The utility function of Master Enterprise isU (T, M) = T'/4 M³/4Where T and M are the two goods that the Enterprise sells. The owner of the Enterprise isinterested in finding out the demand function of its product. Help him:• Find the demand function for Good T and Good M.• Use an Income of $8000 and the Price of Good I as $5.00 while the price of Good M as $12 tofind the optimum bundles of Good T and M.

The budget line shows the various combination of two goods that can be consumed with the given level…

Answered: The utility function of Master…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Given the utility function, where U is the total utility and x and y are the commodities consumed, find the marginal utility function of each of the two commodities.
Ben gets utility from apples and bananas and his preferences can be represented by the utility function U(A,B)=4A+B. If the price of apples is 3 times the price of bananas, what is Ben's ordinary demand function for apples, A*(p A, P B, I)? OA (P A, PB, 1)=0 A*(p A, P B, 1)=1/P A OA (P A, PB, 1)=21p A OA (P A, PB, 1)=1/(3p A) O A*(p A, P B, 1)=1/(4p A
An individual consumes two goods, X and Y, and receives utility according to a Cobb-Douglas production function of the form: U(X,Y)= X1/3Y2/3. Give that MUX= 13(MUYMUX)2/3 and MUY= 23(MUXMUY)1/3 find the consumers optimal demand functions for X and Y in terms of PX, PY, and I. Explain why I could have solved the problem above using the utility function U(X,Y)= XY2 and would have obtained the same answer. What is it about utility that makes this possible?     Economists define the ‘certainty equivalent’ of a risky stream of income as the amount of guaranteed money an individual would accept instead of taking a risk. The certainty equivalent varies between individuals based on their risk preference.
Please refer to the following information to answer the question (in bold) below: You enjoy consuming apples (A) and oranges (O). Suppose that your utility function over both goods is given by Your marginal utility function for apples is . Your marginal utility function for oranges is U (A, O) = AO³ MUA = 0³ MUO 3A0² . Currently, the price of apples is $10/peck, the price of oranges is $5/pound, and your income is $160. Assume that apples are your horizontal axis good and oranges are your vertical axis good. = When you set up the optimal decision rule for your consumer problem, which of the following statements best describes how much you will buy of apples and oranges at your consumer equilibrium? For each peck of apples, you will buy 1/3 pounds of oranges. For each peck of apples, you will buy 1 pounds of oranges. O For each peck of apples, you will buy 3 pounds of oranges. O For each peck of apples, you will buy 6 pounds of oranges.
Nicanor's passion is good wine. If the prices of the other goods are constant, Nicanor's demand for a good Rioja is c = 0.04m – 2p, where m is his income, p is the price of Rioja and c is the demand for Rioja bottles. Assume that Nicanor has an income of $10,000 and that the price of a decent bottle of Rioja is $50. If the price of Rioja rises to $60, determine the income effect and the substitution effect on the demand for bottles of Nicanor wine.
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For the utility function U = Qx^0.84Qy^(1-0.84) rate between good X and good Y at Qx= 7 and Qy=19 find the trade-off
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buyers in the chocolate market demand 200 units of chocolate when price is zero and decrease the purchase of chocolates by 2 units for every one unit increase in price. write down the equation of the demand function in the form of Q= f(P)
True/False? Briefly explain. Assume good x is a normal good. In terms of consumer behavior, a cash grant and a small (relative to the initial consumption of x) limited non-matching grant on good x (with the limit that is equal to the cash grant) are essentially equivalent.
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