ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Suppose there are two goods, x and y. If one good has a negative
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- Suppose your utility for goods x1 and x2 is represented by the following utility function: U(x1,x2)= x11/5 x24/5 a) What is your marginal rate of substitution, MRS12? b) If the price for good x1 is p1 = 2, the price for good x2 is p2 = 4, and your available income is m = 20, write down your budget constraint. c) Using the prices and income given at b) above, find your optimal consumption choice bundle (Marshallian demand) and its corresponding utility level. d) Illustrate your optimal consumption choice on a graph. e) For the prices given in b), what income would you need to achieve a utility level of 25? PLEASE ONLY ANSWER PART C, D AND Earrow_forwardConsider the single-good utility function u(x) = 3x². du(x) a) Find the marginal utility of x, MUx = dx b) Plot the utility function and marginal utility function on two separate graphs. c) Does this utility function satisfy the law of diminishing marginal utility? Explain.arrow_forwardDescribe and graph your own example of a budget constraint using two goods (don’t forget to label your axes). In your example, make sure to state what the budget is, the price of the two goods, what the slope of the budget constraint equals (make sure to include the correct sign), and interpret what the slope represents.arrow_forward
- For the utility function U = Qx^0.84Qy^(1-0.84) rate between good X and good Y at Qx= 7 and Qy=19 find the trade-offarrow_forwardSuppose that Sam has a utility function u(x, y)= x+y where x is the amount of good 1 and y is the amount of good 2. The price of good 2 is $20, and the income is $ 90. With the $5 price decrease of good 1 from $10 to $5, then what is the substitution effect and income effect on the demand for good 1?arrow_forward
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