Question
In: Economics
Suppose your utility function is U(x,y)=2ln(x)+4y. a) Solve for the individual demand for good x and...
Suppose your utility function is U(x,y)=2ln(x)+4y.
a) Solve for the individual demand for good x and the individual demand for good y.
b) Given Px = 1, Py = 2, and M = 5, find the income elasticity of demand for good x -- is good x normal or inferior (or neither)? Also find the income elasticity of demand for good y -- is good y normal or inferior (or neither)?
c) Given Px = 1, Py = 2, and M =5. Find the elasticity of demand (own-price elasticity) for good x -- is good x ordinary or Giffen?
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Suppose your utility function is U(x,y) = 2ln(x)+4y a) Solve for the individual demand for good...
Suppose your utility function is U(x,y) = 2ln(x)+4y
a) Solve for the individual demand for good x and the individual
demand for good y.
b) Given Px = 1, Py = 2, and M = 5, find the income elasticity
of demand for good x -- is good x normal or inferior (or neither)?
Also find the income elasticity of demand for good y -- is good y
normal or inferior (or neither)?
c) Given Px = 1, Py =...
An individual utility function is given by U(x,y) = x·y1/2. This individual demand equation for x...
An individual utility function is given by U(x,y) =
x·y1/2. This individual demand equation for x is a
factor a of I/px: x* = a (I/px). In this
specific case, factor a is equal to ______. (NOTE: Write your
answer in number format, with 2 decimal places of precision level;
do not write your answer as a fraction. Add a leading zero and
trailing zeros when needed.)
Suppose that an individual has a utility function of the form U = Y½ where U...
Suppose that an individual has a utility function of the form U
= Y½ where U is utility and Y is income.
a) Calculate the utility level for Y values of $10,000,
$40,000, $90,000, $160,000, and $250,000 and then plot the
individual’s total utility function.
b) This individual is currently earning $90,000 but has
a 50-50 chance of earning either $40,000 or $160,000 in a new
job.
i) Calculate the expected income and utility from the
new...
Suppose an individual has the following utility function: U(x, y) = −4(x − 5.5)^2 − 2(y...
Suppose an individual has the following utility function: U(x,
y) = −4(x − 5.5)^2 − 2(y − 3.5)^2 Further assume that the price of
good x, px = $6, the price of good y, py = $8, and the individual
has an income m = $65
a) Draw an indifference curve (one IC is enough) that represents
this person’s preferences. Please label the graph properly
including values for x and y.
b) Intuitively, and without formally solving, can you guess...
Suppose an individual has the following utility function: U(x, y) = −4(x − 5.5)^2 − 2(y...
Suppose an individual has the following utility function: U(x,
y) = −4(x − 5.5)^2 − 2(y − 3.5)^2
Further assume that the price of good x, px = $6, the price of
good y, py = $8, and the individual has an income m = $65
a) Draw an indifference curve (one IC is enough) that represents
this person’s preferences. Please label the graph properly
including values for x and y.
b) Intuitively, and without formally solving, can you guess...
Suppose an individual has the following utility function: U(x, y) = −4(x − 5.5)^2 − 2(y...
Suppose an individual has the following utility function: U(x,
y) = −4(x − 5.5)^2 − 2(y − 3.5)^2
Further assume that the price of good x, px = $6, the price of
good y, py = $8, and the individual has an income m = $65
a) Draw an indifference curve (one IC is enough) that represents
this person’s preferences. Please label the graph properly
including values for x and y.
b) Intuitively, and without formally solving, can you guess...
Suppose that the utility function of a consumer is U(x,y) = x ¼y ¾, where x...
Suppose that the utility function of a consumer is U(x,y) = x
¼y ¾, where x and y are the quantities of the
good X and good Y consumed, respectively. The consumer's income is
400.
(a) What is the demanded bundle when the price of good X is 10
and the price of good Y is 10?
(b) Redo part (a) when the price of good X is doubled?
(c) Redo part (a) when the price of good Y is...
Suppose a consumer's utility function is given by U ( X , Y ) = X...
Suppose a consumer's utility function is given by U ( X , Y ) =
X 1 2 Y 1 2. The price of X is PX=8 and the price of Y
is PY=5. The consumer has M=80 to spend.
You may find that it helps to draw a graph to organize the
information in this question. You may draw in the blank area on the
front page of the assignment, but this graph will not be
graded.
a) (2...
Your utility function over x and y is U ( x , y ) = l...
Your utility function over x and y is U ( x , y ) = l n ( x ) +
0.25 y. Your income is $20. You don’t know the prices of x or y so
leave them as variables (p x and p y).
a) (8 points) Find x*, your demand function for x. Find y*, your
demand function for y.
b) (10 points) Find the cross-price elasticity of demand for x
(E x ∗ , p y:...
Jim’s utility function is U(x, y) = xy. Jerry’s utility function is U(x, y) = 1,000xy...
Jim’s utility function is U(x, y) = xy. Jerry’s utility function
is U(x, y) = 1,000xy + 2,000. Tammy’s utility function is U(x, y) =
xy(1 - xy). Oral’s utility function is -1/(10 + xy. Billy’s utility
function is U(x, y) = x/y. Pat’s utility function is U(x, y) =
-xy.
a. No two of these people have the same preferences.
b. They all have the same preferences except for Billy.
c. Jim, Jerry, and Pat all have the same...
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