I need answers for the last two parts.Thanks. Q.7A consumer's utility function is given by theexpression: U = (0.6Xx5 + 0.4Y5).• Determine the marginal utility functions for eachcommodity. Does marginal utility decrease whenconsumption increases?Assuming that the price of good X is Rs 15 and theprice of Y is Rs 6, write the equation of the budget lineand plot it when income is Rs 450. What is its slope?What does it indicate?Calculate the marginal rate of substitution of Y for Xand interpret its economic meaning. Write the equationshowing consumer's equilibrium condition.Obtain the equilibrium values of X and Y.Find the expressions for change in MUx due to increasein Y and change in MUy due to increase in X.

From previous parts, MRTS = MUX / MUY = (3/2) x (Y / X)0.5 Utility is maximized when MRTS = Px/Py…

Answered: Obtain the equilibrium values of X and…

Obtain the equilibrium values of X and Y. Find the expressions for change in MUx due to increase in Y and change in MUy due to increase in X.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

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I need answers for the last two parts.

Thanks.

Q.7
A consumer's utility function is given by the
expression: U = (0.6Xx5 + 0.4Y5).
• Determine the marginal utility functions for each
commodity. Does marginal utility decrease when
consumption increases?
Assuming that the price of good X is Rs 15 and the
price of Y is Rs 6, write the equation of the budget line
and plot it when income is Rs 450. What is its slope?
What does it indicate?
Calculate the marginal rate of substitution of Y for X
and interpret its economic meaning. Write the equation
showing consumer's equilibrium condition.
Obtain the equilibrium values of X and Y.
Find the expressions for change in MUx due to increase
in Y and change in MUy due to increase in X.

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