EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Question
Chapter 2.8, Problem 2.1MQ
To determine
To find: the utility maximizing conditions in case of perfect complement goods.
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Students have asked these similar questions
If the utility function of an individual takes the form:
U = U ( x 1, x2) = (x1 + 2) 2 (x2 + 3) 3
Where U is total utility, and x1 and x2 are the quantities of two commoditiies consumed:
(a) Find the marginal-utility function of each of the two commodities
(b) Find the value of the marginal utility of the first commodity when 3 units of each commodity are consumed.
c) From the following budget line and the utility function, calculate the amount
of two commodities that maximizes satisfaction. What is the maximum amount
of satisfaction?
2500= 20X + 30Y
U = 300 X0.6Y0.7
You are choosing between two goods, X and Y, and your marginal utility from each is as shown in the following table. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? What total utility will you realize? Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? Using the two prices and quantities for X, derive a demand schedule (a table showing prices and quantities demanded) for X.
Chapter 2 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 2.1 - Prob. 1TTACh. 2.1 - Prob. 2TTACh. 2.3 - Prob. 1MQCh. 2.3 - Prob. 2MQCh. 2.3 - Prob. 1TTACh. 2.3 - Prob. 2TTACh. 2.3 - Prob. 1.1MQCh. 2.3 - Prob. 2.1MQCh. 2.5 - Prob. 1TTACh. 2.5 - Prob. 2TTA
Ch. 2.7 - Prob. 1MQCh. 2.7 - Prob. 2MQCh. 2.7 - Prob. 3MQCh. 2.8 - Prob. 1MQCh. 2.8 - Prob. 2MQCh. 2.8 - Prob. 1.1MQCh. 2.8 - Prob. 2.1MQCh. 2 - Prob. 9RQCh. 2 - Prob. 2.1PCh. 2 - Prob. 2.2PCh. 2 - Prob. 2.3PCh. 2 - Prob. 2.4PCh. 2 - Prob. 2.5PCh. 2 - Prob. 2.6PCh. 2 - Prob. 2.7PCh. 2 - Prob. 2.8PCh. 2 - Prob. 2.9PCh. 2 - Prob. 2.10P
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Similar questions
- You are choosing between two goods, X and Y, and your marginal utility from each is as shown in the table below. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? What total utility will you realize? Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? Using the two prices and quantities for X, derive a demand schedule (price–quantity-demanded table) for X.arrow_forwardIs it reasonable to assume that people seek to equate the marginal utility/price ratios of the goods that they purchase, if they have never heard of ‘utility’, let alone ‘marginal utility’, and marginal utility cannot be measured in any absolute way?arrow_forward7. 3.1. Explain, with the aid of examples, the following economic concepts in terms of utility theory: 3.1.1 Total utility 3.1.2 Marginal utility 3.1.3 Weighted marginal utility 3.2 Assess how income elasticity of demand is used to define goods and services.arrow_forward
- Economist George Stigler once wrote that, according to consumer theory, “if consumers do not buy less of a commodity when their incomes rise, they will surely buy less when the price of the commodity rises.” What kind of commodity was Stigler referring to? A normal good An inferior good When the price of this commodity rises, the substitution effect is (positive / negative) and the income effect is (positive / negative). So the net result for consumption of this commodity (depends on which effect dominates / is a decrease / is an increase).arrow_forwardDescribe how rational consumers maximize utility by comparing the marginal utility-to-price ratios of all the products they could possibly purchase.arrow_forwardThe daily total utility per quantity of consumption is shown in the figure. This shows that the total utility of consuming 1 product is $1.60, the total utility of 2 products is $3.00, and so on. Using marginal analysis, for which market price (per unit) is the optimal daily quantity of consumption 4 units? Quantity (units) 1 2 3 4 5 Total utility $1.60 $3 $4.20 $5.20 $6.00 a) $5.10 b) $0.90 c) $1.10 d) $1.30 e) $5.30arrow_forward
- What are the examples of complement and substitute goods, where a change in price of one good would cause a change in demand of the other good? Show Graphically.arrow_forwardIf the marginal utility function of an individual takes the form U = U (x1, x2) = (x1 + 2)2(x2 + 3)3 i. Find the marginal utility function of each of the two commodities. ii.Find the value of marginal utility of commodity 1(MU1), when 3 units of eachcommodity are consumed.arrow_forwardIt is common for supermarkets to carry both generic (store-label) and brand-name (producer-label) varieties of sugar and other products. Many consumers view these products as perfect substitutes, meaning that consumers are always willing to substitute a constant proportion of the store brand for the producer brand. Consider a consumer who is always willing to substitute 4 pounds of a generic store brand for 2 pounds of a brand-name sugar. Do these preferences exhibit a diminishing marginal rate of substitution? Assume that this consumer has $24 of income to spend on sugar, and the price of store-brand sugar is $1 per pound and the price of producer-brand sugar is $3 per pound. How much of each type of sugar will be purchased? How would your answer change if the price of store-brand sugar was $2 per pound and the price of producer-brand sugar was $3 per pound?arrow_forward
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