Assume the price of good x is 12 dhs per unit, the price of good y is 6 dhs per unit, and the income is 48 dhs. 1) Utility maximization: a. Derive the budget line. Draw and explain the budget line b. Maximize utility subject to the budget constraint c. What is the optimal combination of x and y? Which utility level is attained? 2) Indicate the optimal (x, y) bundle together with the relevant indifference curve and the budget constraint, and answer how the latter two and the MRS is related in the optimum 3) Illustrate how your answer in the previous question would be modified if income doubled? Explain. Please can you draw for me the budget line for step 1 in excel sheet also if there are any other drawing required can you also include them?
Assume the price of good x is 12 dhs per unit, the price of good y is 6 dhs per unit, and the income is 48 dhs. 1) Utility maximization: a. Derive the budget line. Draw and explain the budget line b. Maximize utility subject to the budget constraint c. What is the optimal combination of x and y? Which utility level is attained? 2) Indicate the optimal (x, y) bundle together with the relevant indifference curve and the budget constraint, and answer how the latter two and the MRS is related in the optimum 3) Illustrate how your answer in the previous question would be modified if income doubled? Explain. Please can you draw for me the budget line for step 1 in excel sheet also if there are any other drawing required can you also include them?
Chapter3: Preferences And Utility
Section: Chapter Questions
Problem 3.7P
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Transcribed Image Text:Assume the price of good x is 12 dhs per unit, the price of good y is 6 dhs per
unit, and the income is 48 dhs.
1) Utility maximization:
a. Derive the budget line. Draw and explain the budget line
b. Maximize utility subject to the budget constraint
c. What is the optimal combination of x and y? Which utility level is attained?
2) Indicate the optimal (x, y) bundle together with the relevant indifference
curve and the budget constraint, and answer how the latter two and the
MRS is related in the optimum
3) Illustrate how your answer in the previous question would be modified if
income doubled? Explain. Please can you draw for me the budget line for
step 1 in excel sheet also if there are any other drawing required can you also
include them?
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