Question
In: Economics
On the planet Homogenia every consumer who has ever lived consumes only two goods, x and...
On the planet Homogenia every consumer who has ever lived consumes only two goods, x and y, and has the utility function U( x, y) = xy. The currency in Homogenia is the fragel. In this country in 1900, the price of good 1 was 1 fragel and the price of good 2 was 2 fragels. Per capita income was 108 fragels in 1990. In 2000, the price of good 1 was 3 fragels and the price of good 2 was 4 fragels and per capita income increased to 120
a. The quantity of x that's consumed in 1990 and 2000 are: ______ and _______respectively
b. The quantity of y that's consumed in 1990 and 2000 are: ______. and ______ respectively
c. The Laspeyres quantity index for the quantity level in 2000 relative to the price level in 1900 is. ___________ (rounded to 2 decimals)
d. The Paasche quantity index for the quantity level in 2000 relative to the price level in 1900 is ____________(rounded to 2 decimals)
e. The Laspeyres price index for the price level in 2000 relative to the price level in 1900 is _____________ (rounded to 2 decimals)
f. The Paasche price index for the price level in 2000 relative to the price level in 1900 is ___________ (rounded to 2 decimals).
Solutions
Rahul Sunny answered 7 months agoRelated Solutions
On the planet Homogenia every consumer who has ever lived consumes only two goods, x and...
On the planet Homogenia every consumer who has ever lived
consumes only two goods, x and y, and has the utility function U(x,
y) = xy. The currency in Homogenia is the fragel. In this country
in 1900, the price of good 1 was 1 fragel and the price of good 2
was 2 fragels. Per capita income was 84 fragels. In 2000, the price
of good 1 was 3 fragels and the price of good 2 was 4 fragels....
Ali is a consumer who consumes two goods only – Food and leisure. 40F + 350L...
Ali is a consumer who consumes two goods only – Food and
leisure.
40F + 350L = 5000
60F + 420L = 8000
Plotting food on the x-axis and leisure on the y-axis, draw the
budget line. Clearly label the y and x intercepts.
Which combination of food and leisure can Ali afford to get.
Clearly represent it on your graph.
It is known that Ali’s preferences exhibit diminishing MRS.
What does this mean?
Using a set of indifference curves,...
A utility-maximizing consumer who consumes quantity x and y of two goods has a quadratic utility...
A utility-maximizing consumer who consumes quantity x and y of
two goods has a quadratic utility function given by
Ux,y=x+y-0.05x2-0.05y2
subject to
2x+5y=128
Where $128 is the consumer’s budget and the prices of the two
goods are, respectively, 2 and 5. Assuming marginal utilities Ux,
Uy > 0,
a. Find the quantity x and y that maximize the utility function.
b. Using bordered Hessian, check utility for a maximum.
c. What is the maximum utility of the consumer?
A utility-maximizing consumer who consumes quantity x and y of two goods has a quadratic utility...
A utility-maximizing consumer who consumes quantity x and y of
two goods has a quadratic utility function given by
Ux,y=x+y-0.05x2-0.05y2
subject to
2x+5y=128
Where $128 is the consumer’s budget and the prices of the two
goods are, respectively, 2 and 5. Assuming marginal utilities Ux,
Uy > 0,
a. Find the quantity x and y that maximize the utility function.
b. Using bordered Hessian, check utility for a maximum.
c. What is the maximum utility of the consumer?
A utility-maximizing consumer who consumes quantity x and y of two goods has a quadratic utility...
A utility-maximizing consumer who consumes quantity x and y of
two goods has a quadratic utility function given by
Ux,y=x+y-0.05x2-0.05y2
subject to
2x+5y=128
Where $128 is the consumer’s budget and the prices of the two
goods are, respectively, 2 and 5. Assuming marginal utilities Ux,
Uy > 0,
a. Find the quantity x and y that maximize the utility function.
b. Using bordered Hessian, check utility for a maximum.
c. What is the maximum utility of the consumer?
A utility-maximizing consumer who consumes quantity x and y of two goods has a quadratic utility...
A utility-maximizing consumer who consumes quantity x and y of
two goods has a quadratic utility function given by
Ux,y=x+y-0.05x2-0.05y2
subject to
2x+5y=128
Where $128 is the consumer’s budget and the prices of the two
goods are, respectively, 2 and 5. Assuming marginal utilities Ux,
Uy > 0,
a. Find the quantity x and y that maximize the utility function.
b. Using bordered Hessian, check utility for a maximum.
c. What is the maximum utility of the consumer?
You are a consumer who consumes goods X (education) and goods Y (recreation), where the price...
You are a consumer who consumes goods X (education) and goods Y
(recreation), where the price of good X is PX and the price of Y is
Py. Your income that can be allocated to purchase these two items
is M.
Questions
a. What happens if the price of education rises? Describe the
substitution effect and the income effect.
b. Derive the demand curve for education.
You are a consumer who consumes goods X (education) and goods Y (recreation), where the price...
You are a consumer who consumes goods X (education) and goods Y
(recreation), where the price of good X is PX and the price of Y is
Py. Your income that can be allocated to purchase these two items
is M.
Question
a. What happens if the price of education rises? Describe the
substitution effect and the income effect.
b. Derive the demand curve for education.
You are a consumer who consumes goods X (education) and goods Y (recreation), where the price...
You are a consumer who consumes goods X (education) and goods Y
(recreation), where the price of good X is PX and the price of Y is
Py. Your income that can be allocated to purchase these two items
is M.
Questions
a. What happens if the price of education rises? Describe the
substitution effect and the income effect.
b. Derive the demand curve for education.
Consider Scott who consumes only two goods, Coke (Y) and Steak (X). The prices of Coke...
Consider Scott who consumes only two goods, Coke (Y) and Steak
(X). The prices of Coke and steak are $2.00 and $10.00,
respectively. He has a weekly budget of $90 and his optimal
consumption bundle is 20 units of Coke and 5 units of steak per
week. (20) (a) Draw Scott’s optimal choice diagram for Coke and
steak. [Note: define the budget constraint, the slope, and the
utility function.] (4) Scott found that the price of steak is
reduced to...
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