Consider the following consumer utility maximization problem: max x y x.y s.t. 3x + 7y ≤ 231 x>0, y 20 How much x and y will this consumer consume? 5 6 11 11 X y 11
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- Illustrate and explain how consumer equilibrium is achieved using the indifference curve?Discuss how the demand elasticity of a product changes? Give examples.A consumer's weekly income is $5000, the price of a cell phone is $1250, and the price of a watch is $500. What quantity of cell phones and watches will maximize the consumer's utility if they spend their entire weekly income on cell phones and watches? Explain your using I. answer marginal Suppose that this consumer's income elasticity for watches is analysis. 5.4. what does this indicate about watches? If the cross-elasticity calculates to 0.8 what does this indicate about the relationship between watches and cell phones?Juice e2 e₁ 15 18 25 B2 Soda 37) The above figure shows Bobby's indifference map for soda and juice. B₁ indicates his original budget line. B₂ indicates his budget line resulting from an increase in the price of soda. From the graph, one can conclude that A) the income elasticity of demand for soda is 1. B) Bobby's demand for soda is perfectly inelastic. C) Bobby views soda as a normal good. D) Bobby views soda as an inferior good.
- True/False Marginal utility keeps falling with the each additional consumption of a good or service.Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the goods you buy has a negative income elasticity, that is, it is an inferior good, what must be true of the income elasticity of the other good you buy?In two commodities world, utility function for a consumer and her income are given respectively. 11 U = x2y2 I= 480 If the price of these goods are Px= 15 and P, = 60 what would be her demand for these two goods * =? and y =? If the price of first good P has increased from 15 to 60. To keep her utility fixed how much does she need to spend for these two goods at least. In other words what should be her minimum income.
- 1. Let Amy derive utility each from housing, h, and a consumer good, z, with the following utility function: 1/ U=h¾/3₂¾3 M Her Mashallian demand equations are the following: h= and z=- 3ph 2M 3p₂ Amy lives in a city where everyone works downtown. While her income is $160 per month, her commute cost (bus pass) costs her $40 per month, so she only has $120 to spend on h and z. (we assume no time cost of the commute) The consumer good, z, has a price of $1 and the price of her housing, h, is $2 per unit. a. What is her quantity demanded of h and z and what level of utility is she currently enjoying? She is considering moving to a location further from work to a house where her commuting cost would be $60 per month (so she will have $100 to spend on z and h). The market adjusts ph and housing sizes across the city so that utility is the same at every location around the city. b. What is the equation for the appropriate demand function for housing in this city? C. What the price of housing…3. If MU,1/Px1 > MU,2/PX2 is the consumer maximizing his utility? Explain how to maximize it if your answer is no?19:32 Fri 6 Aug 91% Screenshot_20210806-193021_Office.jpg a) Choose X, and X, to max the utility fxn, UX,„X,)=chX;+(l-a}hX; st: M - P, X + P,X ; a) Write down the demand functions for goods 1 and 2 b) Consider a price decrease for good 1 from P, toP" . Write down the demand functions for good 1 when prices are P, and when prices drop from R toP c) What is the compensating income, M associated with the price change? Obtain the SE and IE associated with the price change 24
- A consumer’s weekly income is $5000, the price of a cell phone is $1250, and the price of a watch is $500. What quantity of cell phones and watches will maximize the consumer’s utility if they spend their entire weekly income on cell phones and watches? Explain your answer using marginal analysis. 1A. Suppose that this consumer’s income elasticity for watches is 5.4. what does this indicate about watches? If the cross-elasticity calculates to 0.8 what does this indicate about the relationship between watches and cell phones? 2 Determine and explain the Profit Maximization output of a perfectly competitive firmSuppose that the consumer maximizes his utilitysuch that the marginal utilities of goods X and Y are; MUx=80-16x MUy=60-2y Let Px=P4,Py=P2 and I=P80 Find the utility maximizing quantities X and YMylie's total utility from singing the same song over and over is 70 utils after one repetition, 110 utils after two repetitions, 140 utils after three repetitions, 160 utils after four repetitions, 120 utils after five repetitions, and 60 utils after six repetitions, as shown in the table below. a. Write down her marginal utility for each repetition. Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Repetitions 0 1 2 3 4 5 6 Total Utility Marginal Utility 0 70 110 140 160 120 60 b. Once Mylie's total utility begins to decrease, does each additional singing of the song hurt more than the previous song or less than the previous song? O More than the previous song O Less than the previous song
