Answered: If utility is given by U(x, y) = x2 +…

If utility is given by U(x, y) = x2 + y2 and px = 2, py = 3, I = 50, this person will choose: a. (10, 10). b. (15, 6.67). c. (25, 0). d. (0, 50/3).

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: Problem 1 Jane has the following utility function: u(w) w^.5 or the square root. function Which of…

A: Among the 3 payoff structures, that particular payoff structure would be chosen which would provide…

Q: Every week I spend a total of £400 buying two goods, luxuries (L) and necessities (N). I obtain…

A: Total Income =£400 Two goods: luxuries (L) and necessities (N) U(L, N) = 10 + L + 20N−2N2 Price of L…

Q: For the same set of preferences as in question 5 of this problem set, what is the elasticity of…

A: We have given utility function U = AxAαxB1-α To find price elasticity of demand of good XA, we need…

Q: The horizontal intercept of the consumer's budget line is equal to a) T -T O b) wh +T -T c+ w(h-1) O…

A: A consumer's budget line is a locus of different combinations of two goods that a consumer can…

Q: y function: u = x0.64x2.36. He h by $1.00. Calculate t increases

Q: The Utility Function is U(q1, q2) = q11/6 . q21/3 a.) Solve for the amount of good #1 the…

Q: If an individual's utility function is given by px = 1, py = 4, his or her preferred consumption…

A: Utility, in the context of economics, refers to the satisfaction or enjoyment derived by a consumer…

Q: The monthly profit, in soles, from the sale of q bracelets is given by: U (g) = aq3 + bg² + cq - 5…

A: Profit: U = aq3 + bg² + cq - 5 000 MU = dU/dq MU = 3aq2 + 2bq + c

Q: [Indifference Curves] Consider the utility function U(C1, C2) and B 1 In(C1)BIn(C2) 1. Using a…

A: The given equation is : U=ln(C1) + Bln(C2)We know, ln(C1) + ln(C2) = ln(C1*C2)

Q: A consumer preferences u(x, y) = x-/3 + y1/3 has m = 120 and pays px = 4, py = 4. Next month py = 1.…

A: At optimal point, marginal rate of substitution is equal to price of the two inputs.

Q: Suppose that MUx = 10 and MUy = 20. Further suppose that the consumer’s budgetconstraint can be…

A: Budget line (or price line): A budget line shows all bundles (i.e. combination of two commodities)…

Q: None

A: To solve the given problem, we need to determine the values of ex,py ,ex,px, and ex,I,…

Q: Consider the utility function U(x, y) = xy + x. Which of the following bundles is not on the same…

A: We have to calculate the value of U for all (x,y). The bundle which gives the different result will…

Q: Ambrose has u = 400x^(1/2)+ y, m = 1000, pY= 2 and pX= 200. He will maximize utility with x =…

A: Budget line: - it is the graphical representation of different combinations of two goods that a…

Q: utility function:

A: A utility function is a mathematical illustration that assigns a numerical value to the pleasure or…

Q: - There are 6 cups of espresso (x1) and 6 bars of chocolate (x2) in the house. Andrew and Eric have…

A: Initial endowment refers to the preliminary allocation or ownership of products or assets that each…

Q: 1. Prove that MRS = = − ₂ holds when the utility function is U = U (91, 92).

A: 1) Utility maximization is founded on the premise that people and firms should strive to make their…

Q: Choose one or more: D A. C B. D C. A OD. B 2 - A X 09/23/20 C D Y B 10

A: In case of strictly convex and monotonic preference. The average bundle is strictly preferred over…

Q: A consumer has utility u(x,y) = x^4 y^2 where x is this year’s consumption, and y is next year’s…

A: Individuals (consumers) directly concerned within the acquisition, use, and disposal of economic…

Q: Q2) Charlie's indifference curves have the equation x2 = constant/x₁, where larger constants…

A: In economics, satiation is a special form of preference that is occasionally employed. Individual…

Q: (a) [7 marks] Consider an agent whose preferences over any couple (r1, r2), where r1 E R+ and r2 E…

Q: True/ false Describe Since a greater utility number indicates that a consumer is better off,…

A: Utility: Utility is used to model value or value. Its use has evolved significantly over time. The…

Q: ate a table and graphs (a) Suppose we have preferer indifference curve through the bundle X = 30 and…

A: Utility function : U = 10 x2/3 y1/3 Budget Constraint : Px*x + Py*y = M Optimal consumption is…

Q: 1) (15 points) A student has a lunch utility function U(S,P) = 8S + 3P, where S is the number of…

A: The student perceives pizzas and salads based on their utility values. The utility value of a salad…

Question

If utility is given by U(x, y) = x²+ y²and p_x= 2, p_y= 3, I = 50, this person will choose:

a. (10, 10).

b. (15, 6.67).

c. (25, 0).

d. (0, 50/3).

