1-aAnswer following questions by using the Cobb-Douglas utility function u=xx and assuming that the price of good 1 is pi and good 2 is p2. Assume 0<a<1, pi>0, p2>0, and income I>0. Suppose that we consider a tax on housing. We can analyze the impact of tax byanalyzing the consumption of square feet of housing (x1) and the dollars of"other goods consumption" (x2). Suppose that t dollar of tax is imposed persquare feet of housing. Show graphically and explain in words, how much thetotal tax revenue (T), the consumer would be willing to pay to remove such a tax(L), and the dead weight loss would be by drawing the indifference curve of theconsumer.

To analyze the impact of a tax on housing using the Cobb-Douglas utility function, follow these…

Answered: 1-a Answer following questions by using…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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For the following utility function, for good 1, derive and draw the Engel curve, x1(m) and the demand curve, x1(p1): U(x1, x2)=x11/3 x22/3 .
Donald derives utility from only two goods, carrots (X) and donuts (Y). His utility 0.1 0.9 function is as follows: U(X,Y) =X Y Donald has an income (M) of $900 and the price of carrots (P,) and donuts (P,) are $45 and $90 respectively Based on this information, what does the slope of the indifference curve for Donald tell us. Select one: A. For each additional quantity of carrot consumed, Donald must give up 0.25 of donuts to maintain the same level of satisfaction B. For each additional quantity of donuts consumed, Donald must give up 1/2 of carrots to maintain the same level of satisfaction C. For each additional quantity of carrot consumed, Donald must give up 1/2 of donuts to maintain the same level of satisfaction D. For each additional quantity of carrot consumed, Donald must give up 1/9 of donuts to maintain the same level of satisfaction E. For each additional quantity of donuts constumed. Donald must give up 1/2 of carrots to maintain the same level of satisfaction. F. For…
What happens to utility when we move up and down on the indifference curve? What happens to utility when we move up across the indifference map?
Cobb-Douglas Preferences] Asad lives in a world with two goods (N=2), apples and bananas. He has a Cobb-Douglas utility function over these goods U(a, b) = a 0.7 b 0.3 . Asad has an income I = 200, and faces prices pa = 2, pb = 1 (a) We know that if Asad is optimizing (and consumes a bundle that contains both apples and bananas), that the slope of the budget constraint should be equal to his MRS. Use this and his budget constraint to solve for his optimal bundle. (b) Suppose the price of apples rises to 4, and the price of bananas rises to 3. What is his new optimal consumption bundle? (c) Suppose Asad instead had a utility function given by U(a, b) = a 1.4 b 0.6 + 1. Given the same prices and income as in part (b), what is his optimal bundle?
You like candy and cake. After using your entire $30 budget at the sugar store, you find that the marginal utility from the last candy you consumed was 60 and the last piece of cake was 30. Assuming you have maximized your utility and the price of a piece of candy is $4, calculate the price of cake? Do not enter dollar signs. Answer:
What is the axiom of consumer choice that implies that consumers spend all their income in order to maximize utility?
Please don't provide handwritten solution ...
Allan is considering his purchase of food (F) and clothing (C). He has utility function UF,C=fc+10f. His income is I=10. He faces a price of food $1 and price of clothing $2. According to this information: 1. Determine the marginal utility of food and clothing, and the budget line of Allan 2. Determine Allan’s optimal basket, and provide a graph indicating that optimal point. Explain your finding
Allen has a utility function U=xy², where x is the consumption of apples and y is the consumption of bananas. Price of apple is 1 and price of bananas is 4. Allen has 30 dollars in his pocket, so how many apples and bananas will he purchase to maximize his utility? options: 10 apples and 5 bananas. 3 apples and 10 bananas. 30 apples only. none of above.
Suppose you have a $20 gift card and want to buy Blue and Red yarn. The utility function from yards of blue (B) and red (R) yarn can be expressed as follows: U(B,R) = 3B+R Red yarn costs $4 per yard. blue yarn costs $4 per yard. A) Graph the budget constraint and the indifference curves that can be reached. How many yards of each type of yarn will he purchase at these prices with his gift card?
Gino derives utility from only two goods, carrots (Qc) and donuts (Qd). His utility function is as follows:U(Qc,Qd) = (Qc)(Qd)The marginal utility that Donald receives from carrots (MUc) and donuts (MUd) are given as follows:MUc = Qd MUd = QcGino has an income (I) of £120 and the price of carrots (Pc) and donuts (Pd) are both £1. - what is Gino's budget line and what quantities of Qc and Qd will maximise Gino's utitlity? - holding income and Pd constant, what is Gino's demand curve for carrots? - suppose a tax of 1 pound per unit is levied on donuts. how will this alter Gino's utility maximisinzing market basket of goods?
Given a Utility function: U(x,y) = 3xy. Suppose the Price of x is 2, and the price of y is 4. Furthermore, suppose I = $16. How much of x and y do you consume?

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