Consider the following Marshallian DemandFunction derived from the utilitymaximization problem,X =a MPwhere X is the quantity consumed, Misincome of the consumer, P is the price of thegood, andαis some number between 0 and 1 whichrepresents the relative importance of thegood.Does this demand function satisfy the law ofdemand? (_Why or why not? (*

The law of demand states the inverse relationship between the price and quantity demanded. A rise in…

Consider the following Marshallian Demand Function derived from the utility maximization problem, X = a M P where X is the quantity consumed, Mis income of the consumer, P is the price of the good, and

Consider the following Marshallian Demand Function derived from the utility maximization problem, X = a M P where X is the quantity consumed, Mis income of the consumer, P is the price of the good, and

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: If u(x. y) is a utility function, then v(u) = u is a function that fulfills the monotonic…

A: Utility is an essential concept in economics which means the capability to satisfy various wants and…

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: The consumer's utility function is given by u(x,,x2) = min{x,+4x2,4x,+x}. Her income is m=20 and the…

A: We are going to solve for optimal bundle involving perfect complements to answer this question.

Q: Lagrangian method, find the optimal mption bundle of good A and good B.

A: By Lagrange Method, we will find optimal bundles A and B. Budget Line : Paa +Pbb = M where, Pa =…

Q: Boyd has the following utility function: U=100B √C where B represents books and C represents audio…

A: The total utility refers to the total satisfaction that a consumer can get from consuming goods and…

Q: If Philip's utility function is U=4 (41)05+42 what are his demand functions for the two goods? Let…

Q: A consumer has a utility function u = axy. Income is I and the price of x is 4 while the price of y…

A: Given Utility function of consumer u =axy ..... (1) Income = I Price of x Px =4 Price of y…

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: Suppose Anna’s utility for goods x1 and x2 is represented by the following utility function: U (x1,…

A: Optimal consumption says that when a consumer maximizes utility, the minimal utility per dollar…

Q: Let a1 and a2 denote the quantities consumed. The consumer's preferences are represented by the…

A: We have Utility function U(x1,x2)=x1+x2 ... (1) Consumer income m=100 Price of good 1:…

Q: Consider a utility function U= xy2 in a two good economy of good x and good y. This consumer’s…

A: a) Price for y (P2) is calculated as follows. P1=10, P2, at utility max…

Q: Suppose that i’s preferences over goods x and y are represented by the following utility function…

A: Utility function : U (x , y ) = x0.8 y 0.2 Price of good (x)= p Price of good y = 1 Income = m…

Q: Roger's utility function is Cobb-Douglas, U=B^0.80 Z^0.20 Y the price of B is P_B and the price…

A: The utility function is given as: U=B0.81Z0.20

Q: Question 2: Homer Simpson, our representative consumer, consumes varying amounts of beef and…

A: Utility function represents a mathematical expression that describes an individual's or a consumer's…

Q: How can I analyze and find the Marshallian Demands of the following Utility function?…

A: The perfect complements x1 and x2 would result in the perfect complements which would be consumed…

Q: Consumer’s utility function is U(x1, x2)= X1X23 . Suppose the price of good 1 is p1, the price of…

A: Given information: U = X1X23------------> Utility function The price of good 1 is p1 The price of…

Q: Suppose a consumer’s preferences for goods Y and X can be represented by the utility function,…

A: It is said that a consumer maximizes utility at that point where the slope of its indifference curve…

Q: Casper's utility function is 3x + y, where x is his consumption of cocoa and y is his consumption of…

A: The budget line shows the different combinations of two goods that a consumer can consume given the…

Q: Start with a Cobb-Douglas utility function: U = XªY1-a. Set up the utility maximisation problem and…

A: The given utility function is the Cobb-Douglas function, U = X^α Y^1-α Suppose the good X price is…

Q: Suppose Serbest Mermer gets utility from guns and roses: U(G,R)=yvG +µVR where G is gun and R is…

Q: A consumer derives utility from two goods (x and y), and her utility function is in the form u(x,y)…

A: Answer: Utility represents the satisfaction that consumer receives after consuming a commodity.

