Consider the following utility function и(х, у) — Зх + 4у a. Is the utility function homothetic? Explain. b. Under what condition will the consumer purchase good x alone?
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Q: d. Are the preferences represented by this utility function homothetic?
A: u(x1,x2)=x12×x2
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A: Note:- Since we can only answer up to three subparts, we'll answer the first three. Please repost…
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A: We are going to solve above question using Marginal Rate of Substitution formula.
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Q: utility.
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- The new (price, quantity) pair will be at point:? ABCDEFG HConsumer satisfaction from consuming goods X and Y is as follows:U=10X+14Y-X2-Y2 and consumer income 3X+Y=12Look for:1. The marginal utility function for goods X and Y?2. What are the values of X and Y for maximum utility?3. Prove with the results of X and Y obtained whether optimal customer satisfaction is achieved?Eren’s two main hobbies are taking vacations overseas (V) and eating expensivemeals (M). His utility function is given as: U(V,M) = V2MLast year, the average price of taking a vacation overseas was US$200 and the averageprice of an expensive meal is $50. However, due to supply problems in Onions, theaverage price of an expensive meal rose to $75. The average price of a vacation did notchange. His income, which is $1500, did not change. Suppose that the Department of Welfare wants to know how much should begiven to Eren to offset his change un utility due to the price increase of an expensivemeal. Calculate the compensative variation (CV).
- Eren’s two main hobbies are taking vacations overseas (V) and eating expensivemeals (M). His utility function is given as: U(V,M) = V2MLast year, the average price of taking a vacation overseas was US$200 and the averageprice of an expensive meal is $50. However, due to supply problems in Onions, theaverage price of an expensive meal rose to $75. The average price of a vacation did notchange. His income, which is $1500, did not change. Calculate for the equivalent variation (EV) for the price change.Eren’s two main hobbies are taking vacations overseas (V) and eating expensivemeals (M). His utility function is given as: U(V,M) = V2MLast year, the average price of taking a vacation overseas was US$200 and the averageprice of an expensive meal is $50. However, due to supply problems in Onions, theaverage price of an expensive meal rose to $75. The average price of a vacation did notchange. His income, which is $1500, did not change. Calculate the change in consumer surplus from consuming the expensivemeals considering the price change (Hint: you need to compare his optimalconsumption bundle before and after the price change to get the change in CS).To help with his busy schedule, Joe drinks a lot of cappuccinos. In particular, his weekly demand for cappuccinos is: cap = 0.1 M-8 Pcap Where Xcap is the number of cappuccinos drunk per week, Mis Joe's weekly income and Pcap is the price of a cappuccino. (Note that Xcop is an average demand and need not be a whole number). (a) Suppose that income M = 240 euro, and the price is Pcap = 1.5 euro. How many Cappuccino, on average, will Joe drink per week? Suppose that the price increases to Pcap = 1.6 euro. (b) What is Joe's new demand for cappuccinos? What is his total change in demand due to the price change? (c) Given the new price (Pcap = 1.6), how much extra income would Joe need to allow him to continue buying the number of Cappuccinos calculated in part (a), without needing to reduce his demand other goods? (In other words, how much would Joe's expenditure on cappuccinos have gone up if he had continued to buy the number of cappuccinos calculated in part (a)?) (d) Compute the change…
- Utility function...(Review Question) Sarah consumes both wine ) and cheese (y) and considers them perfect substitutes. She always gets twice as much utility from consuming wine as she does cheese. What equation would represent her utility function? U-(2xy) U=x+2y U=2x+y U=min(x,2y)Which among the following is not true?Select one:a. None of the answers are correctb. When marginal utility declines, a higher price is needed to induce the consumer tobuy more of a particular productc. When marginal utility declines, a lower price is needed to induce the consumer tobuy more of a particular productd. All the answers are correcte. Utility maximizing rule and the demand curve are logically consistent
- 1.There are two goods F and C. Let MU and P denote marginal utility and price of each good. SupposeMUF = 2,MUC = 1,PF = 1,PC = 2.Are you maximizing your satisfaction? If not, what would you do to increase your satisfaction? Explain. 2.What is the substitution effect? Can it cause the quantity to decrease given a decrease in price? Explain 3.What is the income effect? Can it cause the quantity to decrease given a decrease in price? ExplainQuestion In the utility function above, x and y are substitutes.The Consumer Maximization Problem is as follows:Max(x;y)=5x + 6y subject to x + 2y = 10, We know MRSxy=5/6, find it by setting U(x, y) = U¯ and solving the utility function for y and what is the price ratio? Full explain this question and text typing work only thanksWhat is the marginal utility per dollar spent on the 6th strawberry? Which of the combinations of strawberries and apples satisfies the following rule? How do you know?