(Quasilinear Preferences) A consumer'spreferences over two goods are describedby the following utility function:u(x₁,x₂) = x₂ + Inx, wherex, is theamount of good 1, and is the amountof good 2. Her goal is to choose the bestaffordable bundle, and she has $2available. Quantities must be non-negative, but decimals are fine. (a) Findthe optimal bundle ifp₁ = P₂ = 1. (b) Nowfind the optimal bundle ifp₁ = 1 but= 3.P2Uo1. (Queellinear Preferences) A consumer's preferences over two goods are described by the fol-lowing utility function.wfx)=₂+xwhere ay is the amount of good 1, and ag is the amount of good 2. Ter goal is to choosetan best affordable bundle, and she has 82 available. Quantities naust he non negative, butdecimals are fine.(a) Find the optimal handle if p-2-1.Chy Now End the optimal bandle if p; - 1 bus p: – 3.

Utility function is the function that shows the satisfaction level or measure of usefulness of…

(Quasilinear Preferences) A consumer's preferences over two goods are described by the following utility function: u(x₁, x₂) = x₂ + Inx, wherex, is the amount of good 1, and x2 is the amount of good 2. Her goal is to choose the best affordable bundle, and she has $2 available. Quantities must be non- negative, but decimals are fine. (a) Find the optimal bundle if p₁=p₂ = 1. (b) Now find the optimal bundle if p₁ = 1 but = 3. P₂ 1 (Qualli Preces) A cour's poderences or two goods as described by the fol- Irwing utility function. [x)+JX when ay is the amount of grad 1, nod ay is the amount of good 2. Ter goal is to choose tan bat affordable bendle, and she has 82 available. Quantities naut he aca negative, bet (a) Find the optimal handle if p-p-1. (b) Now End the optional bandle if p 1 bus 3.

(Quasilinear Preferences) A consumer's preferences over two goods are described by the following utility function: u(x₁, x₂) = x₂ + Inx, wherex, is the amount of good 1, and x2 is the amount of good 2. Her goal is to choose the best affordable bundle, and she has $2 available. Quantities must be non- negative, but decimals are fine. (a) Find the optimal bundle if p₁=p₂ = 1. (b) Now find the optimal bundle if p₁ = 1 but = 3. P₂ 1 (Qualli Preces) A cour's poderences or two goods as described by the fol- Irwing utility function. [x)+JX when ay is the amount of grad 1, nod ay is the amount of good 2. Ter goal is to choose tan bat affordable bendle, and she has 82 available. Quantities naut he aca negative, bet (a) Find the optimal handle if p-p-1. (b) Now End the optional bandle if p 1 bus 3.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The utility function of a consumer is u = √x + 2y. (a) Calculate how much MRS of that consumer when x = 4. (b) If the consumer currently consumes 4 units of goods x and the price ratio of Px / Py = 1/4, then the consumer should increase or decrease the consumption of goods x?
Ricky has utility function u=x'y. This implies that MUx=2xy. MUy=x². His income is 100. The price of y is 10. (a) Find his demand for x at price 20. (b) Find his demand for x at price 30. (c) Write down his demand function for x: that is, write down his demand for x as a function of the price of x.
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2) Which of the following utility functions represent the same preferences? Explain. a) U (x₁, x₂) = X₁ X₂ b) W (x₁, x₂) = 5lnx₁ +5lnx₂ c) V (x₁, x₂) = x₁¹/3x₂ ¹/3 - 0.8 d) Z(x₁, x₂) = 0.5x₁ + 0.5x₂
A consumer has utility (see image) on ice creams (x) and cakes (y). (a) Are the indifference curves bowed towards the origin? (b) Derive his demand function (as a function of prices px, py and budget I) for ice cream (x). (c)(Looking at the demand function you found in (b), Is ice cream a normal good? Are ice cream and cakes substitutes or complements? Calculate the income elasticity of market demand at the point px = 2, py = 1 and I = 12.