i) Derive consumer's budget constraint ii) Derive the marginal utility X and marginal utility Y iii) Find out the consumer optimum combination of good X and Y at the market. A consumer's Total Utility Function of two goods X and y are as follows:TUx=50x-5x2TUy=32y-4y?Price of X=Rs.5Price of y: Rs.8Conoumorpoomo: 120

TUx = 50x - 5x^2 TUy = 32y - 4y^2 Px = 5 Py = 8 Income = 120

Answered: Derive consumer's budget constraint…

Derive consumer's budget constraint ii) Derive the marginal utility X and marginal utility Y iii) Find out the consumer optimum combination of good X and Y at the market

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 2P

See similar textbooks

Related questions

Q: Explain and differentiate preference and utility.

A: Definitions: Financial specialists utilize the term utility to portray the satisfaction that a buyer…

Q: Question 1 Maria spends all of her income of $2,000 on food (F) and clothing (C). The prices per…

A: M spends all her income on food and clothing. M=$2,000PF=$5PC=$20

Q: (Law of Diminishing Marginal Utility) Complete each of the following sentences: a. your tastes…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Total utility is 0 when marginal utility is 0 True/False

A: # Utility is a concept which helps us calculate the satisfaction a consumer gets when a good or…

Q: Explain the relationship between the budget constraint and indifference curve at consumer optimum.

A: Consumer optimum is the point of consumer's equilibrium where they get maximum level of…

Q: Which situation is consistent with the law of diminishing marginal utility? a. Paul's marginal…

A: The law of diminishing marginal utility states that as we consume more and more of a unit. The…

Q: For each of the following utility functions, compute the marginal utility of good X (MUx) and the…

A: Answer: Marginal utility: marginal utility refers to the addition to the total utility when an…

Q: Consider a consumer with the following utility function for goods X and Y: U(x,y) = 2 - 1 y А. What…

A: Marginal utility is that the added satisfaction that a consumer gets from having another unit of…

Q: Maria spends all of her income of $2,000 on food (F) and clothing (C). The prices per unit are: PF =…

A: (Q) Maria spends all of her income of $2,000 on food (F) and clothing (C). The prices per unit are:…

Q: Draw a budget constraint and indifference curve for Pepsi and Pizza on the same graph. Show the…

A: As we answer only 3 subparts and the question has more than 3 subparts, we would be answering the…

Q: Define marginal utility. (50 words)

A: Utility means the satisfaction that a consumer gets after the consumption of a good or service. It…

Q: An individual has the utility function U=4X 0.5Y 0.5 and can buy good X at £ 2 a unit and good Y…

A: Answer to the question is as follows :

Q: Lisa consumes only pizzas and burritos. In equilibrium, her marginal utility of pizza is 20 and her…

A: Optimal consumption bundle is when Marginal utility of pizza / Marginal utility of a burrito = Price…

Q: A consumer who maximizes utility enjoys eating free hot dogs. Calculate the consumer's marginal…

A: Marginal Utility is the additional satisfaction derived by the consumption of one more unit of given…

Q: Total Utility Marginal Utility Slices of Pizza 0. 20 50 1. 20 3. 10 In the above table, the total…

A: Total utility(TU) refers to the total amount(A) of satisfaction received from the consumption(C) of…

Q: Tanya has a budget of £21 to spend on toothbrushes and tooth paste. she does not receive any utility…

A: Answer - Given in the question - Income = 21 Price of Tooth paste = 5 Price of Tooth Brush = 1 Need…

Q: Let a person's utility function over two goods, X and Y, be given by, U(X,Y) = 3X0.4y0.6. Let the…

A: At Optimal bundle, slope of indifference curve is equal to slope of budget constraint

Q: What happens to marginal utility at the point where total utility is decreasing? Answers: a.…

A: Utility is the fulfillment or advantage inferred by devouring an item; in this manner the minimal…

Q: Q) Marginal utility measures the Select one: a. additional cost of an additional unit of…

A: The utility of a Commodity: The term utility of a commodity refers to the satisfying power or the…

Q: 8) When Marginal Utility = 0, Total Utility is A) Maximum B) Constant C) Minimum D) None of the…

A: Total Utility:- The overall amount of contentment achieved by a consumer as a result of consuming a…

Q: Peter consumes only chocolate ice cream and vanilla ice cream. He is spending all of his income. His…

A: Utility maximization is a strategic theme whereby people and firms get to attain the highest level…

Q: Explain marginal utility. Then describe the law of diminishing marginal utility and provide an…

A: Marginal Utility: - marginal utility is the utility derived by the consumption of an additional…

Q: Arya has an income of $150 per month. She spends on two goods: Burgers and Colas. The price of a…

