2. Sam's is interested in two goods, X and Y. His indirect utility function is U* = M px-0.7 py0.7-1. ( same as U* = M /(px0.7 py1-0.7 ) ) where M is Sam's income, and px and py denote respectively the price of good X and the price of good Y. Sam's market demand function for good X is X*=0.7M/px . Find the absolute value of the change in Sam's consumers surplus if the price of good X rises from 1 to 8 dollars due to a per-unit tax imposed by the government, assuming his income is M=533 and price of good Y is equal to 4.

2. Sam's is interested in two goods, X and Y. His indirect utility function is U* = M px-0.7 py0.7-1. ( same as U* = M /(px0.7 py1-0.7 ) ) where M is Sam's income, and px and py denote respectively the price of good X and the price of good Y. Sam's market demand function for good X is X*=0.7M/px . Find the absolute value of the change in Sam's consumers surplus if the price of good X rises from 1 to 8 dollars due to a per-unit tax imposed by the government, assuming his income is M=533 and price of good Y is equal to 4.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 11SQ

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Similar questions

Suppose that a consumer with the utility function U = X0.75 Y0.25 choses a bundle where X=10 and Y=5. If the prices of the two goods are PX = $3, and PY = $1, calculate marginal utility obtained per dollar spent on each good and show whether this consumer can increase utility without increasing expenditure?
Please see the attached question.
Rick consumes 2 goods, Chicken McNuggets (M) with Szechuan sauce (S). His utility function is U(M, S) = M2/3S1/3 and his income is m. The price of Chicken McNuggets is p, and the price of Szechuan sauce is 1. d. Use the equation from part (c) and the budget constraint from part (a) to find Rick’s demand for each of the two goods. e. Suppose m=100 and p=1. How much of each good does Rick consume? Draw a graph showing Rick’s budget constraint and indifference curve passing through his chosen consumption bundle. f. Suppose m=100 and p=2. How much of each good does Rick consume? On the same graph from part (e), show Rick’s budget constraint and indifference curve passing through his new chosen consumption bundle.
Sam's is interested in two goods, X and Y. His indirect utility function is U* = M px-0.8 py0.8-1. ( same as U* = M /(px0.8 py1-0.8 ) ) where M is Sam's income, and px and py denote respectively the price of good X and the price of good Y. Sam's market demand function for good X is X*=0.8M/px . Find the compensating variation for Sam given the price of good X rises from 1 to 4 dollars due to a per-unit tax imposed by the government, assuming his income is M=514 and price of good Y is equal to 4.
Sam's is interested in two goods, X and Y. His indirect utility function is U* = M px-0.8 py0.8-1. ( same as U* = M /(px0.8 py1-0.8 ) ) where M is Sam's income, and px and py denote respectively the price of good X and the price of good Y. Sam's market demand function for good X is X*=0.8M/px . Find the absolute value of the change in Sam's consumers surplus if the price of good X rises from 1 to 4 dollars due to a per-unit tax imposed by the government, assuming his income is M=514 and price of good Y is equal to 4.
3
Rick consumes 2 goods, Chicken McNuggets (M) with Szechuan sauce (S). His utility function is U(M, S) = M2/3 S1/3 and his income is m. The price of Chicken McNuggets is p, and the price of Szechuan sauce is 1. Suppose m=100 and p=2. How much of each good does Rick consume? On the same graph from part (e), show Rick’s budget constraint and indifference curve passing through his new chosen consumption bundle.