O A consumer's utility function is given by: U(x,y) = 10xy Currently, the prices of goods x and y are $3 and $5, respectively, and the consumer's income is $150 . a. Find the MRS for this consumer for any given bundle (x,y) .b. Find the optimal consumption bundle for this consumer. c. Suppose the price of good x doubles. How much income is required so that the Econ 201 Beomsoo Kim Spring 2018 consumer is able to purchase the original consumption bundle. d. Now that the price of good x has doubled how much income is needed for the consumer to reach the original level of utility? Is this more or less that what you found in c.?
O A consumer's utility function is given by: U(x,y) = 10xy Currently, the prices of goods x and y are $3 and $5, respectively, and the consumer's income is $150 . a. Find the MRS for this consumer for any given bundle (x,y) .b. Find the optimal consumption bundle for this consumer. c. Suppose the price of good x doubles. How much income is required so that the Econ 201 Beomsoo Kim Spring 2018 consumer is able to purchase the original consumption bundle. d. Now that the price of good x has doubled how much income is needed for the consumer to reach the original level of utility? Is this more or less that what you found in c.?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:O A consumer's utility function is given by:
U(x,y) = 10xy Currently, the prices of goods
x and y are $3 and $5, respectively, and the
consumer's income is $150
. a. Find the MRS for this consumer for any
given bundle (x,y)
.b. Find the optimal consumption bundle
for this consumer.
c. Suppose the price of good x doubles. How
much income is required so that the Econ
201 Beomsoo Kim Spring 2018 consumer is
able to purchase the original consumption
bundle.
d. Now that the price of good x has doubled,
how much income is needed for the
consumer to reach the original level of
utility? Is this more or less that what you
found in c.?
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