, and AJ has income m = 15 to spend on the goods. To maximize his utility, how many units of y will AJ consume?
1) For a linear preference function u (x, y) = x + 2y, calculate the utility...
1) For a linear preference function u (x, y) = x + 2y, calculate the utility maximizing consumption bundle, for income m = 90, if a) px = 4 and py = 2 b) px = 3 and py = 6 c) px = 4 and py = 9
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 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?
(A). Find the maximum of the following utility function with respect to x; U= x^2 *...
(A). Find the maximum of the following utility function with respect to x; U= x^2 * (120-4x). The utility function is U(x,y)= sqrt(x) + sqrt(y) . The price of good x is Px and the price of good y is Py. We denote income by M with M > 0. This function is well-defined for x>0 and y>0. (B). Compute (aU/aX) and (a^2u/ax^2). Is the utility function increasing in x? Is the utility function concave in x? (C). Write down...
2. For Each of the following situations, i) Write the Indirect Utility Function ii) Write the...
2. For Each of the following situations, i) Write the Indirect Utility Function ii) Write the Expenditure Function iii) Calculate the Compensating Variation iv) Calculate the Equivalent Variation a) U(X,Y) = X^1/2 x Y^1/2. M = $288. Initially, PX= 16 and PY = 1. Then the Price of X changes to PX= 9. i) Indirect Utility Function: __________________________ ii) Expenditure Function: ____________________________ iii) CV = ________________ iv) EV = ________________ b) U(X,Y) = MIN (X, 3Y). M = $40. Initially,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT