Question

Emily's preferences can be represented by u(x,y)=x1/4 y3/4 . Emily faces prices (px,py) = (2,1) and...

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.

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: $________

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
Emily's preferences can be represented by u(x,y)=x1/4 y3/4 . Emily faces prices (px,py) = (2,1) and...
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...
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) =...
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...
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....
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) =...
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...
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 =...
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 =...
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)...
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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT