Question
In: Economics
Suppose that Tim gets utility from only two goods, rice (R) and beans (B) and his...
Suppose that Tim gets utility from only two goods, rice (R) and beans (B) and his preferences are represented by the utility function U(R,B) = R^2 * B^5. If Tim's income is 42 and price of rice is 1, price of beans is 3. How many units of rice and beans will he choose? Tim’s income elasticity of demand for beans? Explain clearly plz.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
1. Tim gets utility from only two goods, rice (R) and beans (B). One of his...
1. Tim gets utility from only two goods, rice (R) and beans (B).
One of his indifference curves is given by the formula
XR . X2B = 64, where XR
and XB are the quantities of rice and beans.
a. Give two examples of bundles that lie on this indifference
curve, with whole-number quantities of both goods.
b. Suppose Tim currently has a bundle on this indifference
curve, with 2 units of beans. Use derivatives to calculate the rate
at...
A consumer spends all of his income only on two goods, X and Y. His utility...
A consumer spends all of his income only on two goods, X and Y.
His utility function is given by U=XY. The price of good X is $P
and the price of good Y is $2. His income is $400.
(4) Derive the PCC (price consumption curve) of this consumer as
the price of good X changes .
(3) Derive this consumer’s demand function for good X.
(3) As the price of good X falls, this consumer’s demand becomes
less...
A consumer spends all of his income only on two goods, X and Y. His utility...
A consumer spends all of his income only on two goods,
X and Y. His utility function is given by
U=XY. The price of good X is $P and the
price of good Y is $2. His income is $400.
Derive the PCC (price consumption curve) of this
consumer as the price of good X changes .
Derive this consumer’s demand function for good
X.
As the price of good X falls, this consumer’s demand becomes
less elastic. True or...
Consider the utility function of a consumer who obtains utility from consuming only two goods, ?1...
Consider the utility function of a consumer who obtains utility
from consuming only two goods, ?1 and ?2 , in fixed proportions.
Specifically, the utility of the consumer requires the consumption
of two units of ?2 for each unit of ?1.
i. Report the mathematical expression of the utility function of
the consumer.
ii. Provide a diagram of the corresponding indifference
curves.
iii. Provide at least one example and economic intuition.
Suppose that the consumer has available income equal to...
Consider the utility function of a consumer who obtains utility from consuming only two goods, ?1...
Consider the utility function of a consumer who obtains utility
from consuming only two goods, ?1 and ?2 , in fixed proportions.
Specifically, the utility of the consumer requires the consumption
of two units of ?2 for each unit of ?1. A.
i. Report the mathematical expression of the utility function of
the consumer.
ii. Provide a diagram of the corresponding indifference
curves.
iii. Provide at least one example and economic intuition.
Suppose that the consumer has available income equal...
Ana gets utility from Pepperoni sticks and Tea. Ana enjoys variety across the two goods. Her...
Ana gets utility from Pepperoni sticks and Tea. Ana enjoys
variety across the two goods. Her dog, Lexie, gets utility only
from Pepperoni sticks.
(a) [5 points] With P on the x-axis and T on the y-axis, draw
some representative indifference curves for Ana. In a separate but
identically labeled diagram, draw some representative indifference
curves for Lexie. Identify the direction of increasing utility.
(b) [15 points] Assume Ana is endowed with 10 P and 5 T and
Lexie is...
11. A consumer’s utility only depends on the consumption of goods A and B according to...
11. A consumer’s utility only depends on the consumption
of goods A and B according to the following Cobb-Douglass utility
function: U(A, B) = A^(1/3)B^(2/3). The price of goods A and B are
$30 and $45, respectively. The consumer has a budget of $2700 that
he can use to consume the two goods.
Question a) A new tax of 6% is imposed on the price of
good B. Compute the new optimal bundle of good A and B for the...
Suppose that there are two goods, X and Y. The utility function is ?(?, ?) =...
Suppose that there are two goods, X and Y. The utility function
is ?(?, ?) = 5?2 ?. The price of Y is $2 per unit, and
the price of X is P. Income is $2,400.
A.) Derive the demand curve and state the law of demand in
relation to your product or service.
B.) ? = 800 − 10?0.5 . Calculate elasticity of demand
when Q=100, Is the good elastic?
C.) ? = 800 − 10?0.5 − 0.5?. Calculate...
Suppose that there are two goods, X and Y. The utility function is ?(?, ?) =...
Suppose that there are two goods, X and Y. The utility function
is ?(?, ?) = 5?2 ?. The price of Y is $2 per unit, and
the price of X is P. Income is $2,400.
A.) Derive the demand curve and state the law of demand in
relation to your product or service.
B.) ? = 800 − 10?0.5 . Calculate elasticity of demand
when Q=100, Is the good elastic?
C.) ? = 800 − 10?0.5 − 0.5?. Calculate...
Suppose that Ken cares only about bathing suits (B) and flip-flops (F). His utility function is...
Suppose that Ken cares only about bathing suits (B) and
flip-flops (F). His utility function is U = B 0.75F 0.25. The price
of bathing suits are $12, and the price of flip-flops are $6. Ken
has a budget of $240. (a) Draw and label a graph containing Ken’s
budget line with bathing suits (B) on the x-axis and flip-flops (F)
on the y-axis. Graph the x and y intercepts and determine the slope
of the budget line. (b) Define...
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