Q: Economics If a consumer has a utility function of U = x + 2y, which statement is true? The…

A: "In economics, people buy goods in order to maximize there utility/satisfaction. Utility function…

Q: Consider a consumer with the following utility function for goods X and Y: U(x,y) = x³y Let P,…

A: U=x3y Utility maximizing condition: MRS=Px/Py MRS= [dU/dx][dU/dY] dU/dx=3x2y dU/dy=x3 MRS=3y/x…

Q: Suppose that there are three goods, good X, good Y, and good Z, and suppose that the consumer has…

A: Consumer Equilibrium is a point where a rational consumer is been able to choose a different set of…

Q: Given the individual utility function U = 10x^0.5y^0.5. With income, m = $40, the price of good x,…

A: U=10x0.5y0.5Therefore, Marginal rate of substitution (MRS) will be:At optimum, MRS = Price…

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: Suppose a consumer had a utility function given by: U = X³Y. If the price of Good X (Px) is $6 and…

A: Utility maximization refers to the process by which individuals or firms allocate their resources in…

Q: Given, the utility function is a Cobb-Douglas utility, u = x₁x), and budget m = pix1 + P2X2. a)…

A: The utility function represents the relationship between the utility and commodities consumed. Here,…

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: The utility function of a buyer for x units of tea and y units of coffee is given by u(x, y) = x…

A: we are given with a utility maximization problem of a buyer for x units of tea and y units of…

Q: Question 2 Emma's daily utility function is U = 8√R+4M, where R represents the pounds of rice eaten…

A: Ans. 2. Emma's utility maximization level is where the slope of the indifference curve is equal to…

Q: Consider the following utility function and budget constraint: U = (beer^ .4)*(pizza ^.6) 50 =…

A: The utility function is given as The budget equation is given as The government imposes $1 tax on…

Q: ralph has a utility function u(x,y) = 0.5x + y and an income of $M. Let the price of x be $4 and the…

A: Consumer, consumes the good from which he get maximum $ marginal utility. If $ MUx = MU/px is more…

Q: The Calculus of Demand Calculus Appendix Figure It Out: Question 3 of 3 Antonio gets utility from…

A: Utility function: Price of fries = $2and the price of the burger is denoted by p. Initial income m =…

Q: Joe has the following utility function:U(x; y) = 4x+1y. Let / denote Joe's income, Px the price of…

A: The utility function refers to all those commodity bundles that derive the same amount of utility…

Q: Lea's utility function is U = x y0.4 where x denotes her consumption of good X, y denotes her…

A: Consumer equilibrium is the situation where consumer maximized her utility with given level of price…

Q: Assume you consume two goods, X and Y. Your utility function is U = 2X + 4Y. Let PX= $4, PY= $2, and…

A: A perfect substitutes function of utility is a particular kind of utility function in economics that…

Q: Suppose consumers A and B have the following demand functions for x: For each consumer, is x is…

A: The nature of goods as normal and inferior goods can only be recognised in the presence of income…

Q: sider two goods that are perfect substitutes such that four (4) units of good X always provide the…

A: Substitute goods refer to the goods which are used for each other. Both are competitors , when price…

Q: Suppose the optimal demand for two goods 1 and 2 is characterized by the relation x1= 2*x2, no…

A: We are given the relation between 2 goods at the optimal condition as X1 = 2 X2

Q: Find the demand functions of the consumer who has a Cobb Douglas utility function U(x,y) = Axayb…

Q: Let U(x, y) = 3x + y be the utility function of a consumer, who has a budget of I. As a function of…

A: U (x ,y ) = 3x + y PX = PY = 1 Budget Constraint : px(x) + py(y) = I Walrasian demands are simply…

