Question

Emily's preferences can be represented by u(x,y)=x^{1/4}
y^{3/4} . Emily faces prices (p_{x},p_{y})
= (2,1) and her income is $120.

**a) Her optimal consumption bundle is**:________
(write in the form of (x,y) with no space)

Now the price of x increases to $3 while price of y remains the same

**b) Her new** **optimal consumption bundle
is:_______** (write in the form of (x,y) with no
space)

**c) Her Equivalent Variation**
**is**: $________

Answer #1

Emily's preferences can be represented by u(x,y)=x1/4
y3/4 . Emily faces prices (px,py)
= (2,1) and her income is $120.
Her optimal consumption bundle is: _______
(write in the form of (x,y) with no space)
Now the price of x increases to $3 while price of y remains the
same
Her new optimal consumption bundle
is:_______ (write in the form of (x,y) with no
space)
Her Equivalent Variation is:
$__________

Emily's preferences can be represented by u(x,y)=x^1/4 y^3/4 .
Emily faces prices (px,py) = (2,1) and her income is $120.
Her optimal consumption bundle is: __________ (write in the form
of (x,y) with no space)
Now the price of x increases to $3 while price of y remains the
same Her new optimal consumption bundle is: ____________ (write in
the form of (x,y) with no space)
Her Equivalent Variation is: $ ____________

Emily's preferences can be represented by u(x,y) =
x1/2 y1/2 . Emily faces prices
(px,py) = (2,1) and her income is $60. (some
formulas in chapter 5 might help)
Her optimal consumption bundle is:
______________ (write in the form of (x,y) with no space)
Now the price of x increases to $3 while price of y remains the
same
Her new optimal consumption bundle is:
______________ (write in the form of (x,y) with
no space)
Her Equivalent Variation is:
$_______________
Her...

Suppose the utility function of an individual is
U=X1/4 Y3/4 and income is I=4000. If price of
X is Px=4 and price of Y is Py=1.
The optimal consumption bundle for this individual is:
a) X=50, Y=1000
b) X=150, Y=2000
c) X=250, Y=3000
d) X=350, Y=4000
e) None of above

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...

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.

Consider the utility function U(x,y) = xy Income is I=400, and
prices are initially
px =10 and py =10.
(a) Find the optimal consumption choices of x and y.
(b) The price of x changes, to px =40, while the price of y remains
the same. What are
the new optimal consumption choices for x and y?
(c) What is the substitution effect?
(d) What is the income effect?

4. Consider an individual making choices over two
goods, x and y with prices px = 3 and py = 4,
and who has income I = $120 and her preferences can be represented
by the utility function U(x; y) =
x2y2. Suppose the
government imposes a sales tax of $1 per unit on good x: ( Hint:
You need to find the initial, final, and hypothetical optimal
consumption bundles, their corresponding maximized utility levels
and/or minimized expenditure and compare. )...

Assume that Sam has following utility function: U(x,y) =
2√x+y
MRS=(x)^-1/2, px = 1/5, py = 1 and her income I = 10. price
increase for the good x from px = 1/5 to p0x = 1/2.
(a) Consider a price increase for the good x from px = 1/5 to
p0x = 1/2. Find new optimal bundle under new price using a graph
that shows the change in budget set and the change in optimal
bundle when the price...

1. Emily has preferences for two goods x, y while her marginal
rate of substitution (MRS) between x and y is given by 3y/x. Her
budget constraint is m ≥ pxx + pyy, where m = income and px, py are
prices of x, y respectively. (a) Emily's expenditure on y (i.e.,
pyy) is 1/3 of her expenditure on x (i.e., pxx). Is this true Are x
and y normal goods? (b) Andrew has different preferences: his
marginal rate of...

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