Jeremy consumes only two goods, X and Y, and faces the following utility function: U = XY The marginal utity for X is MUx -Y and the marginalutility for Y is MUy = X. His initial budget is $800, and the prices of X and Y are $12.5 and $2.%3D"Most answers should be round numbers. Answer everything to 1 decimal place, if need beWhat are the amounts of X and Y that will maximize Joremy's utility?X= NumberY= NumberHow many X and Y will Jeremy choose if the price of X suddenly fell to S8?X- NumberY. NumberHow many X and Y are in the substitution bundle?X- NumberY. NumberWhat are the break-downs of the prioe change on the amount of X purchased?Subslitution effect NumberIncome etfect Number

Answer: Given, Utility function: U=XYMUX=YMUY=XInitial budgetI=$800Price of good X PX=$12.5Price of…

Jeremy consumes only two goods, X and Y, and faces the following utility function: U = XY. The marginal utity tor X is MUx-Y and the marginal utility for Y is MUy =X. His initial budget is $800, and the prices of X and Y are $12.5 and $2. "Most answers should be round numbers. Answer everything to 1 decimal place, if need be* What are the amounts of X and Y that wil maximize Joromy's utility? X- Number Y Number How many X and Y will Jeremy choose if the price of X suddenly fell to S8? X= Number Y Number How many X and Y are in the substitution bundie? X-Number Y. Number What are the break-downs of the prioe change on the amount of X purchased? Subalitution etfect Number Income effect Number

Jeremy consumes only two goods, X and Y, and faces the following utility function: U = XY. The marginal utity tor X is MUx-Y and the marginal utility for Y is MUy =X. His initial budget is $800, and the prices of X and Y are $12.5 and $2. "Most answers should be round numbers. Answer everything to 1 decimal place, if need be* What are the amounts of X and Y that wil maximize Joromy's utility? X- Number Y Number How many X and Y will Jeremy choose if the price of X suddenly fell to S8? X= Number Y Number How many X and Y are in the substitution bundie? X-Number Y. Number What are the break-downs of the prioe change on the amount of X purchased? Subalitution etfect Number Income effect Number

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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