ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Help mearrow_forward5arrow_forwardThe utility function of a consumer is u = √x + 2y. (a) Calculate how much MRS of that consumer when x = 4. (b) If the consumer currently consumes 4 units of goods x and the price ratio of Px / Py = 1/4, then the consumer should increase or decrease the consumption of goods x?arrow_forward
- A student has a lunch utility function U(S, P) 8S + 3P, where S is number of salads per month and P is number of pizzas per month. The price of a salad is $5, the price of a pizza is 8, and his monthly income for lunch is $80. a) Derive the equation representing the consumer's demand for Salad. Represent the demand for Salad graphically. b) The price of Salad goes up to $25 and the price of Pizza does not change. Compute and represent graphically the new equilibrium of the student. What can you tell about the substitution effect on Salad and pizzaarrow_forwardRicky has utility function u=x'y. This implies that MUx=2xy. MUy=x². His income is 100. The price of y is 10. (a) Find his demand for x at price 20. (b) Find his demand for x at price 30. (c) Write down his demand function for x: that is, write down his demand for x as a function of the price of x.arrow_forwardMary has the following utility function: u(x, y) = 3 ln(x) + 2y. Her income is given by I = 10 and the prices originally are p = 1 and py = 2 (b) How much of each good is Mary currently consuming?arrow_forward
- Assume one person has the following utility function : = x f yz and the total income y 2 xpx+ yPy + zpz u( x, y, z, What are the values of income (y) and prices (px.Py,Pz) will be when a person's demand strictly positive quantity of good x?arrow_forwardConsider a person who consumes two goods, x and y, and has a utility function given by U(x, y) = In(x)+y. This person has an income of $100 and faces a price of $0.50 for good x and $1 for good y. Price of x then rises to $0.60. Solve for the compensating variation (CV) and equivalent variation (EV) of this price change. Show your work.arrow_forwardJason has the following utility function: U = F2C where F is food and C is clothing. Clothing is measured on the vertical axis while food is measured on the horizontal one. Suppose the price of food is €3 per unit, the price of clothing is €2 per unit and that Jason’s income is €36. Calculate the number of units of clothing that Jason consumes in equilibrium. Mary has a different utility function than Jason in Question 2 but faces the same prices as him. Suppose she also only consumes food and clothing but we do not know her utility function or her income. What is Mary’s marginal rate of substitution of food for clothing when her utility is maximized? Explain your answer briefly.arrow_forward
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