Question

Consider the following Marshallian Demand
Function derived from the utility
maximization problem,
X =
a M
P
where X is the quantity consumed, Mis
income of the consumer, P is the price of the
good, and
α
is some number between 0 and 1 which
represents the relative importance of the
good.
Does this demand function satisfy the law of
demand? (_
Why or why not? (*

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

What is the demand for goods L and Y given the utility function U(L,Y) = L+2Y where the price of L is $1 dollar per unit and the price of y is $Z per unit.
Suppose a consumer utility function is given by U(X,Y)=XY+8X the price of good X and Y are 2 birr and 6 birr respectively the consumer has total income of 160 birr to be spent on two goods A) find the utility maximizing quantities of good X and Y B) find MRXSY at equilibrium
Ben gets utility from apples and bananas and his preferences can be represented by the utility function U(A,B)=4A+B. If the price of apples is 3 times the price of bananas, what is Ben's ordinary demand function for apples, A*(p A, P B, I)? OA (P A, PB, 1)=0 A*(p A, P B, 1)=1/P A OA (P A, PB, 1)=21p A OA (P A, PB, 1)=1/(3p A) O A*(p A, P B, 1)=1/(4p A
Assume that bob has a Cobb Douglas utility function U (F,H) = A F^0.7 H^0.3 over Food F and Housing H. How much does Bob spend on Housing and Food when the price of Housing is 10$ and income is 200 ?
Suppose that i's preferences over goods x and y are represented by the following utility function U₁(x, y)=x45¹5. Let m denote the consumer's income, p denote the price of good x and let the price of good y equal 1. A) Find the Marshallian demand functions for goods x and y. B) Show how each of the demand function is affected by a change in the price of good x. C) Which of the goods is an inferior good?
A consumer can consume three goods, x₁, x2, and x3. In the markets where she buys them, she is a price-taker and faces prices for the three goods equal to P₁, P₂, and p3, respectively. The consumer has m dollars to spend. Her preferences can be represented by the following utility function: U(x₁, x₂, x3) = x₁x²x². X a) Derive the consumption bundle that maximizes the consumer's utility, subject to her budget constraint. b) Show that the optimal consumption bundle found in part a) is a global maximum. IMG_4479-2.png
Let a consumer's utility function be U (x, y) = x'/²y/2. The consumer's income is I = 160 and prices for the two goods are, respectively, p, = 1 and py = 4. (a) Write down the utility maximization problem and compute the optimal consumption basket. (b) Suppose now the price of good y is equal to p, = 16 (while the price of good r stays constant). Compute the new optimal consumption basket.
An individual consumes two goods, X and Y, and receives utility according to a Cobb-Douglas production function of the form: U(X,Y)= X1/3Y2/3. Give that MUX= 13(MUYMUX)2/3 and MUY= 23(MUXMUY)1/3 find the consumers optimal demand functions for X and Y in terms of PX, PY, and I. Explain why I could have solved the problem above using the utility function U(X,Y)= XY2 and would have obtained the same answer. What is it about utility that makes this possible?     Economists define the ‘certainty equivalent’ of a risky stream of income as the amount of guaranteed money an individual would accept instead of taking a risk. The certainty equivalent varies between individuals based on their risk preference.
(b) U(x, y) = min [ax, y]
Jane's utility function is U=X^2Y^8 , with marginal utilities being MUX=2XY^8 and MUY=8X^2Y^7. Prices are PX=1 and PY=3. Jane's income is I=120. What is the optimal consumption of X?
Mary has the following utility function: u(x, y) = 3 ln(x) + 2y. Her income is given by I = 10 and the prices originally are p = 1 and py = 2 (b) How much of each good is Mary currently consuming?
Assume one person has the following utility function : = x f yz and the total income y 2 xpx+ yPy + zpz u( x, y, z, What are the values of income (y) and prices (px.Py,Pz) will be when a person's demand strictly positive quantity of good x?