A: Answer (c) Suppose income falls from $150 to $100, then the below graph shows changes in budget…

Q: Suppose you consume 3 pounds of beef and 5 pounds of pork per month. The price of beef is $1.50 per…

A: The ratio of the marginal utility of beef to pork can be calculated as follows:…

Q: Maria spends all of her income of $2,000 on food (F) and clothing (C). The prices per unit are: PF =…

A: Given that: Maria spends all of her income of $2,000 on food (F) and clothing (C). The prices per…

Q: A consumer has preferences over two goods, coconuts and fish. The consumer prefers more of each good…

A: Indifference curve represents the combinations of two goods between which the cunsumers are…

Q: As consumer has more and more units of a goods, its marginal utility to him (a) Declines (b) Rises…

A: # Marginal utility is the satisfaction derived from the consumption of an additional unit of a good…

Q: Q.24 Following schedule shows total utility. If the price per unit is 3, then how many units of the…

A: Meaning of Utility Function: The term utility function refers to the total utility for a consumer…

Q: If a consumer consumes two goods (q1 and q2) and demand function of q1 is U/P1, which portion of…

A: Suppose a consumer has the following budget constraint. U = Q1 P1 + Q2 P2 ......(i) and…

Q: Use a well labelled diagram and illustrate the consumer equilibrium by drawing a budget constraint…

A: Answer: Introduction: An inferior good: an inferior good is a good whose demand decreases as the…

Q: Question 8 The price of good X is $1.50 and that of good Y is $ 1. A particular consumer who…

A: A consumer's increased enjoyment from having one more unit of an item or service is referred to as…

Q: The concept of diminishing marginal utility with the help of necessary tables and graphs taking a…

A: In economics, utility refers to the entire pleasure derived from the consumption of an item or…

Q: Please show your answer step by step with reasons. (i) A consumer has income of £3,000. Apple juice…

A: In economics, a spending plan limitation addresses every one of the mixes of labor and products that…

Q: The marginal utility of the last unit of apples consumed is 12 and the marginal utility of the last…

A: Marginal utility is the utility derived from the consumption of an additional unit of the good. When…

Q: Q.24 Following schedule shows total utility. If the price per unit is 3, then how many units of the…

A: # We know well that a rational consumer would always maximize his satisfaction where his marginal…

Q: compute the marginal utility of good X (MUX) and the marginal utility of good Y (MUY). a. U=U ( X ,Y…

A: Utility refers to the satisfaction derived from the consumption of any good or service. Marginal…

Q: A consumer is making purchases of products Alpha and Beta such that the marginal utility of product…

A: The Equilibrium condition for utility maximization: MUa/Pa = MUb/Pb The marginal utilities per…

Q: Şeyma has the following utility function: U(x,y) = x'/²y+/2 and faces the budget constraint: M = P,x…

A: Maximizing, U(x,y)=x1/2y1/2 subject to, M=Pxx+Pyy Now, y=1PyM-Pxx Using the above equation in…

Q: John has the utility function U(x1,x2) = min{x1 +2x2 , 2x1+x2}. He has 90Ł to spend on beef and…

A: John has Utility function; U(x1,x2)= (x1+2x2, 2x1+x2) He has 90₺ Price of beef= 10₺ per unit Price…

Q: True or false. A budget constraint, budget line or budget set is a graphical way to illustrate all…

A: It's vital to remember that the slope of the budget line equals the cost ratio of two commodities.…

Q: U=X^0.7*Y^0.8 utility function (EXAMPLE: U=XL In the Utility function given above, U=Utility level,…

A: Given U = X0.7Y0.8 And Budget line 5X+10Y=800

Q: Q.2. From the following total utility schedule a. derive the marginal utility schedule. b. plot the…

A: Disclaimer :- as you posted multipart questions we are supposed to solve the first 3 questions only…

Q: PROBLEM (2) A consumer has preferences over bundles of apples (x) and oranges (y) represented by the…

A: The marginal rate of substitution means some units of one good are sacrificed in order to gain an…

Q: Suppose you consume xl unit of Goods 1 and x2 units of Goods 2, the utility you get is U(x1, x2) =…

Q: Leyla consumes goods X and Y. The price of good X is Px and the price of good Y is Py, Leyla’s…

A: Budget constraint refers to the different combinations of two goods that a consumer can consume with…

Q: Red yarn costs $4 per yard. blue yarn costs $4 per yard. A) Graph the budget constraint and the…

A: budget constraint represents all the combinations of goods and services that a consumer may purchase…

Concept explainers

Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.

Question

i) Derive consumer's budget constraint

ii) Derive the marginal utility X and marginal utility Y

iii) Find out the consumer optimum combination of good X and Y at the market.

