The young expert Hand written solution is not allowed. This question is different from the previous one.Consider two consumers, A and B, who consume two goods, x and y. Each consumer spends half of their income oneach good. The price of y is fixed at $1. Assume that the demand functions for each good from each consumer are thefollowing:xУАХВ10p+102P10p+10230p+102PT30px +10УВ2Find the equilibrium price of x in this scenario. Round to the nearest .01, if necessary. Hint: you can see theendowments in the demand curves.

Detailed explanation: Since the price of good y is fixed at $1, we can rewrite the demand functions…

Answered: This question is different from the…

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter20: Consumer Choice: Maximizing Utility And Behavioral Economics

Section: Chapter Questions

Problem 9QP

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(a.) Consider a consumer who consumes two good- X and Y - where X is an inferior (but NOT Giffen good. Consider an initial equilibrium where with an income of 100 and individual consumes 10 units of X and 12 units of Y . Now, suppose the price of the good X increases, keeping everything else unchanged. Draw a clearly labelled diagram and indicate the range of the new equilibrium due to price change. [Note: only a clean graph is required and the information that are NOT given are NOT necessary.] (b.) A monopolist- who sells microprocessors in an entire Indian market- charges INR 1200 per unitand sells 1.213 million units in the country. The firm is a recent entry- so the economists are not sure about the demand curve for the Indian market, except that it is a linear curve. Can you comment anything about the elasticity at the equilibrium? Specifically, does the equilibrium lie in the elastic or the inelastic part of the demand curve? (c.) Consider a monopolist who serves a market given…
Suppose there are two agents Ahmet and Berk in an economy, and both consume two goods X and Y. Also assume that price of X is 2 YTL and Y is the numeraire good, thus price of Y is 1 YTL. Ahmet and Berk has the following utility functions:UAhmet (XA,YA)= 5ln(XA)+ln(YA)UBerk (XB,YB)= XB0,5 YB0,5a. Now assume that both X and Y are private goods. Write down the optimality condition for both agents. Then, write down the optimal level of X as a function of Y for both agents.b. Now assume that X is a public good, but Y is a private good. Write down the optimality condition for good X. Then, write down the optimal level of X as a function of Y for both agents.c. Now compare the consumption levels for X in parts a and b.
Donna and Jim are two consumers purchasing strawberries and chocolate. Jim’s utility function is U(x,y) = xy and Donna’s utility function is U(x,y) = x2y where x is strawberries and y is chocolate. Jim’s marginal utility functions are MUX=y and MUy=x while Donna’s are MUX=2xy and MUy=x2. Jim’s income is $100, andDonna’s income is $150. Are strawberries a normal good or an inferior good for Jim? Explain your answer.
Monica consumes only goods A and B. Suppose that her marginal utility from consuming good A is equal to 1/A, and her marginal utility from consuming good B is 1/B. Assume the price of A is $0.50, the price of B is $4.00, and Monica's income is $120.00. Assume A is on the x axis. At a bundle, A=1, B=2, Monica's MRS is ___________. At this bundle, Monica should a) buy more A and less B b) buy more B and less A Monica should optimally buy ________ units of good A and _______ units of good B.

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