Question
In: Economics
J. Doe has an income of $60, which is divided between two goods: Xers (X) which costs $3 each, and Yers (Y), which costs $4 each.
J. Doe has an income of $60, which is divided between two goods: Xers (X) which costs $3 each, and Yers (Y), which costs $4 each. When prices and income are at these levels, Doe chooses the consumption bundle X = 12 and Y = 6.
Suppose the price of Xer falls to $2, but simultaneously the price of Yer increases to $6. Is Doe better off, worse off, or exactly as well off as before? Explain your reasoning using a graph.
(instead of drawing the actual graph, briefly explain the graph instead. Explain all the curves, shifts, points and axis, intersections and labels etc).
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
4. A. A consumer has $360. Good X costs $4 each. Good Y costs $8 each....
4. A. A consumer has $360. Good X costs $4 each. Good Y costs $8
each. Draw the budget line. Label it “budget line A.” Preferences
are perfect complements: utility = min{X,Y}. Both X and Y are
normal goods. Numerically solve the consumer’s budget choice. Label
it on the diagram, including the indifference curve, and all solved
numbers. B. A consumer has $400. Good X costs $6 each. Good Y costs
$7 each. Draw a new budget line, on a...
4. A. A consumer has $360. Good X costs $4 each. Good Y costs $8 each....
4. A. A consumer has $360. Good X costs $4 each. Good Y costs $8
each. Draw the budget line. Label it “budget line
A.” Preferences are perfect complements: utility = min{X,Y}.
Both X and Y are normal goods. Numerically solve the consumer’s
budget choice. Label it on the diagram, including the indifference
curve, and all solved numbers. B. A consumer has $400. Good X costs
$6 each. Good Y costs $7 each. Draw a new budget line, on a...
A consumer has an income of $120 to buy two goods (X, Y). the price of...
A consumer has an income of $120 to buy two goods (X, Y). the
price of X is $2 and the price of Y is $4. The consumer utility
function is given by
UX,Y=X2/3*Y1/3
You are also told that his marginal utilities are
MUX=23YX1/3
MUY=13XY2/3
Find the slope of the budget constrain. (1
point)
Calculate the optimal quantity of good X and Y for this
consumer (Point A). (2 points)
Assume that the price of good X...
Suppose that a consumer has a choice between two goods, X and Y. If the price of...
Suppose that a consumer has a choice between two goods, X and
Y. If the price of X is $2 per unit and the price of Y
is $5 per unit, how much of X and Y will the utility maximizing
consumer purchase, assuming an income of $19? Use the
information on total utility given below. Use a
methodology that could be used in answering a more complex problem
and show how you used this methodology. Trial and error
or summing the different combinations...
Two goods are in the consumer basket, goods X and Y. The consumer income is I,...
Two goods are in the consumer basket,
goods X and Y. The consumer income is I, price of good X
is Px, and price of good Y is Py. Use the
consumer model to derive the demand curve for good X. Explain your
answer in details.
b. Using your answer in part a,
clearly explain and show the substitution effect and the income
effect.
A. A consumer has $360. Good X costs $4 each. Good Y costs $8 each. Draw...
A. A consumer has $360. Good X costs $4 each.
Good Y costs $8 each. Draw the budget line. Label it “budget line
A.” Preferences are perfect complements: utility = min{X,Y}. Both X
and Y are normal goods. Numerically solve the consumer’s budget
choice. Label it on the diagram, including the indifference curve,
and all solved numbers.
B. A consumer has $400. Good X costs $6 each.
Good Y costs $7 each. Draw a new budget line, on a new...
A. A consumer has $360. Good X costs $4 each. Good Y costs $8 each. Draw...
A. A consumer has $360. Good X costs $4 each.
Good Y costs $8 each. Draw the budget line. Label it “budget line
A.” Preferences are perfect complements: utility = min{X,Y}. Both X
and Y are normal goods. Numerically solve the consumer’s budget
choice. Label it on the diagram, including the indifference curve,
and all solved numbers.
B. A consumer has
$400. Good X costs $6 each. Good Y costs $7 each. Draw a new budget
line, on a new...
Ahmad choosing between two goods, X and Y, and your marginal utility from each is as...
Ahmad choosing between two goods, X and Y, and your
marginal utility from each is as shown in the table below. If your
income is $12and the prices of X = $2 and price of Y is
$2.
Unit of product
Good X
Good Y
Marginal utility
Marginal utility per dollar
Marginal utility
Marginal utility per dollar
1
20
16
2
16
14
3
12
12
4
8
10
5
6
8
6
4
6
What quantities of X and...
Harry derives utility from two goods: X and Y . He has an income of 100...
Harry derives utility from two goods: X and Y . He has an income
of 100 dollars. Both X and Y cost 2 dollars per unit Given the
utility function U = XY (MUx = Y and MUY = X), how many units of X
and Y should Harry consume in order to maximize his utility?
(a) X = 100, Y = 0
(b) X = 0, Y = 100
(c) X = 50, Y = 50
(d) X =...
4: There is an exchange economy with two agents, A, B, and two goods, x, y....
4: There is an exchange economy with two agents, A, B, and two
goods, x, y. A's endowment is x = 6, y = 4, and B's endowment is x
= 4, y = 6. (a) A has the utility function u(x, y) = x + y and B
u(x, y) = xy. Find a competitive equilibrium allocation (CEA) and
associated equilibrium prices. What difference would it make if A's
endowment is x = 3, y = 1, and B's...
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