A consumer has a utility function U(X,Y ) = X1/2 Y1/2 . Prices of the goods are pX = £10 and pY = £5, respectively, and the consumer has income M = £200 to spend on X and Y. Currently, she buys 2 units of good X and spends the rest of her income on good Y. a) Determine this consumer’s current utility level.  b) Compute the consumer’s marginal utilities of goods X and Y.  c) Explain why the consumer’s current consumption of goods X and Y is not optimal. Should she substitute X for Y or vice versa?  The consumer’s marginal rate of substitution is MRS = Y/X. d) Determine this consumer’s optimal consu

Q: Suppose that a consumer's utility function is given by u(x, y) = x(a + y), where x is consumption…

A: The reservation price of y requires that, at this price the consumer is indifferent between buying y…

Q: Q2. Suppose a consumer seeks to maximize the utility function U (x, y) = (x + 2) (y + 1), where and…

A: U(x,y) = (x+2)(y+1) Budget Constraint = Px*x + Py*y = I

Q: Gabriel, a student, has a budget of £60 to spend on cappuccinos (good X) and on cups of tea (good Y)…

A: Given,

Q: Q10. Consider a utility function: U (F,C) = FC so MU_F = C and MU_C = F. In Case 1, Total income is…

A: We are going to use Consumser decision theory to answer the question.

Q: Sam's is interested in two goods, X and Y. His indirect utility function is (same as U* = M/(px0.8…

A: Compensating variation represents the amount of income that must be given to the consumer to permit…

Q: Suppose a consumer had a utility function given by: U = X²Y0.5. If the price of Good X (Px) is $3…

A: The utility function is given as The price of good X is $3.The price of good Y is $6. The budget for…

Q: Suppose a consumer’s preferences can be represented by the utility function U(X,Y) = Min (2X,Y).…

A: Utility function: U = Min (2X, Y) --------------------- Budget constraint: Price of good X (Px) = $2…

Q: Given an individual’s current consumption patterns, we know that the person is consuming in such a…

A:

Q: Individual that consumes two goods (X and Y) and has a CES Utility Function of the form: U =…

A: "As per our policy, we can provide solutions to the first three subparts. Kindly raise the question…

Q: A consumer’s preferences over two goods x and y are given by the utility function U(x, y) = min{αx,…

A: Consumption: It refers to the intake of goods and services in the economy. The more the consumption…

Q: A consumer derives utility from good A and B according to the following utility function: U(A, B) =…

A: Utility maximization problem: With the given prices and income, a consumer chooses his consumption…

Q: Irene spends all of her income M on soda and chips. The price of soda is 2 per unit. Irene’s utility…

A:

Q: For the utility function U = Qx0.68Qy(1-0.68) and the budget 103 = 10Qx + 13Qy find the CHANGE in…

A: Utility maximization problem: With the given prices and the income, a consumer chooses his…

Q: Consider the consumer whose tastes and preferences for (X) and (Y) can be characterized by the…

A: The utility function can be written as follows: The budget constraint can be written as follows:

Q: What is the marginal utility of good 2 for bundle (8,8)?

A: Given, U(x1,x2) = 7x1 + 2(x2)0.6 For finding the marginal utility of good 2, we need to…

Q: If the consumer's utility function is given by U(x, y) = 10x0.5 0.5, solve for the optimal quantity…

A: Consumer theory is important in economics because it investigates how people maximize their…

Q: Consumer's utility function is: U(X,Y) = (X+2) (Y+3). Thus, the marginal utility of good x is MUx =…

A:

Q: Suppose that a consumer with the utility function U = X0.75 Y0.25 choses a bundle where X=10 and…

A: Marginal utility per dollar is the ratio of marginal utility to the price of the good. It increases…

Q: Consumer has the following utility function U (x, y) =x^1/2 × y^1/2, where the price of good x is…

A: A buyer maximizes the utility from consumption by choosing the levels of x and y where the value of…

Q: sider the utility function U(x, y) = xy, which describes the enjoyment Emi gets from consuming s (x)…

A: Equilibrium condition:  MRSxy = Px/Py

Q: Suppose a consumer had a utility function given by: U= 9X + 4Y. If the price of Good X (Px) is $10…

A: The utility problem is given as The price of good X is $10.The price of good Y is $4.The budget for…

Q: Suppose a consumer has a utility function given by U(X,Y)= MIN(X, 2Y). The consumer has $90 to spend…

A: Price Consumption Curve shows the optimal level of goods that can be consumed at various price…

Q: Let a person's utility function over two goods, X and Y, be given by, U(X,Y) = 3X0.4y0.6. Let the…

A: At Optimal bundle, slope of indifference curve is equal to slope of budget constraint

Q: Problem 1 Ava has an income of $1,500 and she spends her income on two goods (1 and 2). Her utility…

A: Optimal consumption bundle: The optimal consumption bundle is such that at that bundle the…

Q: Suppose a consumer had a utility function given by: U = XY². If the price of Good X (Px) is $6 and…

A: Suppose a consumer had a utility function given by: U = X * Y ^ 2 . If the price of Good X (Px) is…

Q: Sam's is interested in two goods, X and Y. His indirect utility function is U* = M px-0.8 py0.8-1.…

A: Consumer surplus is the benefit that a consumer receives if he pays a price that is less than the…

Q: An individual consumes goods q₁ and q₂ and has the following utility function: U=q₁^1/2 q₂ ^1/2…

A: The expenditure function states how much income (or expenditure) is required to get a utility level…

Q: For the utility function U = Qx0.58Qy(1-0.58) find the trade-off rate between good X and good Y at…

A: The marginal rate of substitution of X for Y measures the rate at which the consumer is ready to…

Q: Maya is doing her undergrad at Queen's University. She loves donuts and chocolate chip cookies…

A: a) When the price of CCC (chocolate chip cookies) is $1, which is the same as the price of donuts,…

Q: For the below questions, consider a consumer that consumes two goods, x and z with the following…

A: The Total effect (TE) depicts the effect of the price change of a good or service on the quantities…