A consumer's Total Utility Function of two goods X and y are as follows:
TUx=50x-5x2
TUy=32y-4y?
Price of X=Rs.5
Price of y: Rs.8
Conoumor
poomo: 120

Definition Definition Satisfaction derived from the consumption of an additional unit of any commodity.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Given

VIEW

Derive consumer's budget constraint

VIEW

Derive the marginal utility X and marginal utility Y

VIEW

Optimal Bundle

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Explain why it is that as the consumer purchases more of a good, her marginal utility falls while her total utility rises.
Calculate marginal utility and marginal utilty per dollar for the data provided in the table below: (round to two decimal places) The Price of wine is 3 The Price of Cheese is 0.14 The Consumer's budget for wine and Cheese is 9.69 (CHEESE) (CHEESE) (CHEESE) WEDGES OF CHEESE GLASSES (WINE) (WINE) (WINE) MARGINAL UTILITY MARGINAL MARGINAL UTILITY MARGINAL UTIUTY/dollar OF WINE TOTAL UTILITY TOTAL UTILITY UTIUTY/dollar 70 Number Number Number Number 160 35 Number 65 Number 225 3. 41 Number Number Number Number 45 288 Number 61 Number 48 349 The Quantity of Wine this consumer would buy to maximize utlity is: Number Number The Quantity of Cheese this consumer would buy to maximize utilit is : What is the consumer's Total Utility when optimized: Number 10
Explain the correlation between marginal utility and consumer's demand curve
For normal goodsA) the substitution effect of a price decrease will decrease the quantity of the good demanded while theincome effect of a price decrease will increase the quantity of the good demanded.B) the substitution and income effects of a price decrease will both increase the quantity of the gooddemanded.C) the substitution and income effects of a price decrease will both decrease the quantity of the gooddemanded.D) the substitution effect of a price decrease will increase the quantity of the good demanded while theincome effect of a price decrease will decrease the quantity of the good demanded.
The table below shows total utility for two products. Suppose that the price for product A is $5 and the price for product B is $5. Number of product A Total Utility for A Number of product B Total Utility for B 0 0 0 0 1 140 1 180 2 260 2 340 3 360 3 460 4 440 4 520 5 500 5 540 Given this data, complete the table below: Quantity of A Marginal Utility for A Marginal Utility for A per dollar Quantity of B Marginal Utility for B Marginal Utility for B per dollar 0 0 1 1 2 2 3 3 4 4 5 5
What is the law of diminishing marginal utility why or how is this relevant for our discussion of the demand curve?
Illustrate and explain how consumer equilibrium is achieved using the indifference curve?Discuss how the demand elasticity of a product changes? Give examples.
Would you expect marginal utility torise or fall with additional consumption of a good? Why?
A consumer has the following utility function: Ulx, y) = xy -y, *21 where x and y represents the quantities consumed of goods X and Y. y 20 What will be the substitution and income effects for X and Yassuming that the consumer attempts to maintain the same level of utility achieved before price of Y increased (that is, when price of Y was $1)? SEx= +0.5 IEx = -0.5 SE, = -0.25 IE- = -0.25 SEx= +0.293 IE = -0.293 SEy = -0.414 IE, = +0.414 SEr= +0.25 IE SE, = -0.75 IE, = -0.75 = -0.25 SEx= +0.414 IEx = -0.414 SEy = -0.293 IE, = -0.207 Income = $3 Px= $1, Py= $2
The table shows the total utility (TU) that James receives from consuming different amounts of two goods X and Y, per month. Quantity TUx MUx MUx/Px TUy MUy MUy/Py 0 0 0 1 50 75 2 88 117 3 121 153 4 150 181 5 175 206 6 196 225 7 214 243 8 229 260 9 241 276 a. Fill in the other columns of the table by calculating the marginal utilities for goods X and Y and the ratios of marginal utilities to price for the two goods. Assume that the price of both goods X and Y is $3. b.If James allocates $30 to spend on both goods, how many units will he buy of each? c.How much will James spend on each good at the utility maximizing combination? d.How much total utility will James experience by buying the utility-maximizing…
1. Calculate the marginal utility per dollar for sodas.
The table shows Rita's total utility from burritos and hot dogs. When the price of a burrito is $4, Rita has $28 to spend, and the price of a hot dog falls from $4 to $2, how many burritos and hot dogs does Rita buy? What are two points on Rita's demand curve for burritos? When the price of a burrito is $4, Rita has $28 to spend, and the price of a hot dog is $4, Rita buys burritos and hot dogs. Everything else remaining the same, if the price of a burrito falls from $4 to $2, how many burritos and hot dogs does Rita buy? burritos and hot dogs. Rita buys So two points on Rita's demand curve for burritos are $2.00 each. burritos at $4.00 each and burritos at (...)