Lan's utility function is U = xa y1-a where x denotes her consumption of good X, y denotes her consumption of good Y and a = 0.8. The price of good X is Px = 7, the price of good Y is Py = 14 and Lan's income is M = 338. If each price increases by 2 dollars, how much money must Lan be given to compensate her for the price increase?
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Lan's utility function is
U = xa y1-a
where x denotes her consumption of good X, y denotes her consumption of good Y and a = 0.8.
The price of good X is Px = 7, the price of good Y is Py = 14 and Lan's income is M = 338.
If each price increases by 2 dollars, how much money must Lan be given to compensate her for the price increase?
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- Ann consumes two goods, a and y. Her utility function is given by: u(x, y) = (x+1)G. The price of a is $4 per unit and the price of y is $ per unit. Ann's income is w. (a) * ) Nrite down an expression for Ann's budget line. (b) v- 'Determine the formula for Ann's marginal utility of a, and the formula for Ann's marginal utility of y. (c) ( » For each income level w > 0 calculate Ann's optimal consumption bundle. (d) For which income levels w is bang-for-buck equalization violated at Ann's optimal consumption bundle? Explain. , Assume that w = 2. Draw Ann's budget line in a figure with r on the hor- izontal axis. Add 2 indifference curves of Ann, including the indifference curve that contains Ann's optimal consumption bundle. Indicate Ann's optimal consumption (e) - bundle.Lea's utility function is U = x y0.4 where x denotes her consumption of good X, y denotes her consumption of good Y. The price of good X charged by the sellers of good X is Px = 6, the price of good Y is Py = 6 and Lea's income is M = 411. How many units of good X will Lea buy to maximize her utility?Jenny's income is 234. Her utility function is given by U = x+8.5y. Assuming the price of good X is 1 and the price of good Y increases from 2.8 to 13.2, find the change in the amount of good Y Jenny buys and enter it below. (Note well: "change = new value - old value = after value - before value" ) and enter this value below. (Hint: Use a graph.)
- Let U(x, y) = 3x + y be the utility function of a consumer, whohas a budget of I. As a function of I, find the consumer’s Walrasian demand when the prices are px = py = 1. The price of good x increases to 2, find the new Walrasian demand for the new prices px= 2 and py = 1. Decompose this change into an income and a substitution effect.Carina buys two goods, food Fand clothing C, with the utility function U= FC + F. Her marginal utility of food is MUF= C + 1 and her marginal utility of clothing is MUC = F. She has an income of 20. The price of clothing is 4. a) Her demand for food is represented by F = 20/PF , where Pf is price for Food. True/False. %3D b) Calculate the income effects on Carina's consumption of food when the price of food rises from 1 to 4. c) Calculate the substitution effects on Carina's consumption of food when the price of food rises from 1 to 4. d) Determine the numerical size of the compensating variation (in monetary terms) associated with the increase in the price of food from 1 to 4. Hint: Write the answers for b, c ,d as integer.Pat divides a $900 monthly income between the consumption of food (X) and all else (Y). Pat’s preferences can be described by the following utility function: U = XY. a) If the price of food is $1, and of all else is $2, how much of each good will Pat choose? b) If now the price of food rises to $2, how much of each good will Pat choose? c) Explain this change in terms of income and substitution effects. d) How much would Pat be willing to pay to avoid this price increase?
- Rui's utility function is Let the price of good X be px, the price of good Z be normalized to $1.00, and U be her level of well-being. What is her expenditure function? Rui's expenditure function (E) is E = 2. U=X+4XZ+Z. PX(U+0.25) 2 - 0.25 (Px +1) · (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a subscript can be created with the _ character.) Derive her unco pensated demand curve for X. Let Y be her income. Rui's uncompensated demand curve for good X is (Properly format your expression using the tools in the palette.) X=0.8 A consumer's utility function is given by the expression: U = (0.6X0.5 +0.4Y0.5) ². Determine the marginal utility functions for each commodity. Does marginal utility decrease when consumption increases? Assuming that the price of good X is Rs 15 and the price of Y is Rs 6, write the equation of the budget line and plot it when income is Rs 450. What is its slope? What does it indicate? Calculate the marginal rate of substitution of Y for X and interpret its economic meaning. Write the equation showing consumer's equilibrium condition. Obtain the equilibrium values of X and Y. Find the expressions for change in MUx due to increase in Y and change in MUy due to increase in X.PLEASE HELP ME ANSWER IT AS FAST AS YOU CAN Dalal consumes only two goods for lunch and dinner: risotto (R) and lamb machboos (M). Dalal’s utility function isgiven by U(R,M) = R + 4M. Suppose that a risotto dish costs 3 KD and that a dish of lamb machboos costs 6 KD.Dalal has 300 KD a month to spend on her lunch and dinner meals. d. What would Dalal’s optimal basket be given that her utility will equal the level found in part (c)? e. How much would the basket found in part (d) cost? f. How much cash does Jassem need to offer to fulfill his promise?Although both of Jassem’s offers will make Dalal just as happy, their costs will not be the same. g. What is the cheaper option for Jassem: offering a 60 KD risotto gift card or offering the amount of cash foundin part (f) part c solution, available utility is R+4M = 20+200 = 220 utils.
- PLEASE HELP ME ANSWER IT AS FAST AS YOU CAN Dalal consumes only two goods for lunch and dinner: risotto (R) and lamb machboos (M). Dalal’s utility function isgiven by U(R,M) = R + 4M. Suppose that a risotto dish costs 3 KD and that a dish of lamb machboos costs 6 KD.Dalal has 300 KD a month to spend on her lunch and dinner meals. a. How many risotto and lamb machboos dishes will Dalal buy each month if she maximizes utility?Dalal’s brother, Jassem, wants to make her happier and is considering two options: giving her a 60 KD gift card that can only be spent on risotto from one of the Italian restaurants or giving her some cash money.If Jassem chooses to give Dalal the 60 KD risotto gift card:b. How many risotto meals can Dalal add to her optimal basket? c. What utility level will Dalal get given her income and the risotto gift card?Suppose that Jassem instead chooses the second option and promises Dalal to raise her income to the level thatensures making her as happy as the first…= Mary has the following utility function: u(x, y) I = 10 and the prices originally are p = 1 and py 3 ln(x) + 2y. Her income is given by = 2 (e) Find the total, substitution and income effects for good x caused by the price change. Consider this price change a “large” price change (Apx = P₁ - Px = 3− 1 = 2).Ronald consumes two goods, X and Y. He has a utility function given by the expression: U = 4X0.75y0.25. So, MUX y0.25 and MUY = x0.75 The current prices of X and Y are y0.75 3. X0.25 24 and 48, respectively. Ronald currently has an income of 960 per time period. a. Calculate the optimal quantities of X and Y that Ronald should choose, given his budget constraint.