Expert Solution

This question has been solved!

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

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Solution

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 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

Subpart 4,5,6 only.
Your own a chocolate producing company which can advertise on both television (T) and internet(I). The effect of TV and online commercials on sales is again given byS(T,I) = 500 + 48T−6T2+ 112I−6I2+ 4TI. You have a budget of $25 that you can spend on T and I. The price of aTV commercial is $12per unit and the price of an online commercial is also $12 per unit. 1. Determine the optimal level of TV commercials T and online commercials I if you have to spend all of your budget. You should provide two methods to solve this, by direct substitution and by setting up the Lagrangian. Is the Lagrange multiplier positive or negative? Give an intuitive interpretation of why this is the case? 2. Now determine the optimal level of TV commercials T and online commercials I if you DO NOT have to spend all of your budget. Do you obtain the same answer as subquestion 5.1? What is the Lagrange multiplier equal to in this case? Discuss.
Question d)
A young consumer has to decide how to spend his spare time. He can either watch movies x or play online video games y. Each round of the game cost 20 and each movie cost 20. He has 200 dollars to spend each week. In addition, he has time constraint. He can spend no more than 20 hours for entertainment each week. A movie last 2 hours and playing a game takes about 1 hour. His utility is given by √xy. Use the Kuhn-Tucker condition to find his optimal choice. (Assume that x and y can take any value, not necessarily integers.) Does the solution satisfy the necessary and sufficient condition for a maximum?
A consumer buys (X1, X2 , x3 ) at price vector (P1, P2 , P3). We make three observations of his behavior: At (P.P,P,)=(1,1, 2), the consumer chooses (x,,x,,x, ) =(5,19,9) At (P.P,,P.) =(1,1,1), the consumer chooses (x,.x,,x, ) = (12,12,12) At (P,P,,P,)= (1,2,1), the consumer chooses (x,.x,,x, ) =(27,11,1) Does the consumer's behavior satisfy WARP? What about SARP?
T/F Explain If preference is strongly convex, the utility function will exhibit dimin- ishing marginal utility (MU).
Felix chooses between clothing, 9₁, and food, 92. His initial income is $4,000 a month, p₁ = 400, and p₂ = 40. At his initial bundle, he consumes q₁ = 2 and q₂ = 80. Later, his income rises to $4,800 and the price of clothing rises to p₁ = $600, but the price of food does not change (p2 = 40). As a result, he reduces his consumption of clothing to q₁ =1. Using a revealed preference reasoning (that is, knowing nothing about his indifference curves), can you determine how he ranks the two bundles? O A. Felix may prefer his initial bundle or he may be indifferent between them. B. Felix is indifferent between his initial bundle and his new bundle. O C. Felix prefers his new bundle. D. Felix prefers his initial bundle. O E. Insufficient information exists to determine which bundle Felix prefers.
Solve on the white paper
1. Bob has a utility function U (x, y) Vai +0.8 /T2 + 0,64/x3 over his incomes *1, E2, X3 in the next three years. This function is an example of (A) expected utility; (B) quasi-hyperbolic utility function; (C) discounted utility; (D) none of the above.
Ann's utility function is U = q1q2/(q1 + q2). Solve for her optimal values of q1 and q2 as a function of p1, p2 and Y.
CAN YOU ANSWER PART 4 (iv) PLEASE?? Suppose you have preferences for pizza (z) and soda (d). The price of pizza, pz = 5.00 and the price of soda,pd = 2.00. You have an income of I = 20 that you can spend on pizza and soda every week. Suppose you are equally happy consuming either 3 pieces of pizzas or 2 cups of soda.•(i) What type of preference do you have for pizzas and sodas?•(ii) Derive the utility function for pizza and sodas•(iii) Solve for your optimal consumption of pizza and sodas•(iv) Illustrate your answer to (iii) on a graph, include your indifference curve, the budget constraint,the slope of the budget constraint, and all labels.
LTIPLE CHOICE. Choose the one alternative that best completes 22) The magnitude of the slope of an indifference curve is: A) called the marginal rate of substitution. B) equal to the ratio of the total utility of the goods. C) always equal to the ratio of the prices of the goods. D) all of the above E) A and C only