For each of the following utility functions answer the following questions (i-iv): i) Calculate the marginal utilities MUx and MUy ii) Calculate MRSx,y and determine if this is diminishing as good x increases iii) if I=80, Px= 4, Py=2, determine the utility maximizing basket. iv) Determine the demand curves for good x and y (a). u(x,y)= 6x^2/3 +2y (b) u(x,y)= 3x+7y

For each of the following utility functions answer the following questions (i-iv): i) Calculate the marginal utilities MUx and MUy ii) Calculate MRSx,y and determine if this is diminishing as good x increases iii) if I=80, Px= 4, Py=2, determine the utility maximizing basket. iv) Determine the demand curves for good x and y (a). u(x,y)= 6x^2/3 +2y (b) u(x,y)= 3x+7y

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The term “law of diminishing marginal utility” used in explaining downward sloping demand curves, others things constant, is best described by which of the following statements? The total satisfaction you obtain from consuming a good tends to fall. The average satisfaction you obtain from consuming a good tends to fall. The additional satisfaction you obtain from consuming an additional unit of a good tends to fall. The total satisfaction you obtain from the good tends to rise.
Hello, I am not understanding this practice problem. I dont know how to solve the second half .
Suppose the optimal demand for two goods 1 and 2 is characterized by the relation x1= 2*x2, no matter what the person’s income. Give a utility function compatible with these preferences! What is the demand function for each good?
2. Ping receives a weekly allowance to purchase soda (x) and juice (y) at school. His preferences over these two goods can be represented by the utility function U(x,y) =0.5x+ 5lny where x represents the number of cans of soda and y represents the number of juice boxes. a) Given his preferences find his Marshallian demand functions for soda (x) and juice (y). b) Suppose that the price of a can of soda is $1.5 and that Ping has $30 to spend on soda and juice. Write Ping's demand curve for juice (y). Illustrate his demand curve. c) Suppose that the price of a box of juice is $1 (the price of soda and income remain $1.5 and $30, resp.). Use your demand functions to find his best bundle. In an indifference curve diagram illustrate his best bundle at these prices. For the remainder of the question assume that Ping's allowance (income) rises to $36 per week and the prices of the two goods are unchanged at Px= $1.5 and Py= $1. d) Use your demand functions to find his new best bundle. e)…
10
Consumer 1 has the utility function xy U = x+y_subject to PxX + pyY = m Derive the generalized demand function for good x and good y.
1/2 Consider a consumer with the utility function u(x, y) = 2x¹2 + y, an income of I = Rs 100, and price of good y is Rs 1. A) Find the demand functions for goods x and y. B) If, ceteris paribus, price of good x decreases from Rs 4 to Rs 3, what is the compensating variation? 1.
The utility function is given by u(x₁, x2) = min{2x1,5x2}. a) For this utility derive the demand functions x₁ (P₁, P2, 1) and x₂ (P₁, P2, 1). b) Set l=36 and p2 = 1. Draw the demand curve for good 1. c) Give the formula and draw the Engle curve for good 1. Is good 1 normal or inferior? Are preferences homothetic? Explain.
Suppose a consumer utility function is given by U(X,Y)=XY+8X the price of good X and Y are 2 birr and 6 birr respectively the consumer has total income of 160 birr to be spent on two goods A) find the utility maximizing quantities of good X and Y B) find MRXSY at equilibrium
compute the marginal utility of good X (MUX) and the marginal utility of good Y (MUY).a. U=U ( X ,Y )=3 X1 /2+5Y1/ 2
Suppose your income is 200, the price of good x is 2, and the price of good y is 3. You know that your utility function is U= 2(xy)^3. (A) What amounts of x and y do you choose? (B) Can you generalize your choices to demand curves for x and y for any prices and income?
Consumer has the following utility function U(x,y) = x1/2y1/2 , where the price of good x is 1$ per unit, the price of good y is 4$ per unit, and the consumer’s income is 800$. Find the utility maximizing consumption levels of x and y.